Federal Register Vol. 83, No.156,

Federal Register Volume 83, Issue 156 (August 13, 2018)

Page Range39871-40147
FR Document

83_FR_156
Current View
Page and SubjectPDF
83 FR 40113 - Sunshine Act MeetingsPDF
83 FR 39871 - Continuation of the National Emergency With Respect to Export Control RegulationsPDF
83 FR 40095 - Sunshine Notice-September 5, 2018 Public HearingPDF
83 FR 40090 - Sunshine Act MeetingsPDF
83 FR 40108 - Sunshine Act MeetingsPDF
83 FR 40099 - Sunshine Act MeetingsPDF
83 FR 40086 - Vacancy Posting for a Member of the Administrative Review BoardPDF
83 FR 40088 - Vacancy Posting: Chair of the Administrative Review BoardPDF
83 FR 40086 - Vacancy Posting for a Member of the Employees' Compensation Appeals BoardPDF
83 FR 40036 - Proposed Information Collection Request; Comment Request; Safe Drinking Water Act State Revolving Fund ProgramPDF
83 FR 40037 - Proposed Prospective Purchaser Agreements for the Greenpoint Landfill Site, the Saginaw Malleable Industrial Land Site and the Saginaw Malleable Peninsula Site in Saginaw, MichiganPDF
83 FR 39970 - Air Plan Approval; Minnesota; Infrastructure SIP Requirements for the 2012 PM2.5PDF
83 FR 40033 - Armadillo Flats Wind Project, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request For Blanket Section 204 AuthorizationPDF
83 FR 40033 - Southwest Power Pool, Inc.; Notice Affording the Parties an Opportunity To File BriefsPDF
83 FR 40027 - Records Governing Off-the-Record Communications; Public NoticePDF
83 FR 40035 - Combined Notice of Filings #1PDF
83 FR 40032 - Combined Notice of FilingsPDF
83 FR 40033 - Big Sky North, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
83 FR 40114 - Public Forum: SBA Guaranteed Business Loans to Poultry FarmersPDF
83 FR 40081 - Royalty Policy Committee; Public MeetingPDF
83 FR 40071 - Office of the Director, National Institutes of Health; Notice of MeetingPDF
83 FR 40073 - Submission for OMB Review; 30-Day Comment Request Collection of Customer Service, Demographic, and Smoking/Tobacco Use Information From the National Cancer Institute's Contact Center (CC) Clients (NCI); CorrectionPDF
83 FR 40072 - National Institute of Environmental Health Sciences; Notice of Closed MeetingsPDF
83 FR 40073 - National Institute of Allergy and Infectious Diseases; Notice of Closed MeetingsPDF
83 FR 40073 - National Heart, Lung, and Blood Institute; Notice of MeetingPDF
83 FR 40072 - National Human Genome Research Institute; Notice of Closed MeetingPDF
83 FR 40071 - Proposed Collection; 60-Day Comment Request; National Cancer Institute (NCI) Future Fellows Resume DatabankPDF
83 FR 39991 - Agency Information Collection Activities: Notice of Intent To Extend Collection 3038-0085: Rule 50.50 End-User Notification of Non-Cleared SwapPDF
83 FR 39989 - Agency Information Collection Activities: Notice of Intent To Extend Collection 3038-0101, Registration of Foreign Boards of TradePDF
83 FR 39923 - Exemption From Derivatives Clearing Organization RegistrationPDF
83 FR 39990 - Agency Information Collection Activities Under OMB ReviewPDF
83 FR 39937 - Safety Zone; Delaware River; Penn's Landing; Philadelphia, PA; Fireworks DisplayPDF
83 FR 40096 - New Postal ProductsPDF
83 FR 40081 - Notice of Renewal of the Advisory Committee on Water InformationPDF
83 FR 40115 - Notice of Determinations; Culturally Significant Objects Imported for Exhibition-Determinations: “Nordic Impressions: Art From Åland, Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway, and Sweden, 1821-2017” ExhibitionPDF
83 FR 40091 - Meeting of the Advisory Committee on Reactor Safeguards (ACRS) Subcommittee on NuScalePDF
83 FR 40090 - Physical Security-Combined License and Operating ReactorsPDF
83 FR 40092 - Exelon Generation Company, LLC; Oyster Creek Nuclear Generating StationPDF
83 FR 39988 - Mid-Atlantic Fishery Management Council (MAFMC); Public MeetingPDF
83 FR 40080 - Endangered and Threatened Wildlife and Plants; Availability of Proposed Low-Effect Habitat Conservation Plan for Florida Scrub-Jay; Sarasota County, FloridaPDF
83 FR 39992 - Notice of Intent To Prepare an Environmental Impact Statement for the Air Force Reserve Command F-35A Operational BeddownPDF
83 FR 39918 - Airworthiness Directives; Fokker Services B.V. AirplanesPDF
83 FR 39979 - Endangered and Threatened Wildlife and Plants; Proposed Replacement of the Regulations for the Nonessential Experimental Population of Red Wolves in Northeastern North CarolinaPDF
83 FR 39894 - Endangered and Threatened Wildlife and Plants; Listing the Hyacinth MacawPDF
83 FR 40042 - Agency Information Collection Activities: Submission for OMB Review; Comment RequestPDF
83 FR 40043 - Medicare and Medicaid Programs; Quarterly Listing of Program Issuances-April through June 2018PDF
83 FR 39989 - Office Patent Trial Practice Guide, August 2018 UpdatePDF
83 FR 40116 - Agency Information Collection Activities: Request for Comments for a New Information CollectionPDF
83 FR 40010 - Application to Export Electric Energy; TEC Energy Inc.PDF
83 FR 40025 - Notice of Public Meeting of the Supercritical CO2PDF
83 FR 40032 - Footprint Power LLC; Footprint Power Salem Harbor Operations LLC; Notice of Designation of Commission Staff as Non-DecisionalPDF
83 FR 39987 - Mid-Atlantic Fishery Management Council (MAFMC); Public MeetingPDF
83 FR 39986 - New England Fishery Management Council; Public MeetingPDF
83 FR 39987 - Mid-Atlantic Fishery Management Council (MAFMC); Public MeetingsPDF
83 FR 40029 - City of Gonzales; Notice of Application Tendered for Filing With the Commission and Establishing Procedural Schedule for Licensing and Deadline for Submission of Final AmendmentsPDF
83 FR 40030 - Pacific Gas and Electric Company and City of Santa Clara, California; Notice of Application Accepted for Filing, Soliciting Motions To Intervene and Protests, Ready for Environmental Analysis, and Soliciting Comments, Recommendations, Preliminary Terms and Conditions, and Preliminary Fishway PrescriptionsPDF
83 FR 40082 - National Park Service Alaska Region Subsistence Resource Commission Program Notice of Public MeetingsPDF
83 FR 40059 - Authorization of Emergency Use of a Freeze Dried Plasma Treatment for Hemorrhage or Coagulopathy During an Emergency Involving Agents of Military Combat; AvailabilityPDF
83 FR 40055 - Agency Information Collection Activities: Submission for OMB Review; Comment RequestPDF
83 FR 40117 - Request for Comments of a Previously Approved Information Collection(s)PDF
83 FR 39982 - Notice of 110th Commission MeetingPDF
83 FR 40038 - Federal Advisory Committee Act; Technological Advisory CouncilPDF
83 FR 39985 - University of Pittsburgh of the Commonwealth System of Higher Education, et al.: Notice of Decision on Application for Duty-Free Entry of Scientific InstrumentsPDF
83 FR 39982 - Certain Uncoated Paper From Portugal: Final Results of Antidumping Duty Administrative Review; 2015-2017PDF
83 FR 40034 - Boyce Hydro Power, LLC; Notice of Application Accepted for Filing and Soliciting Comments, Motions To Intervene, and ProtestsPDF
83 FR 40027 - Puget Sound Energy, Inc.; SOCCO, Inc.; Sumas Pipeline Company; Sumas Dry Kilns, Inc.; Notice of ApplicationPDF
83 FR 40030 - City of Kaukauna, Wisconsin; Notice of Availability of Environmental AssessmentPDF
83 FR 40028 - Texas Eastern Transmission, LP; Notice of ApplicationPDF
83 FR 40034 - Notice of Availability of the Final Engineering Guidelines for the Evaluation of Hydropower Projects: Chapter 12-Water ConveyancePDF
83 FR 39983 - Laminated Woven Sacks From the Socialist Republic of Vietnam: Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Determination With Final Antidumping Duty DeterminationPDF
83 FR 40140 - Art Advisory Panel-Notice of Availability of Report of 2017 Closed MeetingsPDF
83 FR 39981 - Notice of Request for Revision of a Currently Approved CollectionPDF
83 FR 39917 - United States Standards for Grades of Processed VegetablesPDF
83 FR 39879 - Special Local Regulations; Marine Events Within the Fifth Coast Guard DistrictPDF
83 FR 40037 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NSPS for Bulk Gasoline Terminals (Renewal)PDF
83 FR 40084 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-IMS Global Learning Consortium, Inc.PDF
83 FR 40089 - Arts Advisory Panel MeetingsPDF
83 FR 40085 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-Network Centric Operations Industry Consortium, Inc.PDF
83 FR 40085 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-Node.Js FoundationPDF
83 FR 40083 - National Register of Historic Places; Notification of Pending Nominations and Related ActionsPDF
83 FR 39886 - Automatic Burial Benefits for Previously Unestablished Surviving SpousesPDF
83 FR 40055 - Expansion Cohorts: Use in First-In-Human Clinical Trials To Expedite Development of Oncology Drugs and Biologics; Draft Guidance for Industry; AvailabilityPDF
83 FR 40057 - Patient-Focused Drug Development Guidance: Methods To Identify What Is Important to Patients and Select, Develop, or Modify Fit-for-Purpose Clinical Outcome Assessments; Public Workshop; Request for CommentsPDF
83 FR 39880 - Drawbridge Operation Regulation; Chevron Oil Company Canal, Fourchon, LAPDF
83 FR 40113 - Presidential Declaration of a Major Disaster for Public Assistance Only for the State of MICHIGANPDF
83 FR 40085 - Agency Information Collection Activities; Proposed eCollection; eComments Requested; Revision of a Currently Approved Collection: Office of Justice Programs' Community Partnership Grants Management System (GMS)PDF
83 FR 40025 - National Coal CouncilPDF
83 FR 40026 - Environmental Management Site-Specific Advisory Board, Northern New MexicoPDF
83 FR 40113 - Presidential Declaration of a Major Disaster for the State of CaliforniaPDF
83 FR 40114 - Presidential Declaration of a Major Disaster for Public Assistance Only for the State of CaliforniaPDF
83 FR 40039 - Agency Information Collection Activities: Submission for OMB Review; Comment RequestPDF
83 FR 39882 - Safety Zone; Lower Mississippi River, Mile Markers 94 to 97 Above Head of Passes, New Orleans, LAPDF
83 FR 39884 - Safety Zone; Allegheny River, Miles 43.5 to 45.5, Kittanning, PAPDF
83 FR 40099 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Nasdaq Options Regulatory FeePDF
83 FR 40103 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Options Regulatory FeePDF
83 FR 40112 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change To List and Trade Shares of SolidX Bitcoin Shares Issued by the VanEck SolidX Bitcoin TrustPDF
83 FR 40096 - Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to the Regular Order Take Fee and the QCC and Solicitation Order RebatePDF
83 FR 40108 - Self-Regulatory Organizations; Nasdaq GEMX, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Options Regulatory FeePDF
83 FR 40110 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee SchedulePDF
83 FR 40106 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee SchedulePDF
83 FR 40101 - Self-Regulatory Organizations; MIAX PEARL, LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the MIAX PEARL Fee SchedulePDF
83 FR 40106 - Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Withdrawal of a Proposed Rule Change, as Modified by Amendment No. 1, To List and Trade Shares of Twelve Monthly Series of the Cboe Vest S&P 500 Enhanced Growth Strategy ETF Under the ETF Series Solutions Trust Under Rule 14.11(c)(3), Index Fund SharesPDF
83 FR 39921 - Commerce Control List: Request for Comments Regarding Controls on Certain Spraying or Fogging Systems and “Parts” and “Components” ThereforPDF
83 FR 39892 - Air Plan Approval; Maine; Infrastructure Requirement for the 2010 Nitrogen Dioxide National Ambient Air Quality StandardPDF
83 FR 39957 - Air Plan Approval; Maine; Infrastructure State Implementation Plan Requirements for the 2012 PM2.5PDF
83 FR 39888 - Air Plan Approval; Rhode Island; Control of Volatile Organic Compound Emissions, Control of Nitrogen Oxide Emissions, and Sulfur Content of FuelsPDF
83 FR 39890 - Air Plan Approval; Connecticut; 1997 8-Hour Ozone Attainment DemonstrationPDF
83 FR 40087 - Agency Information Collection Activities; Submission for OMB Review; Comment Request, Homeless Veterans Reintegration Program (HVRP) Impact Evaluation, New CollectionPDF
83 FR 40076 - Changes in Flood Hazard DeterminationsPDF
83 FR 40075 - Accreditation and Approval of SGS North America, Inc., as a Commercial Gauger and LaboratoryPDF
83 FR 40075 - Approval of SGS North America, Inc., as a Commercial GaugerPDF
83 FR 40116 - Projects Rescinded for Consumptive Uses of WaterPDF
83 FR 40115 - Projects Approved for Consumptive Uses of WaterPDF
83 FR 40116 - Projects Approved for Minor ModificationsPDF
83 FR 40074 - Accreditation and Approval of SGS North America, Inc., as a Commercial Gauger and LaboratoryPDF
83 FR 40088 - Freedom of Information Act (FOIA) Advisory Committee; MeetingPDF
83 FR 39879 - Drawbridge Operation Regulation; Petaluma River, Haystack Landing (Petaluma), CAPDF
83 FR 40091 - Meeting of the Advisory Committee on Reactor Safeguards (ACRS) Subcommittee on Future Plant DesignsPDF
83 FR 40092 - Meeting of the Advisory Committee on Reactor Safeguards (ACRS) Subcommittee; on NuScalePDF
83 FR 40041 - Notice of Agreements FiledPDF
83 FR 40089 - Proposal Review Panel for Computing and Communication Foundations; Notice of MeetingPDF
83 FR 39981 - Notice of Request for Revision of a Currently Approved Information CollectionPDF
83 FR 40140 - Privacy Act of 1974; System of RecordsPDF
83 FR 40070 - Fougera Pharmaceuticals, Inc., et al.; Withdrawal of Approval of 20 Abbreviated New Drug ApplicationsPDF
83 FR 39988 - Withdrawal of Notice of Intent To Prepare Supplemental Environmental Impact Statements and Amendment of Record of Decisions for Programmatic Environmental Impact StatementsPDF
83 FR 39993 - Final Rules of ProcedurePDF
83 FR 39939 - Competitive Postal ProductsPDF
83 FR 39975 - Georgia: Proposed Authorization of State Hazardous Waste Management Program RevisionsPDF
83 FR 40011 - Notice of Petition for Waiver of Johnson Controls, Inc. From the Department of Energy Central Air Conditioners and Heat Pumps Test Procedure, and Notice of Grant of Interim WaiverPDF
83 FR 39873 - Energy Conservation Program: Test Procedures for Central Air Conditioners and Heat PumpsPDF
83 FR 39874 - Airworthiness Directives; Various Model 234 and Model CH-47D HelicoptersPDF
83 FR 39978 - Documentation Supporting the Proposal of the Orange County North Basin Site; Addendum AvailabilityPDF
83 FR 39877 - Minimum Internal Control StandardsPDF

Issue

83 156 Monday, August 13, 2018 Contents Agricultural Marketing Agricultural Marketing Service PROPOSED RULES United States Standards for Grades: Processed Vegetables, 39917-39918 2018-17283 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 39981 2018-17285 Agriculture Agriculture Department See

Agricultural Marketing Service

See

Rural Business-Cooperative Service

AIRFORCE Air Force Department NOTICES Environmental Impact Statements; Availability, etc.: Air Force Reserve Command F-35A Operational Beddown, 39992-39993 2018-17324 Antitrust Division Antitrust Division NOTICES Changes under National Cooperative Research and Production Act: IMS Global Learning Consortium, Inc., 40084-40085 2018-17280 Changes under the National Cooperative Research and Production Act: Network Centric Operations Industry Consortium, Inc., 40085 2018-17278 Node.js Foundation, 40085 2018-17277 Arctic Arctic Research Commission NOTICES Meetings: 110th Commission Meeting, 39982 2018-17300 Bonneville Bonneville Power Administration NOTICES Final Rules of Procedure, 39993-40010 2018-17223 Centers Medicare Centers for Medicare & Medicaid Services NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 40042-40043, 40055 2018-17318 2018-17302 Medicare and Medicaid Programs: Quarterly Listing of Program Issuances; April through June 2018, 40043-40054 2018-17316 Coast Guard Coast Guard RULES Drawbridge Operations: Chevron Oil Co. Canal, Fourchon, LA, 39880-39882 2018-17271 Petaluma River, Haystack Landing (Petaluma), CA, 39879-39880 2018-17234 Safety Zones: Allegheny River, miles 43.5 to 45.5, Kittanning, PA, 39884-39886 2018-17262 Lower Mississippi River, Mile Markers 94 to 97 Above Head of Passes, New Orleans, LA, 39882-39884 2018-17263 Special Local Regulations: Marine Events within the Fifth Coast Guard District, 39879 2018-17282 PROPOSED RULES Safety Zones: Delaware River; Penns Landing; Philadelphia, PA; Fireworks Display, 39937-39939 2018-17333 Commerce Commerce Department See

First Responder Network Authority

See

Industry and Security Bureau

See

International Trade Administration

See

National Oceanic and Atmospheric Administration

See

National Telecommunications and Information Administration

See

Patent and Trademark Office

Commodity Futures Commodity Futures Trading Commission PROPOSED RULES Exemption from Derivatives Clearing Organization Registration, 39923-39937 2018-17335 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 39990-39991 2018-17334 Agency Information Collection Activities; Proposals, Submissions, and Approvals: End-User Notification of Non-Cleared Swap, 39991-39992 2018-17337 Registration of Foreign Boards of Trade, 39989-39990 2018-17336 Defense Department Defense Department See

Air Force Department

Energy Department Energy Department See

Bonneville Power Administration

See

Federal Energy Regulatory Commission

RULES Energy Conservation Program: Test Procedures for Central Air Conditioners and Heat Pumps, 39873-39874 2018-17187 NOTICES Application to Export Electric Energy: TEC Energy Inc., 40010-40011 2018-17313 Meetings: Environmental Management Site-Specific Advisory Board, Northern New Mexico, 40026-40027 2018-17267 National Coal Council, 40025-40026 2018-17268 Supercritical CO2 Oxy-combustion Technology Group, 40025 2018-17312 Petitions for Waivers: Johnson Controls, Inc. from Central Air Conditioners and Heat Pumps Test Procedure, 40011-40025 2018-17188
Environmental Protection Environmental Protection Agency RULES Air Quality State Implementation Plans; Approvals and Promulgations: Connecticut; 1997 8-hour Ozone Attainment Demonstration, 39890-39892 2018-17245 Maine; Infrastructure Requirement for the 2010 Nitrogen Dioxide National Ambient Air Quality Standard, 39892-39894 2018-17248 Rhode Island; Control of Volatile Organic Compound Emissions, Control of Nitrogen Oxide Emissions, and Sulfur Content of Fuels, 39888-39890 2018-17246 PROPOSED RULES Air Quality State Implementation Plans; Approvals and Promulgations: Maine; Infrastructure State Implementation Plan Requirements for the 2012 Fine Particle National Ambient Air Quality Standard, 39957-39970 2018-17247 Minnesota; Infrastructure SIP Requirements for the 2012 PM2.5 NAAQS; Multistate Transport, 39970-39975 2018-17362 Authorizations of State Hazardous Waste Management Program Revisions: Georgia, 39975-39978 2018-17206 National Priorities List: Orange County North Basin Site: Documentation Supporting Proposal; Addendum Availability, 39978-39979 2018-16801 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: NSPS for Bulk Gasoline Terminals, 40037-40038 2018-17281 Safe Drinking Water Act State Revolving Fund Program, 40036-40037 2018-17372 Prospective Purchaser Agreements: Greenpoint Landfill Site, the Saginaw Malleable Industrial Land Site and the Saginaw Malleable Peninsula Site in Saginaw, MI, 40037 2018-17370 Federal Aviation Federal Aviation Administration RULES Airworthiness Directives: Various Model 234 and Model CH-47D Helicopters, 39874-39877 2018-17112 PROPOSED RULES Airworthiness Directives: Fokker Services B.V. Airplanes, 39918-39921 2018-17322 Federal Communications Federal Communications Commission NOTICES Meetings: Technological Advisory Council, 40038 2018-17298 Federal Deposit Federal Deposit Insurance Corporation NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 40039-40041 2018-17264 Federal Emergency Federal Emergency Management Agency NOTICES Flood Hazard Determinations; Changes, 40076-40080 2018-17243 Federal Energy Federal Energy Regulatory Commission NOTICES Applications: Boyce Hydro Power, LLC, 40034-40035 2018-17293 Puget Sound Energy, Inc.; SOCCO, Inc.; Sumas Pipeline Co.; Sumas Dry Kilns, Inc., 40027 2018-17292 Texas Eastern Transmission, LP, 40028-40029 2018-17289 Combined Filings, 40032, 40035-40036 2018-17352 2018-17353 Designations of Commission Staff ss Non-Decisional: Footprint Power LLC; Footprint Power Salem Harbor Operations LLC, 40032 2018-17311 Environmental Assessments; Availability, etc.: Kaukauna, WI, 40030 2018-17290 Guidance: Engineering Guidelines for the Evaluation of Hydropower Projects: Chapter 12—Water Conveyance, 40034 2018-17288 Initial Market-Based Rate Filings Including Requests for Blanket Section 204 Authorizations: Armadillo Flats Wind Project, LLC, 40033 2018-17356 Big Sky North, LLC, 40033-40034 2018-17350 License Applications: Gonzales, TX, 40029-40030 2018-17306 Pacific Gas and Electric Co. and City of Santa Clara, CA, 40030-40032 2018-17305 Opportunity to File Briefs: Southwest Power Pool, Inc., 40033 2018-17355 Records Governing Off-the-Record Communications, 40027-40028 2018-17354 Federal Highway Federal Highway Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 40116-40117 2018-17314 Federal Maritime Federal Maritime Commission NOTICES Agreements Filed, 40041-40042 2018-17231 FIRSTNET First Responder Network Authority NOTICES Environmental Impact Statements; Availability, etc.: Withdrawal of Notice of Intent to Prepare; Amendment of Record of Decisions, 39988-39989 2018-17225 Fish Fish and Wildlife Service RULES Endangered and Threatened Species: Listing the Hyacinth Macaw, 39894-39916 2018-17319 PROPOSED RULES Endangered and Threatened Species: Nonessential Experimental Population of Red Wolves in Northeastern North Carolina, 39979-39980 2018-17320 NOTICES Endangered and Threatened Species: Low-Effect Habitat Conservation Plan for Florida Scrub-Jay; Sarasota County, FL, 40080-40081 2018-17325 Food and Drug Food and Drug Administration NOTICES Authorization of Emergency Use of a Freeze Dried Plasma Treatment for Hemorrhage or Coagulopathy During an Emergency Involving Agents of Military Combat, 40059-40070 2018-17303 Guidance: Expansion Cohorts: Use in First-In-Human Clinical Trials to Expedite Development of Oncology Drugs and Biologics, 40055-40057 2018-17273 Meetings: Patient-Focused Drug Development Guidance: Methods to Identify What Is Important to Patients and Select, Develop, or Modify Fit-for-Purpose Clinical Outcome Assessments; Public Workshop, 40057-40059 2018-17272 New Drug Applications: Fougera Pharmaceuticals, Inc., et al.; Withdrawal of Approval of 20 Abbreviated Applications, 40070-40071 2018-17226 Geological Geological Survey NOTICES Charter Renewals: Advisory Committee on Water Information, 40081 2018-17331 Health and Human Health and Human Services Department See

Centers for Medicare & Medicaid Services

See

Food and Drug Administration

See

National Institutes of Health

Homeland Homeland Security Department See

Coast Guard

See

Federal Emergency Management Agency

See

U.S. Customs and Border Protection

Industry Industry and Security Bureau PROPOSED RULES Commerce Control List: Controls on Certain Spraying or Fogging Systems and Parts and Components Therefor, 39921-39923 2018-17249 Interior Interior Department See

Fish and Wildlife Service

See

Geological Survey

See

National Indian Gaming Commission

See

National Park Service

NOTICES Meetings: Royalty Policy Committee, 40081-40082 2018-17346
Internal Revenue Internal Revenue Service NOTICES Meetings: Art Advisory Panel—Availability of Report of 2017, 40140 2018-17286 International Trade Adm International Trade Administration NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Certain Uncoated Paper from Portugal, 39982-39983 2018-17294 Laminated Woven Sacks from the Socialist Republic of Vietnam, 39983-39985 2018-17287 Duty-Free Entry of Scientific Instruments; Applications: University of Pittsburgh of Commonwealth System of Higher Education, et al., 39985-39986 2018-17295 Justice Department Justice Department See

Antitrust Division

See

Justice Programs Office

Justice Programs Justice Programs Office NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Community Partnership Grants Management System, 40085-40086 2018-17269 Labor Department Labor Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Homeless Veterans Reintegration Program Impact Evaluation, 40087-40088 2018-17244 Vacancy Posting: Chair of the Administrative Review Board, 40088 2018-17375 Employees Compensation Appeals Board, 40086 2018-17374 Member of the Administrative Review Board, 40086 2018-17376 National Archives National Archives and Records Administration NOTICES Meetings: Freedom of Information Act Advisory Committee, 40088-40089 2018-17235 National Endowment for the Arts National Endowment for the Arts NOTICES Meetings: Arts Advisory Panel, 40089 2018-17279 National Foundation National Foundation on the Arts and the Humanities See

National Endowment for the Arts

National Indian National Indian Gaming Commission RULES Minimum Internal Control Standards, 39877-39879 2018-16254 National Institute National Institutes of Health NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Collection of Customer Service, Demographic, and Smoking/Tobacco Use Information From the National Cancer Institute's Contact Center Clients; Correction, 40073 2018-17344 National Cancer Institute Future Fellows Resume Databank, 40071-40072 2018-17339 Meetings: National Heart, Lung, and Blood Institute, 40073-40074 2018-17341 National Human Genome Research Institute, 40072 2018-17340 National Institute of Allergy and Infectious Diseases, 40073 2018-17342 National Institute of Environmental Health Sciences, 40072-40073 2018-17343 Office of the Director, 40071 2018-17345 National Oceanic National Oceanic and Atmospheric Administration NOTICES Meetings: Mid-Atlantic Fishery Management Council, 39987-39988 2018-17308 2018-17310 2018-17326 New England Fishery Management Council, 39986-39987 2018-17309 National Park National Park Service NOTICES Meetings: Alaska Region Subsistence Resource Commission Program, 40082-40083 2018-17304 National Register of Historic Places: Pending Nominations and Related Actions, 40083-40084 2018-17275 National Science National Science Foundation NOTICES Meetings: Proposal Review Panel for Computing and Communication Foundations, 40089 2018-17230 National Telecommunications National Telecommunications and Information Administration NOTICES Environmental Impact Statements; Availability, etc.: Withdrawal of Notice of Intent to Prepare; Amendment of Record of Decisions, 39988-39989 2018-17225 Nuclear Regulatory Nuclear Regulatory Commission NOTICES Environmental Assessments; Availability, etc.: Exelon Generation Company, LLC, Oyster Creek Nuclear Generating Station, 40092-40095 2018-17327 Guidance: Physical Security—Combined License And Operating Reactors, 40090-40091 2018-17328 Meetings: Advisory Committee on Reactor Safeguards Subcommittee on Future Plant Designs, 40091-40092 2018-17233 Advisory Committee on Reactor Safeguards Subcommittee on NuScale, 40091-40092 2018-17232 2018-17329 Meetings; Sunshine Act, 40090 2018-17414 Overseas Overseas Private Investment Corporation NOTICES Meetings; Sunshine Act, 40095-40096 2018-17422 Patent Patent and Trademark Office NOTICES Office Patent Trial Practice Guide, August 2018 Update, 39989 2018-17315 Postal Regulatory Postal Regulatory Commission PROPOSED RULES Competitive Postal Products, 39939-39957 2018-17221 NOTICES New Postal Products, 40096 2018-17332 Presidential Documents Presidential Documents ADMINISTRATIVE ORDERS Export Control Regulations; Continuation of National Emergency (Notice of August 8, 2018), 39871 2018-17465 Rural Business Rural Business-Cooperative Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 39981-39982 2018-17229 Securities Securities and Exchange Commission NOTICES Meetings; Sunshine Act, 40099, 40108, 40113 2018-17390 2018-17391 2018-17473 Self-Regulatory Organizations; Proposed Rule Changes: Cboe BZX Exchange, Inc., 40106, 40112-40113 2018-17250 2018-17256 Miami International Securities Exchange LLC, 40106-40108, 40110-40112 2018-17252 2018-17253 MIAX PEARL, LLC, 40101-40103 2018-17251 Nasdaq GEMX, LLC, 40108-40110 2018-17254 Nasdaq ISE, LLC, 40096-40099, 40103-40105 2018-17255 2018-17257 The Nasdaq Stock Market LLC, 40099-40101 2018-17258 Small Business Small Business Administration NOTICES Disaster Declarations: California, 40113-40114 2018-17266 California; Public Assistance Only, 40114 2018-17265 Michigan; Public Assistance Only, 40113 2018-17270 Meetings: SBA Guaranteed Business Loans to Poultry Farmers, 40114-40115 2018-17347 State Department State Department NOTICES Culturally Significant Objects Imported for Exhibition: Nordic Impressions: Art from Aland, Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway, and Sweden, 1821-2017, 40115 2018-17330 Susquehanna Susquehanna River Basin Commission NOTICES Projects Approved for Consumptive Uses of Water, 40115-40116 2018-17239 Projects Approved for Minor Modifications, 40116 2018-17237 Projects Rescinded for Consumptive Uses of Water, 40116 2018-17240 Transportation Department Transportation Department See

Federal Aviation Administration

See

Federal Highway Administration

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 40117-40140 2018-17301
Treasury Treasury Department See

Internal Revenue Service

Customs U.S. Customs and Border Protection NOTICES Commercial Gaugers and Laboratories; Accreditations and Approvals: SGS North America, Inc., 40074-40075 2018-17236 2018-17242 Commercial Gaugers; Accreditations and Approvals: SGS North America, Inc., 40075-40076 2018-17241 Veteran Affairs Veterans Affairs Department RULES Automatic Burial Benefits for Previously Unestablished Surviving Spouses, 39886-39888 2018-17274 NOTICES Privacy Act; Systems of Records, 40140-40147 2018-17228 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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83 156 Monday, August 13, 2018 Rules and Regulations DEPARTMENT OF ENERGY 10 CFR Part 429 [EERE-2016-BT-TP-0029] RIN 1904-AD71 Energy Conservation Program: Test Procedures for Central Air Conditioners and Heat Pumps AGENCY:

Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION:

Lifting of administrative stay.

SUMMARY:

On July 3, 2017, the Department of Energy (DOE) issued an administrative stay postponing the effectiveness of certain provisions of a final rule, published in the Federal Register on January 5, 2017. The January 5, 2017 final rule amended the test procedure and certain certification, compliance, and enforcement provisions for central air conditioners and heat pumps. Specifically, in issuing the administrative stay, DOE stayed the effectiveness of two provisions of the January 5, 2017 final rule that require outdoor unit models be tested under the outdoor unit with no match procedure if they meet either of two enumerated conditions. By this action, DOE lifts the administrative stay of the two provisions.

DATES:

As of August 3, 2018, the administrative stay issued under 5 U.S.C. 705, postponing the effectiveness of certain provisions of 10 CFR 429.16(a)(3)(i), was lifted.

FOR FURTHER INFORMATION CONTACT:

Mr. Pete Cochran, U.S. Department of Energy, Office of the General Counsel, 1000 Independence Ave. SW, Washington, DC 20585-0121. Phone: (202) 586-9496. Email: [email protected]

SUPPLEMENTARY INFORMATION:

Background

On January 5, 2017, DOE published a final rule (January 2017 final rule) amending the test procedure and certification, compliance, and enforcement provisions for central air conditioners and heat pumps (CAC/HP). 82 FR 1426. Among other changes, the January 2017 final rule added a paragraph at 10 CFR 429.16(a)(3)(i) requiring, among other things, that central air conditioners and heat pumps be tested under the outdoor unit with no match provisions if: (1) Any of the refrigerants approved for use with an outdoor unit model is HCFC-22 or has a 95 °F midpoint saturation absolute pressure that is +/− 18 percent of the 95 °F saturation absolute pressure for HCFC-22, or if there are no refrigerants designated as approved for use; or (2) a model of outdoor unit is not charged with a specified refrigerant from the point of manufacture or if the unit is shipped requiring the addition of more than two pounds of refrigerant to meet the charge required for testing per section 2.2.5 of appendix M or appendix M1 (unless either (a) the factory charge is equal to or greater than 70% of the outdoor unit internal volume times the liquid density of refrigerant at 95 °F or (b) an A2L refrigerant is approved for use and listed in the certification report).

The original effective date of the January 2017 final rule was February 6, 2017. Subsequently, DOE delayed the effective date of the January 2017 final rule until March 21, 2017 (82 FR 8985), and then further delayed the effective date until July 5, 2017 (82 FR 14425; 82 FR 15457).

On March 3, 2017, Johnson Controls, Inc. (JCI) filed a petition for review of the January 2017 final rule in the United States Court of Appeals for the Seventh Circuit. This litigation is subject to ongoing mediation. JCI manufactures outdoor units with an approved refrigerant that has a 95 °F midpoint saturation absolute pressure that is +/− 18 percent of the 95 °F saturation absolute pressure for HCFC-22. These same models are also shipped requiring the addition of more than two pounds of refrigerant to meet the charge required for testing per section 2.2.5 of appendix M or appendix M1, and the factory charge is not equal to or greater than 70% of the outdoor unit internal volume times the liquid density of refrigerant at 95 °F. Thus, under either of the two provisions that were added at 10 CFR 429.16(a)(3)(i) by the January 2017 final rule, these models would need to be tested as outdoor units with no match under appendix M or M1.

Also on March 3, 2017, JCI submitted to DOE a petition for a 180-day extension of the requirement that JCI make efficiency representations for its GAW Series products in accordance with the two new provisions of the January 2017 final rule. DOE granted this request on June 2, 2017.

On April 6, 2017, JCI submitted to DOE a petition for waiver and application for interim waiver from these two test procedure provisions. JCI subsequently submitted an amended petition for waiver and application for interim waiver on June 5, 2018.

On May 31, 2017, JCI requested that DOE grant it an administrative stay of the above described two provisions pending judicial review of the January 2017 final rule. On June 6, 2017, JCI requested that DOE hold its stay request in abeyance, noting that DOE's June 2, 2017 grant of a 180-day extension of the date by which JCI must comply with the two provisions specified above obviated the need for an immediate grant of an administrative stay. Subsequently, on June 29, 2017, Lennox International Inc. (Lennox), a manufacturer of central air conditioners and heat pumps, filed a complaint in the U.S. District Court for the Northern District of Texas challenging DOE's decision to grant the 180-day extension to JCI.

On July 3, 2017, DOE issued an administrative stay in accordance with the Administrative Procedure Act (5 U.S.C. 705).1 DOE's determination to issue the stay and postpone the effectiveness of the two provisions was based on JCI's submissions that raised concerns about significant potential impacts of the test procedure provisions on JCI, as well as the desire to ensure that all manufacturers of central air conditioners and heat pumps would have the same relief granted to JCI. 82 FR 32228. On July 17, 2017, following the denial of its request for stay of the 180-day extension and/or for preliminary injunctive relief, Lennox voluntarily dismissed its lawsuit.

1 The administrative stay was made publicly available on DOE's website on July 3, 2017: https://www.energy.gov/sites/prod/files/2017/07/f35/Grant%20of%20Administrative%20Stay%20Concerning%20Test%20Procedure%20For%20Cental%20Air%20Conditioners%20and%20Heat%20Pumps.pdf. The administrative stay was subsequently published in the Federal Register on July 13, 2017. 82 FR 32227. On September 14, 2017, the Natural Resources Defense Council filed a complaint in the U.S. District Court for the Southern District of New York challenging DOE's decision to issue the administrative stay.

Grant of JCI's Application for Interim Waiver

As stated above, JCI submitted initial and amended petitions for waiver and interim waiver that raise concerns about the equity of the challenged test procedure provisions. JCI contends that the challenged test procedure provisions unfairly require central air conditioner systems that are approved for use with R-407C refrigerant and are offered as new, matched systems to be tested as outdoor units with no match. Under the outdoor unit with no match testing provisions, these systems are treated as replacement outdoor units, regardless of whether they are sold as new, matched systems or replacement outdoor units, and are rated using default indoor parameters that approximate the performance of an old, previously installed indoor unit. As such, JCI argues that the test procedure is not representative of the energy consumption of such central air conditioners when installed in the field as new, matched systems. JCI proposes to evaluate the 1,178 system combinations listed in its amended waiver petition and certified in DOE's Compliance Certification Management System in a manner that is representative of the true energy consumption of these products when installed as new, matched systems, similar to how central air conditioners that use other refrigerants and are sold both as new, matched systems and as replacement outdoor units are treated under DOE's test procedure.

While the administrative stay has been in place, DOE has continued to evaluate JCI's initial and amended petitions for waiver and interim waiver. Based on a review of these petitions and JCI's public-facing materials, it is DOE's current understanding that the basic models listed in JCI's amended petition, similar to central air conditioners that use other refrigerants, are offered as both matched, new systems and as replacement outdoor units for existing systems. As a result, DOE determined that JCI's amended petition for waiver would likely be granted and issued a decision granting JCI an interim waiver subject to certain conditions.

Lifting of the Administrative Stay

In issuing the administrative stay, DOE determined that it was in the interest of justice to do so based on two concerns: (1) The potential for significant economic impacts for JCI resulting from a possibly unrepresentative test procedure; and (2) the desire to maintain a level playing field for all central air conditioner manufacturers. The issuance of the interim waiver removes the first concern and subjects the final determination on the waiver request to the administrative process, including a notice-and-comment period, in DOE's waiver regulations at 10 CFR 430.27. Further, even if DOE ultimately denies JCI's amended waiver petition, an administrative stay would still no longer be needed as DOE would have determined that the results of the test procedure issued in the January 2017 final rule accurately represent the energy use of JCI's products.2 In that case, there would be no concern about possible significant economic impacts to JCI resulting from an unrepresentative test procedure.

2 DOE will grant a waiver from the test procedure requirements if the prescribed test procedures evaluate the basic model in a manner so unrepresentative of its true energy or water consumption characteristics as to provide materially inaccurate comparative data. 10 CFR 430.27(f)(2). JCI argues that the test procedure provisions in question result in materially inaccurate comparative data for the basic models listed in its amended petition.

The waiver petition process also addresses the second concern as any manufacturer of a similar product may also submit a waiver petition. In fact, if DOE ultimately grants JCI's amended waiver petition, a manufacturer of a similar product would be required to submit a petition for waiver under DOE's regulations. 10 CFR 430.27(j). Further, DOE has determined that the waiver petition process is a better, more tailored approach to ensuring a level playing field as manufacturers are required to propose alternative test procedures to the test procedure from which the waiver is sought, which are then subject to potential modification and approval by DOE. 10 CFR 430.27(b)(1)(iii). Because DOE explicitly approves alternative test procedures, there is no possibility of uncertainty regarding how a product subject to a waiver should be tested. This also allows DOE to ensure that manufacturers of similar products are making energy efficiency representations using the same alternative test procedure, which is essential for maintaining integrity in a market.

Based on the foregoing reasons, DOE lifts the administrative stay issued on July 3, 2017.

Signed in Washington, DC, on August 3, 2018. Stephen C. Skubel, Assistant General Counsel for Litigation.
[FR Doc. 2018-17187 Filed 8-10-18; 8:45 am] BILLING CODE 6450-01-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-4007; Product Identifier 2015-SW-064-AD; Amendment 39-19351; AD 2018-16-11] RIN 2120-AA64 Airworthiness Directives; Various Model 234 and Model CH-47D Helicopters AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final rule.

SUMMARY:

We are adopting a new airworthiness directive (AD) for various Model 234 and Model CH-47D helicopters. This AD requires inspections of the pitch housing and revising the pitch housing retirement life. This AD was prompted by reports of cracking in the pitch housing lugs. The actions of this AD are intended to detect and prevent an unsafe condition on these products.

DATES:

This AD is effective September 17, 2018.

The Director of the Federal Register approved the incorporation by reference of certain documents listed in this AD as of September 17, 2018.

ADDRESSES:

For service information identified in this final rule, contact Boeing Helicopters, The Boeing Company, 1 S. Stewart Avenue, Ridley Park, PA 19078, telephone 610-591-2121, and Columbia Helicopters, Inc. (Columbia), 14452 Arndt Road NE, Aurora, OR 97002, telephone (503) 678-1222, fax (503) 678-5841, or at http://www.colheli.com. You may review a copy of the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

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-2015-4007; 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 AD, any incorporated-by-reference service information, the Special Airworthiness Information Bulletin (SAIB), the economic evaluation, any comments received, and other information. The street address for the Docket Operations Office (phone: 800-647-5527) is U.S. Department of Transportation, Docket Operations Office, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT:

Chris Bonar, Aerospace Engineer, Airframe Section, Seattle ACO Branch, FAA, 2200 S 216th Street, Des Moines, WA 98198; telephone (206) 231-3521; email [email protected]

SUPPLEMENTARY INFORMATION:

Discussion

On March 14, 2017, at 82 FR 13567, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to Model 234 and Model CH-47D helicopters with a pitch housing part number (P/N) 145R2075-11, 145R2075-12, 145R2075-13, 145R2075-14, 145R2075-15, 145R2075-16, 234R2075-1, or 234R2075-2 installed. The type certificate (TC) holder for Model 234 helicopters is Columbia (TC previously held by Boeing Defense & Space Group), and the TC holders for Model CH-47D helicopters currently include Columbia, Billings Flying Service, Inc., and Tandem Rotor, LLC. We did not limit the proposed AD to these TC holders because we expect additional TC holders of helicopters that are subject to this same unsafe condition.

The NPRM was prompted by reports of cracking in the pitch housing lugs, located on the lead side of the lower vertical pin lug. The reports initially prompted the FAA to issue SAIB SW-11-03, dated October 22, 2010, which recommends that all owners and operators of Columbia Model 234 helicopters perform repetitive ultrasonic inspections of the lugs. At that time, there were no civil Model CH-47D helicopters in service. On March 20, 2015, we received a report of lateral vibration on a Model 234 helicopter caused by a crack in an aft pitch housing upper lug. The crack was determined to be caused by fatigue and attributed to underestimated load conditions in the original life limit calculations. This cracking differed from the cracking described in the SAIB.

To correct this unsafe condition, we proposed to require repetitive eddy current and ultrasonic inspections of the pitch housing. Boeing, the original manufacturer of both model helicopters, developed service information for the SAIB ultrasonic inspections, which we proposed to require in the NPRM. Due to the rapid growth rate, an effective eddy current inspection must detect an inward-growing crack of no more than 0.10 inch. The NPRM proposed to require, for Columbia helicopters, the eddy current inspection method specified in Columbia's service information. Because the other TC holders have not developed service instructions, we proposed to require the eddy current inspection procedures for all other helicopters be submitted to the Seattle or Denver Aircraft Certification Offices for approval.

We also proposed to require removing the pitch housing from service when it accumulates a total of 8,200 hours time-in-service (TIS). Forward pitch housings on Model CH-47D helicopters had no life limit and the aft pitch housing already had a life limit of 8,200 hours TIS. For Model 234 helicopters, the forward pitch housing had a life limit of 12,547 hours TIS and the aft pitch housing had a life limit of 19,077 hours TIS. The NPRM proposed to establish or reduce these life limits to 8,200 hours TIS for both forward and aft pitch housings, regardless of the model helicopter.

The actions specified by the NPRM were intended to detect and prevent a crack in a pitch housing lug. This condition could result in loss of a rotor blade and consequent loss of helicopter control.

Since the NPRM was issued, the FAA's Aircraft Certification Service has changed its organization structure. The new structure replaces product directorates with functional divisions. We have revised some of the office titles and nomenclature throughout this final rule to reflect the new organizational changes. Additional information about the new structure can be found in the Notice published on July 25, 2017 (82 FR 34564).

Ex Parte Contact

On October 25, 2017, after the comment period closed, we had a teleconference with Columbia about Columbia's service information identified in the NPRM. Columbia's comment during this teleconference is addressed below. A summary of this discussion can be found in the rulemaking docket at http://www.regulations.gov in Docket No. FAA-2015-4007.

Comments

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

Request

One commenter supported the actions required by this AD.

Another commenter requested that we provide more information regarding our determination to include all Model CH-47D and Model 234 helicopters in this AD, including the number of hours on the failed Japanese military CH-47 pitch housing. This commenter suggested the failures may be unique to the Model 234 helicopter or may result from factors, such as high speed operations, a corrosive Japanese operating environment, or inaccurate fatigue equations.

We agree to provide additional information regarding our determination. The Japanese military CH-47 pitch housing failure referenced in SAIB SW-11-03 failed due to fatigue cracking initiated by fretting. The event occurred in 2006, and we do not have access to the number of hours on the failed pitch housing. The reported pitch housing lug cracks occurred on both the Model 234 and the Model CH-47D. These models use identical rotor head design and components, including the same part-numbered pitch housings. Therefore, we determined that the life limits for the pitch housings on both models should be the same.

We found no indication that the lug failure resulted from the Japanese operating environment. Investigation of the cracking did not show evidence of damage originating at corrosion sites. The Japanese operating environment is not unique as these aircraft operate worldwide in a variety of conditions. We also found no indications that the failures were due to inaccuracies in the Boeing Model 234 cycle count equations. Our investigation concluded that the original fatigue life evaluation excluded certain loading conditions and resulted in a life limit that was too high.

Tandem Rotor requested the AD not impose a life limit on the forward pitch housing or, alternatively, impose a life limit consistent with the life limit of the MH-47E/G forward pitch housing of 24,975 hours TIS. As part of this request, Tandem Rotor asks us to reconsider the service lives established by Boeing.

We disagree. We reviewed newer analyses than those considered by Boeing, including fatigue loading that was not part of the original design data. These newer analyses show a life limit is required on both the forward and aft pitch housings. This is consistent with SAIB SW-11-03, which included the forward pitch housing despite cracks having only been found in service on the aft pitch housing. The newer analyses do not support the 24,975-hour life limit requested by Tandem Rotor. These helicopters are used in a wide variety of operations. The life limits required by this AD assume more severe usage than the average operator in order to fully cover the range of different operators and usages. Individual operators may request an alternative method of compliance if sufficient data is submitted to substantiate a different life limit because their usage is not as damaging to a particular part.

Tandem Rotor also requested that the repetitive ultrasonic inspection interval be increased from 200 hours to 250 hours TIS to align the inspection with an existing recurring 500-hour eddy current inspection, thus reducing travel costs and simplifying maintenance planning for the technician.

We disagree. We have determined that the 200-hour interval for the inspection represents an appropriate time in which the required actions can be performed in a timely manner within the affected fleet, while still maintaining an adequate level of safety. A 250-hour interval did not yield a sufficient safety margin when considering all usage spectrums in the current fleet.

Columbia requested that we change the AD to make the eddy current inspection requirement the same for all helicopters. In support of its request, Columbia states that its service bulletin is proprietary and should not be incorporated by reference (and thus made publicly available) as an inspection method in the AD.

We agree. The inspection methods in the Columbia service information is specific to Columbia helicopters. Because Columbia is the only operator of its U.S. fleet, we determined there are no other operators that need this information to perform the eddy current inspections. We have changed the AD accordingly.

FAA's Determination

We have reviewed the relevant information, considered the comments received, and determined that an unsafe condition exists and is likely to exist or develop on other products of these same type designs and that air safety and the public interest require adopting the AD with the change previously described. This change will not increase the economic burden on any operator or increase the scope of the AD.

Related Service Information Under 1 CFR Part 51

We reviewed Boeing Service Bulletin 145R2075-62-0001, Revision 1, dated September 27, 2011, which specifies updated life limits for the forward and aft pitch housings and revised overhaul and ultrasonic inspection procedures for various military Model CH-47 and Model 234 helicopters.

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

Other Related Service Information

We also reviewed Columbia Helicopters, Inc. Alert Service Bulletin No. 234-62-A0012, Revision 2, dated March 1, 2016, and Alert Service Bulletin No. 47D-62-A0002, Revision 0, dated March 1, 2016. This service information specifies performing repetitive eddy current inspections, visual inspections, and ultrasonic inspections and for reducing the life limit of the pitch housing assemblies.

Differences Between This AD and the Service Information

The service information provides different life limits for the forward and aft pitch housings, while this AD requires a life limit of 8,200 hours TIS for all pitch housings. The service information requires either an ultrasonic inspection or a dye penetrant inspection as part of the overhaul procedures. The service information specifies different compliance times for the inspections than what this AD requires.

Costs of Compliance

We estimate that this AD affects 15 helicopters of U.S. Registry and that labor costs average $85 per work-hour. Based on these estimates, we expect the following costs:

• An eddy current inspection requires 4 work-hours for a total cost of $340 per helicopter and $5,100 for the U.S. fleet, per inspection cycle.

• An ultrasonic inspection requires 4 work-hours for a total cost of $340 per helicopter and $5,100 for the U.S. fleet, per inspection cycle.

• Replacing a pitch housing requires 8 work-hours and parts cost $13,000, for a total cost of $13,680 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

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

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

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

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

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

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

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

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): 2018-16-11 Various Model 234 and Model CH-47D Helicopters: Amendment 39-19351; Docket No. FAA-2015-4007; Product Identifier 2015-SW-064-AD. (a) Applicability

This AD applies to Model 234 and Model CH-47D helicopters, regardless of type certificate holder, with a pitch housing assembly (pitch housing) part number (P/N) 145R2075-11, 145R2075-12, 145R2075-13, 145R2075-14, 145R2075-15, 145R2075-16, 234R2075-1, or 234R2075-2 installed, certificated in any category.

(b) Unsafe Condition

This AD defines the unsafe condition as a crack in a pitch housing lug. This condition could result in loss of a rotor blade and consequent loss of helicopter control.

(c) Effective Date

This AD becomes effective September 17, 2018.

(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) Before further flight, remove from service any pitch housing P/N 145R2075-11, 145R2075-12, 145R2075-13, 145R2075-14, 145R2075-15, 145R2075-16, 234R2075-1, and 234R2075-2 that has accumulated 8,200 hours total time-in-service (TIS).

(2) Before the pitch housing accumulates 200 hours TIS after the effective date of this AD and thereafter at intervals not to exceed 200 hours TIS, ultrasonic inspect the pitch housing for a crack in accordance with Attachment 1, paragraphs F and H through K, of Boeing Service Bulletin 145R2075-62-0001, Revision 1, dated September 27, 2011. If there is a crack, replace the pitch housing before further flight.

(3) Within 400 hours TIS after the effective date of this AD or before the pitch housing has accumulated 4,000 hours total TIS, whichever occurs later, and thereafter at intervals not to exceed 500 hours TIS, eddy current inspect the pitch housing for a crack. If there is a crack, replace the pitch housing before further flight. The eddy current inspection must be accomplished using a method approved by the Manager, Seattle ACO Branch, or by the Manager, Denver ACO Branch. For a repair method to be approved as required by this AD, the manager's approval letter must specifically refer to this AD.

(f) Alternative Methods of Compliance (AMOCs)

(1) For operators of helicopters with type certificates issued by the Denver Aircraft Certificate Office or ACO Branch, the manager of the Denver ACO Branch, FAA, may approve AMOCs for this AD. Send your proposal to: Greg Johnson, Senior Aerospace Engineer, Denver ACO Branch, Compliance and Airworthiness Division, FAA, 26805 East 68th Avenue, Denver, CO 80249; phone: 303-342-1083; fax: 303-342-1088; email: [email protected]

(2) All other AMOC requests should be sent to the Manager, Seattle ACO Branch, FAA. Send your proposal to: Chris Bonar, Aerospace Engineer, Airframe Section, Seattle ACO Branch, FAA, 2200 S 216th Street, Des Moines, WA 98198; telephone (206) 231-3521; email [email protected]

(3) 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

Special Airworthiness Information Bulletin SW-11-03, dated October 22, 2010 (SAIB); Columbia Helicopters, Inc., Alert Service Bulletin No. 234-62-A0012, Revision 2, dated March 1, 2016; and Columbia Helicopters, Inc., Alert Service Bulletin No. 47D-62-A0002, Revision 0, dated March 1, 2016, which are not incorporated by reference, contain additional information about the subject of this AD. You may view the SAIB on the internet at http://www.regulations.gov in the AD Docket. For Columbia service information identified in this final rule, contact Columbia Helicopters, Inc., 14452 Arndt Road NE, Aurora, OR 97002, telephone (503) 678-1222, fax (503) 678-5841, or at http://www.colheli.com. You may view a copy of the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

(h) Subject

Joint Aircraft Service Component (JASC) Code: 6220, Main Rotor Head.

(i) Material Incorporated by Reference

(1) The Director of the Federal Register approved the incorporation by reference 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) Boeing Service Bulletin 145R2075-62-0001, Revision 1, dated September 27, 2011.

(ii) Reserved.

(3) For Boeing Helicopters service information identified in this AD, contact Boeing Helicopters, The Boeing Company, 1 S. Stewart Avenue, Ridley Park, PA 19078, telephone 610-591-2121.

(4) You may view this service information at FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177. For information on the availability of this material at the FAA, call (817) 222-5110.

(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 Fort Worth, Texas, on July 27, 2018. Scott A. Horn, Deputy Director for Regulatory Operations, Compliance & Airworthiness Division, Aircraft Certification Service.
[FR Doc. 2018-17112 Filed 8-10-18; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF THE INTERIOR National Indian Gaming Commission 25 CFR Part 542 RIN 3141-AA55 Minimum Internal Control Standards AGENCY:

National Indian Gaming Commission, Department of the Interior.

ACTION:

Notification of final rulemaking; stay.

SUMMARY:

The National Indian Gaming Commission (NIGC) is suspending its minimum internal control standards (MICS) for Class III gaming under the Indian Gaming Regulatory Act. Updated guidance for Class III MICS will now be maintained at www.nigc.gov.

DATES:

This rule is effective September 27, 2018. Title 25 CFR part 542 is stayed effective September 27, 2018.

FOR FURTHER INFORMATION CONTACT:

Jennifer Lawson at 202-632-7003 or write to [email protected]

SUPPLEMENTARY INFORMATION:

I. Background

The NIGC Class III MICS were promulgated in 1999 and last substantively revised in 2005. In 2006, the D.C. Circuit Court of Appeals in Colorado River Indian Tribes v. Nat'l Indian Gaming Comm'n, 466 F.3d 134 (CRIT v. NIGC), held that NIGC lacked authority to enforce or promulgate Class III MICS. Since that time, the Class III MICS have remained untouched. Technology has advanced rapidly, though, making some standards obsolete and introducing new areas of risk not contemplated by the outdated standards. And yet, many tribal-state compacts—even those entered into since 2006—continue to adopt NIGC Class III MICS by reference.

II. Development of the Rule

In light of the ruling in CRIT v. NIGC and recognizing the industry's need for updated standards, the NIGC sought comment on what to do with the outdated standards still remaining in the regulations and whether to draft updated, non-binding guidance for Class III MICS. Between 2015 and 2016, over forty tribes provided comment and overwhelmingly supported the NIGC proposal for non-binding guidance. Many also supported keeping the existing 542 regulations in the Code of Federal Regulations, even though they would be unenforceable, to minimize impacts on tribal/state compacts that incorporate them by reference. Additionally, the Commission sent letters to state gaming regulators on June 14, 2017, requesting comment on the draft guidance. One responded with recommendations.

In light of these comments, the Commission has developed non-binding guidance for Class III MICS and is suspending the existing part 542 regulations. Doing so will leave the existing regulations “on the books,” but with an editorial note stating that they are not enforceable. The updated guidance document for Class III MICS is available on the NIGC website at www.nigc.gov. This guidance is not intended to modify or amend any terms in a state compact.

Because the document will be guidance instead of regulations, NIGC will be able to keep it updated and adapt much more quickly to changes in the industry.

III. Regulatory Matters Notice and Comment

Typically, the suspension of Agency regulations would require the Agency to follow the notice and comment process mandated by the Administrative Procedure Act (APA). However, the APA permits agencies to finalize some rules without first publishing a proposed rule in the Federal Register. This exception is limited to cases where the agency has “good cause” to find that the notice-and-comment process would be “impracticable, unnecessary, or contrary to the public interest.” In this case, because the D.C. Circuit has ruled that the NIGC may not enforce its Class III MICS, or even maintain them as agency regulations, the NIGC has good cause to find that the notice and comment period is unnecessary and may directly publish a final rule suspending the Class III MICS regulations. The NIGC did not appeal the Circuit court's decision to the United States Supreme Court, so it is the law of the land and the NIGC has no discretion in regard to following the court's mandates.

Regulatory Flexibility Act

The rule will not have a significant impact on a substantial number of small entities as defined under the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. Moreover, Indian Tribes are not considered to be small entities for the purposes of the Regulatory Flexibility Act.

Small Business Regulatory Enforcement Fairness Act

The rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. The rule does not have an effect on the economy of $100 million or more. The rule will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, local government agencies or geographic regions, nor will the proposed rule have a significant adverse effect on competition, employment, investment, productivity, innovation, or the ability of the enterprises, to compete with foreign based enterprises.

Unfunded Mandate Reform Act

The Commission, as an independent regulatory agency, is exempt from compliance with the Unfunded Mandates Reform Act, 2 U.S.C. 1502(1); 2 U.S.C. 658(1).

Takings

In accordance with Executive Order 12630, the Commission has determined that the rule does not have significant takings implications. A takings implication assessment is not required.

Civil Justice Reform

In accordance with Executive Order 12988, the Commission has determined that the rule does not unduly burden the judicial system and meets the requirements of sections 3(a) and 3(b)(2) of the Order.

National Environmental Policy Act

The Commission has determined that the rule does not constitute a major federal action significantly affecting the quality of the human environment and that no detailed statement is required pursuant to the National Environmental Policy Act of 1969, 42 U.S.C. 4321, et seq.

Paperwork Reduction Act

Suspending part 542 also suspends any information collection requirements contained within. Therefore, no detailed statement is required pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501, et seq.

Tribal Consultation

The National Indian Gaming Commission is committed to fulfilling its tribal consultation obligations—whether directed by statute or administrative action such as Executive Order (E.O.) 13175 (Consultation and Coordination with Indian Tribal Governments)—by adhering to the consultation framework described in its Consultation Policy published July 15, 2013. The NIGC's consultation policy specifies that it will consult with tribes on Commission Action with Tribal Implications, which is defined as: Any Commission regulation, rulemaking, policy, guidance, legislative proposal, or operational activity that may have a substantial direct effect on an Indian tribe on matters including, but not limited to the ability of an Indian tribe to regulate its Indian gaming; an Indian tribe's formal relationship with the Commission; or the consideration of the Commission's trust responsibilities to Indian tribes.

On February 26, 2015, the Commission announced consultation and sought comments over its plans to draft updated, non-mandatory Class III MICS guidance and proposal to withdraw the part 542 regulations. The Commission held four in-person and one telephonic consultation sessions. The consultation and comment period ended on February 23, 2016. Over forty tribes commented on the plan. As a result of the comments, the Commission, on November 22, 2016, announced its proposal to suspend the part 542 regulations and issue updated, non-mandatory Class III MICS guidance. The Commission developed and shared a draft of the guidance and held six in-person consultation sessions. The Commission received comments through July 2017.

List of Subjects in 25 CFR Part 542

Accounting, Administrative practice and procedure, Gambling, Indian—Indian lands, Reporting and recordkeeping requirements.

For the reasons discussed in the preamble, the Commission amends 25 CFR part 542 as follows:

PART 542—MINIMUM INTERNAL CONTROL STANDARDS 1. The authority for part 542 is revised to read as follows: Authority:

25 U.S.C. 2706(b)(10).

2. Section 542.1 is revised to read as follows:
§ 542.1 What does this part cover?

(a) This part previously established the minimum internal control standards for gaming operations on Indian land.

(b) This part is suspended pursuant to the decision in Colorado River Indian Tribes v. Nat'l Indian Gaming Comm'n, 466 F.3d 134 (D.C. Cir. 2006). Updated non-binding guidance on Class III Minimum Internal Control Standards may be found at www.nigc.gov.

3. Effective September 27, 2018, part 542 is stayed. Dated: July 18, 2018. Jonodev O. Chaudhuri, Chairman. Dated: July 18, 2018. Kathryn Isom-Clause, Vice Chair.
[FR Doc. 2018-16254 Filed 8-10-18; 8:45 am] BILLING CODE 7565-01-P
DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 100 [Docket No. USCG-2018-0725] Special Local Regulations; Marine Events Within the Fifth Coast Guard District AGENCY:

Coast Guard, DHS.

ACTION:

Notice of enforcement of regulation.

SUMMARY:

The Coast Guard will enforce special local regulations for the Baltimore Air Show from October 4, 2018, through October 7, 2018, to provide for the safety of life on navigable waterways during the event. Our regulation for marine events within the Fifth Coast Guard District identifies the regulated area for the event. During the enforcement period, the Coast Guard patrol commander or designated marine event patrol may forbid and control the movement of all vessels in the regulated area.

DATES:

The regulations in 33 CFR 100.501 will be enforced for the Baltimore Air Show regulated area listed in item b.23 in the table to § 100.501 from 11 a.m. through 5 p.m. on October 4, 2018, from 10:30 a.m. through 5 p.m. on October 5, 2018, from 11 a.m. through 5 p.m. on October 6, 2018, and from 11 a.m. through 5 p.m. on October 7, 2018.

FOR FURTHER INFORMATION CONTACT:

If you have questions about this notice of enforcement, call or email Mr. Ron Houck, U.S. Coast Guard Sector Maryland-National Capital Region (WWM Division); telephone 410-576-2674, email [email protected]

SUPPLEMENTARY INFORMATION:

The Coast Guard was notified by the Historic Ships in Baltimore, Inc., on February 6, 2018, through submission of a marine event application that, due to a scheduling change, a change of dates is necessary to the dates previously published in the Code of Federal Regulations (CFR) for the biennially scheduled Baltimore Air Show, as listed in the table to 33 CFR 100.501. The date of the event for this year is changed to October 4, 2018, through October 7, 2018. The Coast Guard will enforce the special local regulations in 33 CFR 100.501 for the Baltimore Air Show regulated area from 11 a.m. through 5 p.m. on October 4, 2018, from 10:30 a.m. through 5 p.m. on October 5, 2018, from 11 a.m. through 5 p.m. on October 6, 2018, and from 11 a.m. through 5 p.m. on October 7, 2018. Our regulation for marine events within the Fifth Coast Guard District, § 100.501, specifies the location of the regulated area for the Baltimore Air Show, which encompasses portions of the Patapsco River, at Baltimore, MD.

This action is being taken to provide for the safety of life on navigable waterways during the event. As specified in § 100.501(c), during the enforcement period, the Coast Guard patrol commander or designated marine event patrol may forbid and control the movement of all vessels in the regulated area. Vessel operators may request permission to enter and transit through a regulated area by contacting the Coast Guard patrol commander on VHF-FM channel 16.

In addition to this notice of enforcement in the Federal Register, the Coast Guard plans to provide notification of this enforcement period via the Local Notice to Mariners and marine information broadcasts.

Dated: August 7, 2018. Joseph B. Loring, Captain, U.S. Coast Guard, Captain of the Port Maryland-National Capital Region.
[FR Doc. 2018-17282 Filed 8-10-18; 8:45 am] BILLING CODE 9110-04-P
DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [Docket No. USCG-2018-0091] Drawbridge Operation Regulation; Petaluma River, Haystack Landing (Petaluma), CA AGENCY:

Coast Guard, DHS.

ACTION:

Notice of temporary deviation from regulations; request for comments.

SUMMARY:

The Coast Guard has issued a temporary deviation from the operating schedule that governs the Northwestern Pacific (SMART) railroad bridge across the Petaluma River, mile 12.4, at Haystack Landing (Petaluma), CA. This deviation will be a second test of a change to the drawbridge operation schedule to determine whether a permanent change to the schedule is appropriate. This test deviation will modify the existing regulation to add an advance notification requirement for obtaining bridge openings.

DATES:

This deviation is effective from 6 a.m. on August 20, 2018 to 6 a.m. on October 18, 2018.

Comments and related materials must reach the Coast Guard on or before November 1, 2018.

ADDRESSES:

You may submit comments identified by docket number USCG-2018-0091 using Federal eRulemaking Portal at http://www.regulations.gov.

See the “Public Participation and Request for Comments” portion of the SUPPLEMENTARY INFORMATION section below for instructions on submitting comments.

FOR FURTHER INFORMATION CONTACT:

If you have questions on this test deviation, call or email Carl T. Hausner, Chief, Bridge Section, Eleventh Coast Guard District; telephone 510-437-3516; email [email protected]

SUPPLEMENTARY INFORMATION:

I. Background, Purpose and Legal Basis

On March 2, 2018, the Coast Guard published a Test Deviation entitled Petaluma River, Haystack Landing (Petaluma), CA in the Federal Register (83 FR 8936). We received five comments on this rule. Four of the five comments submitted, concerning the test deviation, addressed the 2-hour advance notification. The commenters stated that the lengthy advance notification would be a burden on waterway users. The fifth comment was directed at the structural deficiency of a number of dams in the United States; this comment is not pertinent to this deviation.

Sonoma-Marin Area Rail Transit (SMART) owns the Northwestern Pacific railroad bridge across the Petaluma River, mile 12.4, at Haystack Landing (Petaluma), CA. The bridge has a vertical clearance of 3.6 feet above mean high water in the closed-to-navigation position and unlimited vertical clearance in the open-to-navigation position, and currently operates under 33 CFR 117.187(a).

The duration of this initial test deviation was 90 days. During this initial test, according to drawtender logs, 96 vessels requested openings and passed through the bridge. At no time was a 2-hour notice given to the drawtender and in only one instance was a one-hour advance notice given. In all other instances, a notification of 30 minutes or less was given to the drawtender and the bridge opened for the passage of those vessels. The Coast Guard received five comments, via the Federal eRulemaking Portal, related to the initial test deviation. Four of the five comments indicated the 2-hour notice would be a burden on waterway users.

In order to meet the reasonable needs of navigation, while benefiting rail transportation, the Coast Guard is publishing this alternate temporary deviation to the proposed schedule change to determine whether a permanent change to the schedule is appropriate to better balance the needs of marine and rail traffic.

Under this temporary deviation, in effect from 6 a.m. on August 20, 2018 to 6 a.m. on October 18, 2018, the bridge shall open on signal from 3 a.m. to 11 p.m. if at least 30 minutes notice is given to the drawtender. At all other times, the draw shall be maintained in the fully open position, except for the passage of trains or for maintenance. To request an opening, mariners can contact the drawtender via marine radio VHF-FM channel 16/9 or by telephone at (707) 890-8650. Vessels able to pass through the bridge in the closed position may do so at any time. The bridge will be required to open as soon as practicable for vessels engaged in emergency response. SMART will log dates and times of vessels requesting openings. There are no alternate routes for vessels transiting upstream of the bridge on the Petaluma River.

The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners and through direct outreach to local harbors, marinas, and water-based business of the temporary change in the operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.

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

II. Public Participation and Request for Comments

We view public participation as essential to effective rulemaking, and will consider all comments and materials received during the comment period. Your comments can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, visit http://www.regulations.gov/privacynotice.

Documents mentioned in this notice as being available in this docket and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that website's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

Dated: August 7, 2018. Carl T. Hausner, District Bridge Chief, Eleventh Coast Guard District.
[FR Doc. 2018-17234 Filed 8-10-18; 8:45 am] BILLING CODE 9110-04-P
DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [Docket No. USCG-2018-0512] RIN 1625-AA09 Drawbridge Operation Regulation; Chevron Oil Company Canal, Fourchon, LA AGENCY:

Coast Guard, DHS.

ACTION:

Final rule.

SUMMARY:

The Coast Guard is removing the existing drawbridge operation regulation for the State Route (SR) 3090 Bridge, mile 0.05, across the Chevron Oil Company Canal, at Fourchon, Lafourche Parish, LA. The drawbridge was removed in May 7, 2018 and the operating regulation is no longer applicable or necessary.

DATES:

This rule is effective August 13, 2018.

ADDRESSES:

To view documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov, type USCG-2018-0512. In the “SEARCH” box and click “SEARCH.” Click on Open Docket Folder on the line associated with this rulemaking.

FOR FURTHER INFORMATION CONTACT:

If you have questions on this rule, call or email Ms. Donna Gagliano, Bridge Branch Office, Eighth District, U.S. Coast Guard; telephone 504-671-2128, email [email protected]

SUPPLEMENTARY INFORMATION:

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

The Coast Guard is issuing this final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(3)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because the State Route (SR) 3090 Bridge, mile 0.05, across the Chevron Oil Company Canal, at Fourchon, Lafourche Parish, LA (SR 3090 Bridge), that once required draw operations in 33 CFR 117.437, was removed from the waterway. Therefore, the regulation is no longer applicable and shall be removed from publication. It is unnecessary to publish an NPRM because this regulatory action does not purport to place any restrictions on mariners but rather removes a restriction that has no further use or value.

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

III. Legal Authority and Need for Rule

The Coast Guard is issuing this rule under authority 33 U.S.C. 499.

On May 7, 2018, the SR 3090 Bridge, mile 0.05, across the Chevron Oil Company Canal, at Fourchon, Lafourche Parish, LA was removed in its entirety. It has come to the attention of the Coast Guard that the governing regulation for this drawbridge was never removed subsequent to the removal of the drawbridge completion. The elimination of this drawbridge necessitates the removal of the drawbridge operation regulation, 33 CFR 117.437, which pertained to the former drawbridge.

The purpose of this rule is to remove 33 CFR 117.437 that refers to the Chevron Oil Company Canal, SR 3090 Bridge, mile 0.05, from the Code of Federal Regulations because it governs a bridge that is no longer in existence.

IV. Discussion of Final Rule

The Coast Guard is removing the regulation in 33 CFR 117.437 and the regulatory burden related to the draw operations for this bridge that is no longer in existence. This change does not affect waterway or land traffic.

V. Regulatory Analyses

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

A. Regulatory Planning and Review

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

This regulatory action determination is based on the fact that the bridge was removed from the waterway and no longer operates as a drawbridge. The removal of the operating schedule from 33 CFR 117 Subpart B will have no effect on the movement of waterway or land traffic.

B. Impact on Small Entities

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

For the reasons stated in section IV.A above this final rule would not have a significant economic impact on any vessel owner or operator.

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

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

C. Collection of Information

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

D. Federalism and Indian Tribal Government

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

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

E. Unfunded Mandates Reform Act

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

F. Environment

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This rule simply removes the operating regulations or procedures for a drawbridge no longer in existence. This action is categorically excluded from further review, under figure 2-1, paragraph (32)(e), of the Instruction.

A Record of Environmental Consideration and a Memorandum for the Record are not required for this rule.

G. Protest Activities

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

List of Subjects in 33 CFR Part 117

Bridges.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows:

PART 117—DRAWBRIDGE OPERATION REGULATIONS 1. The authority citation for part 117 continues to read as follows: Authority:

33 U.S.C. 499; 33 CFR 1.05-1; Department of Homeland Security Delegation No. 0170.1.

§ 117.437 [Removed]
2. Remove § 117.437. Dated: July 30, 2018. Paul F. Thomas, Rear Admiral, U.S. Coast Guard, Commander, Eighth Coast Guard District.
[FR Doc. 2018-17271 Filed 8-10-18; 8:45 am] BILLING CODE 9110-04-P
DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [Docket Number USCG-2018-0372] RIN 1625-AA00 Safety Zone; Lower Mississippi River, Mile Markers 94 to 97 Above Head of Passes, New Orleans, LA AGENCY:

Coast Guard, DHS.

ACTION:

Final rule.

SUMMARY:

The Coast Guard is establishing a permanent safety zone for the navigable waters of the Lower Mississippi River between mile marker (MM) 94 and MM 97, above Head of Passes. This action is necessary to provide for the safety of life on these navigable waters during firework displays. This regulation prohibits vessels from entering the safety zone before, during, and after the firework displays unless authorized by the Captain of the Port Sector New Orleans or a designated representative.

DATES:

This rule is effective September 12, 2018.

ADDRESSES:

To view documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov, type USCG-2018-0372 in the “SEARCH” box and click “SEARCH.” Click on Open Docket Folder on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT:

If you have questions about this proposed rulemaking, call or email Lieutenant Commander Benjamin Morgan, Sector New Orleans, U.S. Coast Guard; telephone 504-365-2231, email [email protected].

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

The Coast Guard Captain of the Port Sector New Orleans (COTP) is establishing a permanent safety zone on the Lower Mississippi River in order to better provide for the safety of life on these navigable waters during firework displays. The COTP has determined that a large and increasing volume of the firework displays occurring within Sector New Orleans' area of responsibility take place at locations between mile markers (MMs) 94 and 97 above Head of Passes on the Lower Mississippi River. Many of these events recur annually and are listed in Table 5 of 33 CFR 165.801 titled Sector New Orleans Annual and Recurring Safety Zones. However, a substantial and increasing number of these firework displays are one-time events associated with conventions, weddings, festivals, etc. By creating a permanent safety zone that can be enforced through a notice of enforcement, the COTP can more efficiently provide for the safety of life on these navigable waters. Therefore, on June 18, 2018, the Coast Guard published a notice of proposed rulemaking (NPRM) titled Safety Zone; Lower Mississippi River, Mile Markers 94 to 97 Above Head of Passes, New Orleans, LA (83 FR 28175). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to this fireworks display safety zone. During the comment period that ended on July 18, 2018, we received two comments.

III. Legal Authority and Need for Rule

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The COTP has determined that a permanent safety zone that can be enforced as necessary for fireworks displays will better allow the COTP to provide for the safety of life. A large and increasing number of marine events has been occurring on the Lower Mississippi River, with the bulk of the events occurring within the same three-mile stretch of river. This rule allows for more timely and efficient responses to these requests and will also greatly reduce the administrative burden the COTP encounters with establishing individual safety zones for these various events. The purpose of this rulemaking is to ensure the safety of life on these navigable waters within this three-mile segment of the Lower Mississippi River before, during, and after firework displays. Potential hazards associated with firework displays include the accidental discharge of fireworks, dangerous projectiles, and falling embers and other debris.

IV. Discussion of Comments, Changes, and the Rule

As noted above, we received two comments on our NPRM published on June 18, 2018. One comment was unrelated to the rule. The second comment requested that the regulatory text include geographic coordinates in degrees-minutes-seconds with an associated horizontal datum in order to accurately depict the safety zone boundaries on NOAA nautical charts. The Coast Guard agrees that the requested information would be helpful for NOAA and the public to identify the boundaries of the zone. The regulatory text of this final rule has been updated to include this information.

This rule establishes a permanent safety zone between mile marker (MM) 94 (29°57′32″ N, 90°03′05″ W) and MM 97 (29°55′19″ N, 90°04′00″ W), NAD83 datum, on the Lower Mississippi River, above Head of Passes. While this zone encompasses a three-mile section of the waterway, the COTP will limit the enforcement of the zone only to the areas necessary for the protection of life on these navigable waters before, during, and after firework displays. No vessel or person is permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. A designated representative means any Coast Guard commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to units under the operational control of USCG Sector New Orleans. Persons and vessels requiring entry into this proposed safety zone must request permission from the COTP or a designated representative. They may be contacted on VHF-FM Channel 16 or 67 or by telephone at (504) 365-2200. Persons and vessels permitted to enter the safety zone must transit at their slowest safe speed and comply with all lawful directions issued by the COTP or the designated representative.

In accordance with 33 CFR 165.7, for each enforcement of the safety zone established under this proposed rule, the COTP will publish a notice of enforcement in the Federal Register as early as practicable. The COTP or a designated representative will inform the public of the enforcement area and period of this safety zone through Vessel Traffic Service Advisories, Broadcast Notices to Mariners (BNMs), Local Notice to Mariners (LNMs), and/or Marine Safety Information Bulletins (MSIBs) as appropriate.

V. Regulatory Analyses

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

A. Regulatory Planning and Review

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

This regulatory action determination is based on the size, duration, and location of the safety zone. While this zone would be permanent, it would only be enforced on an as needed basis to better regulate marine events in the area. This typically encompasses one-hour operations for a one-mile portion of the waterway.

B. Impact on Small Entities

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

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

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

C. Collection of Information

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

D. Federalism and Indian Tribal Governments

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

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

E. Unfunded Mandates Reform Act

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

F. Environment

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969(42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves establishing a safety zone on the Lower Mississippi River, mile marker (MM) 94 to MM 97. While this zone will be permanent, it will only be subject to enforcement on an as-needed basis. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES.

G. Protest Activities

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

List of Subjects in 33 CFR Part 165

Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.

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

PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS 1. The authority citation for part 165 continues to read as follows: Authority:

33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.

2. Add § 165.845 above the center heading “Ninth Coast Guard District” to read as follows:
§ 165.845 Safety Zone; Lower Mississippi River, mile markers 94 to 97 above Head of Passes, New Orleans, LA.

(a) Location. The following area is a safety zone: All navigable waters of the Lower Mississippi River, New Orleans, LA from mile marker (MM) 94 (29°57′32″ N, 90°03′05″ W) to MM 97 (29°55′19″ N, 90°04′00″ W), NAD83 datum, on the Lower Mississippi River, above Head of Passes.

(b) Enforcement period. The safety zone established by this section will be enforced only upon notice of the Captain of the Port Sector New Orleans (COTP). In accordance with 33 CFR 165.7, for each enforcement of a safety zone established under this section, the COTP will publish a notice of enforcement in the Federal Register as early as practicable. In addition, the COTP will also inform the public of the enforcement area and times of this section as indicated in paragraph (d) of this section.

(c) Regulations. (1) In accordance with the general regulations in § 165.23 of this part, entry into this zone is prohibited to all vessels and persons except vessels authorized by the COTP or designated representative. A designated representative means any Coast Guard commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to units under the operational control of Sector New Orleans.

(2) Persons and vessels requiring entry into this safety zone must request permission from the COTP or a designated representative. They may be contacted on VHF-FM Channel 16 or 67 or by telephone at (504) 365-2200.

(3) Persons and vessels permitted to enter this safety zone must transit at their slowest safe speed and comply with all lawful directions issued by the COTP or the designated representative.

(d) Information broadcasts. The COTP or a designated representative will inform the public of the enforcement period of this safety zone through Vessel Traffic Service Advisories, Broadcast Notices to Mariners (BNMs), Local Notice to Mariners (LNMs), and/or Marine Safety Information Bulletins (MSIBs) as appropriate.

Dated: August 6, 2018. K.M. Luttrell, Captain, U.S. Coast Guard, Captain of the Port Sector New Orleans.
[FR Doc. 2018-17263 Filed 8-10-18; 8:45 am] BILLING CODE 9110-04-P
DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [Docket Number USCG-2018-0718] RIN 1625-AA00 Safety Zone; Allegheny River, Miles 43.5 to 45.5, Kittanning, PA AGENCY:

Coast Guard, DHS.

ACTION:

Temporary final rule.

SUMMARY:

The Coast Guard is establishing a temporary safety zone for all navigable waters of the Allegheny River, extending the entire width of the river, from mile marker (MM) 43.5 to MM 45.5. This safety zone is necessary to protect persons, property, and the marine environment from potential hazards associated with a boat race. Entry of persons or vessels into this zone is prohibited unless authorized by the Captain of the Port Marine Safety Unit Pittsburgh or a designated representative.

DATES:

This rule is effective each day from 9 a.m. to 8 p.m. from August 17, 2018, through August 19, 2018.

ADDRESSES:

To view documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov, type USCG-2018-0718 in the “SEARCH” box and click “SEARCH.” Click on Open Docket Folder on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT:

If you have questions on this rule, call or email Petty Officer Charles Morris, Marine Safety Unit Pittsburgh, U.S. Coast Guard; telephone 412-221-0807, email [email protected]

SUPPLEMENTARY INFORMATION:

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

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(3)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. This safety zone must be established by August 17, 2018 and we lack sufficient time to provide a reasonable comment period and then consider those comments before issuing this rule. The NPRM process would delay the establishment of the safety zone until after the date of the boat race and compromise public safety.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register. Delaying this rule would be contrary to the public interest because immediate action is necessary to respond to the potential safety hazards associated with this boat race.

III. Legal Authority and Need for Rule

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port Marine Safety Unit Pittsburgh (COTP) has determined that potential hazards associated with this boat race will be a safety hazard for anyone within a two-mile stretch of the Allegheny River. The rule is needed to protect persons, property, and the marine environment in the navigable waters within the safety zone before, during, and after the boat race.

IV. Discussion of the Rule

This rule establishes a safety zone from 9 a.m. on August 17, 2018 through 8 p.m. on August 19, 2018. The safety zone will be enforced each day during the effective period from 9 a.m. through 8 p.m. The safety zone will cover all navigable waters of the Allegheny River, extending the entire width of the river, from mile marker (MM) 43.5 to MM 45.5. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters before, during, and after the boat race. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. A designated representative is a commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to units under the operational control of USCG Marine Safety Unit Pittsburgh. Persons and vessels seeking entry into this safety zone must request permission from the COTP or a designated representative. They may be contacted on VHF-FM Channel 16 or by telephone at (412) 221-0807. Persons and vessels permitted to enter this safety zone must transit at their slowest safe speed and comply with all lawful instructions of the COTP or a designated representative. The COTP or a designated representative will inform the public of the enforcement period for the safety zone as well as any changes in the schedule through Broadcast Notices to Mariners (BNMs), Local Notices to Mariners (LNMs), and/or Marine Safety Information Broadcasts (MSIBs) as appropriate.

V. Regulatory Analyses

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

A. Regulatory Planning and Review

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

This regulatory action determination is based on the size, time, duration, and location of the safety zone. This safety zone encompasses a two-mile stretch of the Allegheny River for eleven hours on each of three days. Moreover, the Coast Guard will issue a Broadcast Notice to Mariners (BNMs) via VHF-FM marine channel 16 about the zone, and the rule allows vessels to seek permission to enter the zone.

B. Impact on Small Entities

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

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

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

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

C. Collection of Information

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

D. Federalism and Indian Tribal Governments

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

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

E. Unfunded Mandates Reform Act

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

F. Environment

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting eleven hours that will prohibit entry on a two-mile stretch of the Allegheny River on each of three days. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES.

G. Protest Activities

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

List of Subjects in 33 CFR Part 165

Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.

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

PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS 1. The authority citation for part 165 continues to read as follows: Authority:

33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.

2. Add § 165.T08-0718 to read as follows:
§ 165.T08-0718 Safety Zone; Allegheny River, miles 43.5 to 45.5, Kittanning, PA.

(a) Location. The following area is a safety zone: All navigable waters of the Allegheny River, extending the entire width of the river, from mile marker (MM) 43.5 to MM 45.5.

(b) Effective period. This section is effective each day from 9 a.m. through 8 p.m. August 17, 2018 through August 19, 2018.

(c) Regulations. (1) In accordance with the general regulations in § 165.23, entry into this zone is prohibited unless authorized by the Captain of the Port Marine Safety Unit Pittsburgh (COTP) or a designated representative. A designated representative is a commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to units under the operational control of USCG Marine Safety Unit Pittsburgh.

(2) Persons and vessels seeking entry into this safety zone must request permission from the COTP or a designated representative. They may be contacted on VHF-FM Channel 16 or by telephone at (412) 221-0807.

(3) Persons and vessels permitted to enter this safety zone must transit at their slowest safe speed and comply with all lawful instructions of the COTP or a designated representative.

(e) Informational broadcasts. The COTP or a designated representative will inform the public of the enforcement period for the safety zone as well as any changes in the schedule through Broadcast Notices to Mariners (BNMs), Local Notices to Mariners (LNMs), and/or Marine Safety Information Broadcasts (MSIBs) as appropriate.

Dated: August 6, 2018. F.M. Smith, Lieutenant Commander, U.S. Coast Guard, Acting Captain of the Port Marine Safety Unit Pittsburgh.
[FR Doc. 2018-17262 Filed 8-10-18; 8:45 am] BILLING CODE 9110-04-P
DEPARTMENT OF VETERANS AFFAIRS 38 CFR Part 3 RIN 2900-AQ10 Automatic Burial Benefits for Previously Unestablished Surviving Spouses AGENCY:

Department of Veterans Affairs.

ACTION:

Final rule.

SUMMARY:

This final rule amends the Department of Veterans Affairs (VA) regulation governing persons who may receive VA burial benefits on behalf of a deceased veteran. As amended, the regulation reflects VA's current policy of paying an automatic burial benefit to surviving spouses who were not established in VA systems as a veteran's spouse at the time of the veteran's death. The intended effect of this amendment is to ensure that a veteran's surviving spouse receives burial benefits to which he or she is entitled at the earliest possible time.

DATES:

This final rule is effective August 13, 2018.

FOR FURTHER INFORMATION CONTACT:

Julieann (Jewels) Brantseg, Pension Analyst, Pension and Fiduciary Service, Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Ave. NW, Washington, DC 20420, (202) 632-8863. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION:

This final rule amends the VA regulation regarding persons who may receive burial benefits, paid by the Veterans Benefits Administration (VBA), to ensure that the regulation properly reflects current VBA policy. On June 6, 2014, VA published in the Federal Register final burial regulations that permit VBA to automate certain burial allowance payments, pay flat-rate burial and plot or interment allowances, and establish priority of payments to certain survivors and estate representatives. Burial Benefits, 79 FR 32653. The revised burial regulations became effective July 7, 2014. See 79 FR 32653.

Burial regulations at 38 CFR 3.1700 through 3.1713 streamlined VBA's burial benefits program to ensure that VBA quickly, efficiently, and accurately delivers benefits to survivors and other individuals who incur the cost of a veteran's burial and funeral. The regulations established rules for the automatic payment of burial allowances that facilitated payment to many surviving spouses at the time VA updates its computer system to reflect the veteran's date of death. Other individuals seeking reimbursement for burial expenses are paid on a first-to-file basis.

On December 16, 2016, Congress enacted Public Law 114-315, Sec. 101, which authorized VA to pay benefits under 38 U.S.C. chapters 13 and 15 and sections 2302, 2307, and 5121 “to a survivor of a veteran who has not filed a formal claim if [VA] determines that the record contains sufficient evidence to establish the entitlement of the survivor to such benefits.” See 38 U.S.C. 5101(a)(1)(B). This new statutory provision essentially affirmed VA's practice of providing automatic burial payments to surviving spouses under the current regulation. This rule brings about a procedural change that would allow VA to provide automatic burial payments to other surviving spouses whom VA determines are entitled to such benefits based on the record at the time VA updates its computer system to reflect the veteran's death, which we believe is consistent with the intent of section 5101(a)(1)(B).

Therefore, at this time, we amend 38 CFR 3.1702, which pertains to persons who may receive burial benefits and the priority of payments. The change in this final rule reflects the intent of the original amendments—to expedite the payment of these small, one-time benefit payments to survivors who generally have an immediate need for supplemental financial assistance after the veteran's death.

We amend § 3.1702(a), which permits VA to make automatic burial benefit payments to a deceased veteran's surviving spouse when VA is able to determine eligibility based on evidence of record at the time VA updates its computer system to reflect the veteran's date of death. We amend paragraph (a) to specifically state that a surviving spouse may receive an automatic burial benefit under certain circumstances, whether or not previously established as a dependent spouse on the veteran's compensation or pension award at the time of the veteran's death. There are several reasons why VA systems may not reflect the existence of a spouse at the time of a veteran's death even though a spouse does, in fact, exist. This could occur if a veteran was receiving disability compensation but was rated less than 30-percent disabled under the rating schedule. Such veterans with a service-connected disability rating of less than 30 percent are not entitled to additional compensation for spouses. See 38 U.S.C. 1115. It could also occur if a veteran has never claimed his or her spouse as a dependent. In addition, VA systems could show a spouse who is not the current spouse. This could occur if VA was never notified that the veteran's dependency status had changed. The amended regulation clarifies that VBA may pay the automatic burial benefit to an eligible surviving spouse when, at the time VA updates its computer system to reflect the veteran's date of death, VA knows of or is informed of the existence of the surviving spouse, can establish the individual's dependent status as the veteran's surviving spouse in accordance with § 3.204 (when applicable), and is able to determine burial benefits eligibility based on evidence of record at the time VA updates its computer system to reflect the veteran's date of death.

At this time, VA systems only permit automatic payments to surviving spouses. In the future, VA may consider making automatic payments to other persons.

Administrative Procedure Act

This rule reflects VA's current practice and effectuates a procedural change to VA's final burial regulations published on June 6, 2014, to establish a uniform process for providing automatic burial payments to all surviving spouses. The lack of documentation of a dependent spouse in VA's system at the time of the veteran's death should not impose additional procedural requirements on those individuals when applying for burial benefits established under the regulations.

This rule does not make any substantive policy change or impose new rights, duties, or obligations on affected individuals but simply reflects VA's existing policy and effectuates a procedural change to VA's final burial regulations published on June 6, 2014, to ensure uniform procedures for eligible surviving spouses to receive burial allowance payments faster. In other words, this rule does not expand the class of individuals eligible for burial allowance payments but merely ensures faster payment of the burial allowance to surviving spouses who otherwise would have to submit an application for the burial allowance. Also, this rule does not adversely impact surviving spouses who would have been eligible for automatic payment under the 2014 amendments; we contemplate that all such individuals would also qualify for such payments under this rule. As a rule of agency procedure or practice, this rule is exempt under 5 U.S.C. 553(b)(A) from the prior notice-and-comment requirements of 5 U.S.C. 553. Also, this rule is exempt from the delayed effective date requirement under 5 U.S.C. 553(d) because it is a procedural rule and, alternatively, because this rule is beneficial to surviving spouses at a time of need, pursuant to 5 U.S.C. 553(d)(3), VA finds good cause to make the amendments effective on the date of publication.

Paperwork Reduction Act

Section 3.1703 contains an information collection approved by the Office of Management and Budget (OMB) under OMB control number 2900-0003. This final rule does not contain any provisions constituting an additional collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) and does not alter the existing information collection contained in § 3.1703; rather, the final rule merely provides that VA may grant benefits in certain cases even if the claimant has not filed an application under the existing information collection.

Executive Orders 12866, 13563, and 13771

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,” which requires review by OMB, 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 website at http://www.va.gov/orpm by following the link for “VA Regulations Published from FY 2004 through Fiscal Year to Date.” This rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.

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 final rule will have no such effect on State, local, and tribal governments, or on the private sector.

Regulatory Flexibility Act

The Secretary hereby certifies that this final rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601-612. This final rule will not directly affect any small entities; only individuals will be directly affected. 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.

Catalog of Federal Domestic Assistance

The Catalog of Federal Domestic Assistance number and title for the program affected by this rulemaking is 64.101, Burial Expenses Allowance for Veterans.

List of Subjects in 38 CFR Part 3

Administrative practice and procedure, Claims, Disability benefits, Health care, Pensions, Radioactive materials, Veterans, Vietnam.

Signing Authority

The Secretary of Veterans Affairs 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. Robert L. Wilkie, Secretary, Department of Veterans Affairs, approved this document on August 6, 2018, for publication.

Dated: August 6, 2018. Jeffrey M. Martin, Impact Analyst, Office of Regulation Policy & Management, Office of the Secretary, Department of Veterans Affairs.

For reasons set out in the preamble, the Department of Veterans Affairs amends 38 CFR part 3 as follows:

PART 3—ADJUDICATION Subpart A—Pension, Compensation, and Dependency and Indemnity Compensation 1. The authority citation for part 3, subpart A continues to read as follows: Authority:

38 U.S.C. 501(a), unless otherwise noted.

2. Amend § 3.1702 by revising paragraph (a) to read as follows:
§ 3.1702 Persons who may receive burial benefits; priority of payments.

(a) Automatic payments to surviving spouses of eligible deceased veterans. (1) On or after July 7, 2014, VA may automatically pay a burial benefit to an eligible veteran's surviving spouse, whether or not previously established as a dependent spouse on the deceased veteran's compensation or pension award, when VA knows of or is informed of the existence of the surviving spouse, can establish the surviving spouse's relationship under § 3.204 (when applicable), and is able to determine burial benefits eligibility based on evidence of record at the time VA updates its computer system to reflect the veteran's date of death.

(2) VA may grant additional burial benefits, including the plot or interment allowance, reimbursement for transportation, and the service-connected burial allowance under § 3.1704, to the surviving spouse or any other eligible person in accordance with paragraph (b) of this section and based on a claim described in § 3.1703.

[FR Doc. 2018-17274 Filed 8-10-18; 8:45 am] BILLING CODE 8320-01-P
ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R01-OAR-2018-0098; A-1-FRL-9981-55—Region 1] Air Plan Approval; Rhode Island; Control of Volatile Organic Compound Emissions, Control of Nitrogen Oxide Emissions, and Sulfur Content of Fuels AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

The Environmental Protection Agency (EPA) is approving a State Implementation Plan (SIP) revision submitted by the State of Rhode Island. This revision updates Rhode Island Air Pollution Control Regulations (APCRs) for volatile organic compound (VOC) emissions, nitrogen oxide (NOX) emissions, sulfur content in fuel requirements and associated general definitions. The intended effect of this action is to approve the revised regulations. This action is being taken under the Clean Air Act.

DATES:

This rule is effective September 12, 2018.

ADDRESSES:

EPA has established a docket for this action under Docket Identification No. EPA-R01-OAR-2018-0098. All documents in the docket are listed on the https://www.regulations.gov website. Although listed in the index, some information is not publicly available, i.e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available at https://www.regulations.gov or at the U.S. Environmental Protection Agency, EPA Region 1, Office of Ecosystem Protection, Air Quality Planning Unit, 5 Post Office Square—Suite 100, Boston, MA. EPA requests that if at all possible, you contact the contact listed in the FOR FURTHER INFORMATION CONTACT section to schedule your inspection. The Regional Office's official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding legal holidays.

FOR FURTHER INFORMATION CONTACT:

David L. Mackintosh, Air Quality Planning Unit, U.S. Environmental Protection Agency, EPA Region 1, 5 Post Office Square—Suite 100, (Mail code OEP05-2), Boston, MA 02109-3912, tel. 617-918-1584, email [email protected]

SUPPLEMENTARY INFORMATION:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

Table of Contents I. Background and Purpose II. Response to Comments III. Final Action IV. Incorporation by Reference V. Statutory and Executive Order Reviews I. Background and Purpose

On June 15, 2018 (83 FR 25981), EPA issued a notice of proposed rulemaking (NPRM) for the State of Rhode Island. In the NPRM, EPA proposed approval of SIP revisions submitted by the Rhode Island Department of Environmental Management (RI DEM) on February 10, 2017. This SIP submittal included six revised Air Pollution Control Regulations (APCRs): No. 8, “Sulfur Content of Fuels;” No. 19, “Control of Volatile Organic Compounds from Surface Coating Operations;” No. 27, “Control of Nitrogen Oxides Emissions;” No. 35, “Control of Volatile Organic Compounds and Volatile Hazardous Air Pollutants from Wood Products Manufacturing Operations;” No. 36, “Control of Emissions from Organic Solvent Cleaning;” and General Definitions.

The NPRM provides the rationale for EPA's proposed approval, which will not be restated here.

II. Response to Comments

EPA received two anonymous comments in response to the notice of proposed rulemaking. The comments address subjects outside the scope of the proposed action, did not explain (or provide a legal basis for) how the proposed action should differ in any way, and made no specific mention of the proposed action. Therefore, the comments are not germane and EPA provides no further response.

III. Final Action

EPA is approving the February 10, 2017 RI DEM SIP submittal consisting of the six revised APCRs: No. 8, “Sulfur Content of Fuels” (with the exception of sections 8.7 and 8.8.3); No. 19, “Control of Volatile Organic Compounds from Surface Coating Operations” (with the exception of sections 19.2.2 and 19.9.2); No. 27, “Control of Nitrogen Oxides Emissions” (with the exception of section 27.7.3); No. 35, “Control of Volatile Organic Compounds and Volatile Hazardous Air Pollutants from Wood Products Manufacturing Operations” (with the exception of sections 35.2.3 and 35.9.3); No. 36, “Control of Emissions from Organic Solvent Cleaning” (with the exception of sections 36.2.2 and 36.14.2); and General Definitions (with the exception of the provision entitled “Application” under the “General Provisions”).

IV. Incorporation by Reference

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Rhode Island regulations described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these documents generally available through https://www.regulations.gov and at the EPA Region 1 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information). Therefore, these materials have been approved by EPA for inclusion in the State implementation plan, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference in the next update to the SIP compilation.1

1 62 FR 27968 (May 22, 1997).

V. Statutory and Executive Order Reviews

Under the Clean Air Act, 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 Clean Air Act. 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 Orders12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• This action is not an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866;

• 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 Clean Air Act; and

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

In addition, 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 and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

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 Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 12, 2018. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. 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, Nitrogen dioxide, Ozone, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.

Dated: August 6, 2018. Alexandra Dunn, Regional Administrator, EPA Region 1.

Part 52 of chapter I, title 40 of the Code of Federal Regulations 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 OO—Rhode Island 2. In § 52.2070(c), the table is amended by revising the entries for “Air Pollution Control General Definitions Regulation”, “Air Pollution Control Regulation 8”, “Air Pollution Control Regulation 19”, “Air Pollution Control Regulation 27”, “Air Pollution Control Regulation 35”, and “Air Pollution Control Regulation 36” to read as follows:
§ 52.2070 Identification of plan.

(c) EPA approved regulations.

EPA-Approved Rhode Island Regulations State citation Title/subject State
  • effective
  • date
  • EPA approval date Explanations
    Air Pollution Control General Definitions Regulation General Definitions 1/9/2017 8/13/2018, [Insert Federal Register citation] Excluding “Application” section of the “General Provisions” which was not submitted by the State *         *         *         *         *         *         * Air Pollution Control Regulation 8 Sulfur Content of Fuels 1/9/2017 8/13/2018, [Insert Federal Register citation] Excluding sections 8.7 and 8.8.3 which were not submitted by the State. *         *         *         *         *         *         * Air Pollution Control Regulation 19 Control of Volatile Organic Compounds from Surface Coating Operations 1/9/2017 8/13/2018, [Insert Federal Register citation] Excluding sections 19.2.2 and 19.9.2, which were not submitted by the State. *         *         *         *         *         *         * Air Pollution Control Regulation 27 Control of Nitrogen Oxides Emissions 1/9/2017 8/13/2018, [Insert Federal Register citation] Excluding section 27.7.3 which was not submitted by the State. *         *         *         *         *         *         * Air Pollution Control Regulation 35 Control of Volatile Organic Compounds and Volatile Hazardous Air Pollutants from Wood Products Manufacturing Operations 1/9/2017 8/13/2018, [Insert Federal Register citation] Excluding sections 35.2.3 and 35.9.3 which were not submitted by the State. Air Pollution Control Regulation 36 Control of Emissions from Organic Solvent Cleaning 1/9/2017 8/13/2018, [Insert Federal Register citation] Excluding sections 36.2.2 and 36.14.2 which were not submitted by the State. *         *         *         *         *         *         *
    [FR Doc. 2018-17246 Filed 8-10-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R01-OAR-2018-0178; FRL-9981-40—Region 1] Air Plan Approval; Connecticut; 1997 8-Hour Ozone Attainment Demonstration AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is approving the ozone attainment demonstration portion of a State Implementation Plan (SIP) revision submitted by the State of Connecticut to meet the Clean Air Act (CAA) requirements for attaining the 1997 8-hour ozone national ambient air quality standard (NAAQS). The EPA is approving Connecticut's demonstration of attainment of the 1997 8-hour ozone NAAQS for the New York-Northern New Jersey-Long Island, NY-NJ-CT moderate 1997 8-hour ozone nonattainment area (hereafter, the NY-NJ-CT area or the NY-NJ-CT nonattainment area). In addition, the EPA is approving Connecticut's reasonably available control measures (RACM) analysis. This action is being taken under the Clean Air Act.

    DATES:

    This rule is effective on September 12, 2018.

    ADDRESSES:

    EPA has established a docket for this action under Docket Identification No. EPA-R01-OAR-2018-0178. All documents in the docket are listed on the https://www.regulations.gov website. Although listed in the index, some information is not publicly available, i.e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available at https://www.regulations.gov or at the U.S. Environmental Protection Agency, EPA Region 1 Regional Office, Office of Ecosystem Protection, Air Quality Planning Unit, 5 Post Office Square—Suite 100, Boston, MA. EPA requests that if at all possible, you contact the contact listed in the FOR FURTHER INFORMATION CONTACT section to schedule your inspection. The Regional Office's official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding legal holidays.

    FOR FURTHER INFORMATION CONTACT:

    Eric Wortman, Air Permits, Toxics, and Indoor Programs Unit, U.S. Environmental Protection Agency, EPA Region 1 Regional Office, 5 Post Office Square—Suite 100 (Mail Code OEP05-2), Boston, MA 02109-3912, phone number: (617) 918-1624, fax number: (617) 918-0624, email: [email protected].

    SUPPLEMENTARY INFORMATION:

    Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

    Table of Contents I. Background and Purpose II. Summary of Action III. Final Action IV. Statutory and Executive Order Reviews I. Background and Purpose

    On May 25, 2018 (83 FR 24259), the EPA published a Notice of Proposed Rulemaking (NPRM) for the State of Connecticut. In the May 25, 2018 proposed rulemaking action, the EPA proposed to approve the portion of a Connecticut SIP revision submitted on August 8, 2017 which demonstrates attainment of the 1997 ozone NAAQS. The EPA also proposed to approve the associated RACM analysis for the same area. Connecticut previously submitted an initial attainment demonstration for the 1997 ozone NAAQS for the Connecticut portion of the NY-NJ-CT area on February 1, 2008.

    This action addresses Connecticut's demonstrations of attainment of the 1997 8-hour ozone standard and associated RACM analysis for the Connecticut portion of the NY-NJ-CT area, submitted by Connecticut on February 1, 2008 and August 8, 2017. The EPA is taking separate action on the 2011 base year emission inventories, RFP plans, motor vehicle emission budgets, and contingency measures submitted as part of the August 8, 2017 SIP revisions in a forthcoming Federal Register document.

    II. Summary of Action

    As discussed in the Federal Register at 83 FR 24259, May 25, 2018, proposed rulemaking, the EPA reviewed the photochemical grid modeling used by Connecticut in its August 8, 2017 SIP submittal to demonstrate attainment of the 1997 ozone NAAQS and determined the modeling meets the EPA's guidelines and is acceptable to the EPA. Air quality monitoring data for 2014-2016 also demonstrates attainment of the 1997 8-hour ozone standard throughout the NY-NJ-CT area. The purpose of the attainment demonstration is to demonstrate how, through enforceable and approvable emission reductions, an area will meet the standard by the attainment date. The purpose of the RACM analysis is to show that the State has considered all reasonable available control measures to achieve attainment of the 1997 8-hour ozone standard. All necessary ozone control measures have already been adopted, submitted, approved and implemented. Also discussed in further detail in the Federal Register at 83 FR 24259, May 25, 2018, proposed rulemaking and based on (1) the State following the EPA's modeling guidance, (2) the modeled attainment of 1997 standard, (3) the air quality monitoring data for 2014-2016, and (4) the implemented SIP-approved control measures, the EPA is approving the attainment demonstration and RACM analysis for the 1997 ozone NAAQS for the Connecticut portion of the NY-NJ-CT area. The EPA is not taking action on the attainment demonstration and RACM analysis for the 2008 ozone NAAQS at this time.

    Other specific requirements of an attainment demonstration and the rationale for the EPA's proposed action are explained in the NPRM and will not be restated here. The EPA received two comments during the comment period. Although one comment was partially supportive of the EPA's proposed action, the comments otherwise discuss subjects outside the scope of an attainment demonstration action, do not explain (or provide a legal basis for) how the proposed action should differ in any way, and make no specific mention of the proposed action. As such, they are not germane and do not require further response to finalize the action as proposed.

    III. Final Action

    The EPA is approving the attainment demonstration and RACM analysis for the Connecticut portion of the NY-NJ-CT area for the 1997 ozone NAAQS. This rulemaking addresses the EPA's obligations to act on Connecticut's February 1, 2008 SIP revision for the 1997 ozone NAAQS, as well as the attainment demonstration and RACM analysis portion of the August 8, 2017 SIP submittal for the 1997 ozone NAAQS for the Connecticut portion of the NY-NJ-CT area.

    IV. Statutory and Executive Order Reviews

    Under the Clean Air Act, 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 Clean Air Act. 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);

    • This action is not an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.

    • 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 Clean Air Act; and

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

    In addition, 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 and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

    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 Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 12, 2018. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. 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, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Volatile organic compounds.

    Dated: August 6, 2018. Alexandra Dunn, Regional Administrator, EPA Region 1.

    Part 52 of chapter I, title 40 of the Code of Federal Regulations 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 H—Connecticut 2. Section 52.377 is amended by adding paragraph(s) to read as follows:
    § 52.377 Control strategy: Ozone.

    (s) Approval—An attainment demonstration for the 1997 8-hour ozone standard to satisfy requirements of section 182(c)(2)(A) of the Clean Air Act, and a Reasonably Available Control Measure (RACM) analysis to satisfy requirements of section 172(c)(1) of the Clean Air Act for the New York-Northern New Jersey-Long Island (NY-NJ-CT) ozone nonattainment area, submitted by the Connecticut Department of Energy and Environmental Protection. This rulemaking addresses the EPA's obligations to act on Connecticut's February 1, 2008 SIP revision for the 1997 ozone NAAQS, as well as the attainment demonstration and RACM analysis portion of the August 8, 2017 SIP submittal for the 1997 ozone NAAQS for the Connecticut portion of the NY-NJ-CT area.

    [FR Doc. 2018-17245 Filed 8-10-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R01-OAR-2018-0269; FRL-9981-93-Region 1] Air Plan Approval; Maine; Infrastructure Requirement for the 2010 Nitrogen Dioxide National Ambient Air Quality Standard AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is approving a State Implementation Plan (SIP) revision submitted by the State of Maine. This revision addresses the interstate transport requirements of the Clean Air Act (CAA) with respect to the 2010 primary nitrogen dioxide (NO2) National Ambient Air Quality Standard (NAAQS). This action approves Maine's demonstration that the State is meeting its obligations regarding the interstate transport of NO2 emissions into other states. This action is being taken under the CAA.

    DATES:

    This rule is effective on September 12, 2018.

    ADDRESSES:

    EPA has established a docket for this action under Docket Identification No. EPA-R01-OAR-2018-0269. All documents in the docket are listed on the https://www.regulations.gov website. Although listed in the index, some information is not publicly available, i.e., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form. Publicly available docket materials are available at https://www.regulations.gov or at the U.S. Environmental Protection Agency, EPA Region 1 Regional Office, Office of Ecosystem Protection, Air Quality Planning Unit, 5 Post Office Square—Suite 100, Boston, MA. EPA requests that if at all possible, you contact the contact listed in the FOR FURTHER INFORMATION CONTACT section to schedule your inspection. The Regional Office's official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding legal holidays.

    FOR FURTHER INFORMATION CONTACT:

    Patrick Bird, Office of Ecosystem Protection, 5 Post Office Square—Suite 100 (Mail Code OEP 05-2), Boston, MA 01209-3912, tel. (617) 918-1287, email [email protected]

    SUPPLEMENTARY INFORMATION:

    Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

    Table of Contents I. Background and Purpose II. Response to Comments III. Final Action IV. Statutory and Executive Order Reviews I. Background and Purpose

    On May 25, 2018 (83 FR 24264), EPA published a Notice of Proposed Rulemaking (NPRM) regarding specific Clean Air Act requirements applicable to the State of Maine. In particular, the NPRM proposed approval of Maine's February 21, 2018, SIP submittal for the 2010 primary NO2 NAAQS as it pertains to section 110(a)(2)(D)(i)(I) of the CAA.

    Section 110(a)(2)(D)(i)(I) requires a state's SIP to include provisions prohibiting any source or other type of emissions activity within the state from emitting any air pollutant in amounts that will contribute significantly to nonattainment, or interfere with maintenance, of the NAAQS in another state. The two clauses of this section are referred to as prong 1 (significant contribution to nonattainment) and prong 2 (interference with maintenance of the NAAQS).

    In the NPRM, EPA proposed to approve Maine's February 21, 2018, infrastructure SIP submittal for the 2010 primary NO2 NAAQS, concluding Maine's SIP submittal adequately addresses prong 1 and prong 2 requirements of CAA section 110(a)(2)(D)(i)(I) for the 2010 primary NO2 NAAQS. The rationale for EPA's proposed action is explained in the NPRM and will not be restated here.

    II. Response to Comments

    In response to the May 25, 2018 NPRM, we received a number of anonymous comments that address subjects outside the scope of our proposed action, do not explain (or provide a legal basis for) how the proposed action should differ in any way, and make no specific mention of the proposed action. Consequently, those comments are not germane to this rulemaking and require no further response.

    EPA received one relevant comment that referred specifically to the proposed rulemaking on the Maine's infrastructure SIP submittal for the 2010 primary NO2 NAAQS.

    Comment: The commenter suggests that, under the Plain Writing Act of 2010, EPA should not have used the word “promulgated” in the NPRM for this action.

    Response: The Plain Writing Act of 2010 (“PWA” or the “Act”), Public Law 111-274, 124 Stat. 2861, requires EPA to “use plain writing in every covered document of the agency that the agency issues or substantially revises.” See PWA section 4(b). The Act defines “plain writing” as “writing that is clear, concise, well-organized, and follows other best practices appropriate to the subject or field and intended audience.” See PWA section 3(3). The Office of Management and Budget (“OMB”) published guidance 1 on the Act that encourages agencies to follow Federal Plain Language Guidelines available at www.plainlanguage.gov that recommend agencies avoid certain words, including “promulgate.” Neither the PWA nor the guidelines, however, bar its use.

    1 OMB, Final Guidance on Implementing the Plain Writing Act of 2010 (April 13, 2011), available at https://plainlanguage.gov/law/.

    In the NPRM, EPA used forms of “promulgate” twice as follows: “[o]n February 9, 2010, EPA promulgated a new 1-hour primary NAAQS for NO2 at a level of 100 parts per billion (ppb), based on a 3-year average of the 98th percentile of the yearly distribution of 1-hour daily maximum concentrations” and “states are required to submit SIPs meeting the applicable requirements of section 110(a)(2) within three years after promulgation of a new or revised NAAQS” (emphasis added). The Clean Air Act specifically requires EPA to “promulgate” NAAQS, CAA section 109(a)(1)(B), and requires states to submit infrastructure SIPs to EPA within three years after the “promulgation” of a NAAQS, CAA section 110(a)(1). EPA agrees that it can sometimes be clearer to avoid words like “promulgate,” but EPA appropriately used “promulgated” and “promulgation” in the NPR to refer specifically to these formal CAA requirements. In any event, the comment does not suggest that the commenter misunderstood EPA's proposed action due to the use of these words. See PWA section 2. Nor does the commenter state that EPA should disapprove Maine's submittal. Therefore, we are approving the SIP submittal as proposed.

    III. Final Action

    EPA is approving Maine's February 21, 2018, SIP revision addressing prongs 1 and 2 of CAA section 110(a)(2)(D)(i)(I) for the 2010 primary NO2 NAAQS. EPA is taking final action to approve this SIP submittal because Maine's SIP includes adequate provisions to prevent emissions sources within the State from significantly contributing to nonattainment or interfering with maintenance of this standard in any other state.

    IV. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 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 Clean Air Act. 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);

    • This action is not an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.

    • 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 Clean Air Act; and

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

    In addition, 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 and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

    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 Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 12, 2018. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. 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, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements.

    Dated: August 6, 2018. Alexandra Dunn, Regional Administrator, EPA Region 1.

    Part 52 of chapter I, title 40 of the Code of Federal Regulations 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 U—Maine 2. Section 52.1020(e) is amended by adding an entry titled “Interstate Transport SIP to meet Infrastructure Requirements for the 2010 1-hour NO2 NAAQS” at the end of the table to read as follows:
    § 52.1020 Identification of plan.

    (e) Nonregulatory.

    Maine Non Regulatory Name of non regulatory SIP provision Applicable geographic or nonattainment area State submittal date/effective date EPA approved date 3 Explanations *         *         *         *         *         *         * Interstate Transport SIP to meet Infrastructure Requirements for the 2010 1-hour NO2 NAAQS Statewide 2/21/2018 8/13/2018, [Insert Federal Register citation] This approval addresses Prongs 1 and 2 of CAA section 110(a)(2)(D)(i)(I) only. 3 In order to determine the EPA effective date for a specific provision listed in this table, consult the Federal Register notice cited in this column for the particular provision.
    [FR Doc. 2018-17248 Filed 8-10-18; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF THE INTERIOR Fish and Wildlife Service 50 CFR Part 17 [Docket No. FWS-R9-ES-2012-0013; 4500030115] RIN 1018-BC79 Endangered and Threatened Wildlife and Plants; Listing the Hyacinth Macaw AGENCY:

    Fish and Wildlife Service, Interior.

    ACTION:

    Final rule.

    SUMMARY:

    We, the U.S. Fish and Wildlife Service, determine threatened species status under the Endangered Species Act of 1973 (Act), as amended, for the hyacinth macaw (Anodorhynchus hyacinthinus), a species that occurs almost exclusively in Brazil and marginally in Bolivia and Paraguay. This rule adds this species to the List of Endangered and Threatened Wildlife. We are also establishing a rule pursuant to section 4(d) of the Act to further provide for the conservation of the hyacinth macaw.

    DATES:

    This rule is effective September 12, 2018.

    ADDRESSES:

    Comments and materials received, as well as supporting documentation used in the preparation of this rule, are available for public inspection at http://www.regulations.gov under Docket No. FWS-R9-ES-2012-0013.

    FOR FURTHER INFORMATION CONTACT:

    Don Morgan, Chief, Division of Delisting and Foreign Species, Ecological Services Program, U.S. Fish and Wildlife Service, 5275 Leesburg Pike, MS: ES, Falls Church, VA 22041; telephone 703-358-2444. If you use a telecommunications device for the deaf (TDD), call the Federal Relay Service at 800-877-8339.

    SUPPLEMENTARY INFORMATION:

    Executive Summary

    Why we need to publish a rule. Under the Endangered Species Act (Act), a species may warrant protection through listing if it is found to be an endangered or threatened species. Listing a species as an endangered or threatened species can only be completed by issuing a rule. On July 6, 2012, the U.S. Fish and Wildlife Service (Service) published in the Federal Register (FR) a 12-month finding and proposed rule to list the hyacinth macaw (Anodorhynchus hyacinthinus) as an endangered species under the Act (77 FR 39965). On November 28, 2016, the Service published a revised proposed rule to list the hyacinth macaw as a threatened species (81 FR 85488), which included a proposed rule under section 4(d) of the Act that defined the prohibitions we are extending to the hyacinth macaw and the exceptions to those prohibitions, as well as provisions that are necessary and advisable for the species' conservation. This rule finalizes the listing of the hyacinth macaw as a threatened species under the Act, and establishes a 4(d) rule to further provide for the species' conservation.

    The basis for our action. Under section 4(a)(1) of the Act, we determine that a species is an endangered or threatened species based on any of five factors: (A) The present or threatened destruction, modification, or curtailment of its habitat or range; (B) overutilization for commercial, recreational, scientific, or educational purposes; (C) disease or predation; (D) the inadequacy of existing regulatory mechanisms; or (E) other natural or manmade factors affecting its continued existence. The primary causes attributed to the decline of the hyacinth macaw include habitat loss and degradation (Factor A), hunting (Factor B), predation (Factor C), competition and low reproduction rate (Factor E), and climate change (Factor E).

    Section 4(d) of the Act authorizes the Secretary of the Interior (Secretary) to extend to threatened species the prohibitions provided for endangered species under section 9 of the Act. Our implementing regulations for threatened wildlife, found at title 50 of the Code of Federal Regulations (CFR) at § 17.31 (50 CFR 17.31), incorporate the section 9 prohibitions for endangered wildlife, except when a species-specific rule under section 4(d) of the Act is promulgated. For threatened species, section 4(d) of the Act gives the Service discretion to specify the prohibitions and any exceptions to those prohibitions that are appropriate for the species, as well as include provisions that are necessary and advisable to provide for the conservation of the species. A rule issued under section 4(d) of the Act allows us to include provisions that are tailored to the specific conservation needs of that threatened species and which may be more or less restrictive than the general provisions at 50 CFR 17.31.

    Peer review and public comment. We sought comments from independent specialists to ensure that our analysis is based on scientifically sound data, assumptions, and analyses. We invited peer reviewers and the public to comment on our listing proposals. All substantive information from peer review and public comments was fully considered and incorporated into this final rule, where appropriate.

    Previous Federal Actions

    Please refer to the proposed listing rule, published in the Federal Register on July 6, 2012 (77 FR 39965), for previous Federal actions for this species prior to that date. The publication of the proposed listing rule opened a 60-day public comment period, which closed on September 4, 2012. Based on new information, on November 28, 2016, we published a revised proposed rule (81 FR 85488) to list the hyacinth macaw as a threatened species, which included a proposed rule under section 4(d) of the Act (16 U.S.C. 1531 et seq.) that defines the conservation measures that apply to the hyacinth macaw (50 CFR 17.41(c)). That revised proposed rule also opened a 60-day public comment period, which closed on January 27, 2017.

    Summary of Changes From the Revised Proposed Rule

    We included additional information regarding action plans in Brazil that aim to reduce deforestation.

    Brazil has implemented actions plans that aim to reduce deforestation rates in the Amazon and Cerrado, referred to as the Plan of Action for Prevention and Control of Deforestation in the Legal Amazon (PPCDAm) and the Action Plan for the Prevention and Control of Deforestation and Burning in the Cerrado (PPCerrado), respectively. In the proposed rule we stated that we did not have any details regarding the success or progress of these plans. However, in this final rule we included the most recent information available and results achieved by these plans (see Factor D discussion, below).

    Summary of Comments and Recommendations

    We reviewed all comments we received from peer reviewers and the public for substantive issues and new information. All substantive information from peer review and public comments has been fully considered and is incorporated into this final rule, where appropriate.

    We received 104 public comments combined on the proposed and revised proposed rules to list the hyacinth macaw under the Act during their respective comment periods. Many commenters supported listing the hyacinth macaw as an endangered or threatened species under the Act. However, many commenters also recommended that we issue a rule under section 4(d) of the Act that would allow interstate commerce of hyacinth macaws to occur without needing a permit. The following discussion summarizes issues and substantive information from public comments and provides our responses.

    Comment (1): Many commenters opined that the Act was meant to protect species native to the United States, and the hyacinth macaw should not be listed since it is a foreign species.

    Our Response: The Act does not differentiate between domestic and foreign species as it applies to our responsibilities to determine whether species are endangered or threatened, and sections 4(b)(1)(A) and 4(b)(1)(B)(i) expressly require the Service to consider efforts by a foreign nation prior to making a listing determination. The broad definitions of “species,” “fish or wildlife,” and “plants” in section 3 of the Act do not differentiate between species native to the United States, species native to both the United States and one or more other countries, and species not native to the United States. Further, the findings and purposes at sections 2(a)(4), 2(a)(5), and 2(b) of the Act also speak to the application of the Act to foreign species and numerous provisions of the Act and the implementing regulations refer to foreign jurisdictions (e.g., sections 8 and 8A, 50 CFR 424.11(e)).

    Comment (2): Some commenters believed that there is no demonstrable benefit to listing the hyacinth macaw under the Act because it is already protected by CITES and the Wild Bird Conservation Act (WBCA; 16 U.S.C. 4901-4916).

    Our Response: The decision to list a species under the Act is based on whether the species meets the definition of an endangered or threatened species as defined under section 3 of the Act and is made solely on the basis of the best scientific and commercial data available. Conservation measures provided to species listed as endangered or threatened under the Act include recognition, requirements for Federal protection, and prohibitions against certain practices. Recognition through listing results in public awareness, and may encourage and result in conservation actions by foreign governments, Federal and State governments, private agencies and interest groups, and individuals. The purpose of the WBCA is to ensure that exotic bird species are not harmed by international trade and encourages wild bird conservation programs in countries of origin. The purpose of CITES is to ensure that international trade in plants and animals does not threaten their survival in the wild. Protection provided by other laws, such as CITES and WBCA, is taken into consideration when determining the status of the species. However, simply being protected by these other laws does not preclude the need to list if the species still meets the definition of an endangered or threatened species. Listing under the Act can help ensure that the United States and its citizens do not contribute to the further decline of the species. That said, we considered the conservation role that CITES and WBCA provide when developing the 4(d) rule for the species. The 4(d) rule that we are putting in place streamlines the permitting process by deferring to existing laws that are protective of hyacinth macaws in the course of import and export and not requiring permits under the Act for certain types of activities. Additionally, we are not prohibiting interstate commerce of hyacinth macaw within the United States (see 4(d) Rule, below).

    Comment (3): Several commenters stated that the information used in the proposed rule was outdated; one also expressed concern that the information was from English-only sources.

    Our Response: The Service is required by the Act to make determinations solely on the basis of the best scientific and commercial data available. We based the proposed rule on all the information we received following the initiation of the status review for the hyacinth macaw, as well as all of the information we found during our own research. The information we use is not always current, as it depends on research being conducted in the field and the availability of information. At that time, the information we compiled was considered the best available information. After we published the proposed rule in 2012, additional information became available or was submitted by the public, including more recent information and studies from a species expert and conservation organizations within the hyacinth macaw's range countries. Literature that was not in English was professionally translated and then reviewed, to the best of our ability. The information we received has been incorporated into this final rule and helped serve as the basis for our determination that the hyacinth macaw is threatened, not endangered.

    Comment (4): Two commenters stated that significant additional wild populations have been recently discovered and were not included in the data cited for the proposed listings.

    Our Response: The commenters did not provide any information or citations to support their claims. The information that we have indicates that hyacinth macaws may be expanding into new areas or areas previously abandoned; however, we found no support for significant additional populations having been established. The overall population estimate for the hyacinth macaw remains 6,500 individuals.

    Comment (5): Many commenters raised concerns about the listing of the hyacinth macaw due to economic impacts on small businesses because of the restriction on commercial trade within the United States.

    Our Response: Determinations on whether a species should be added to the Federal Lists of Endangered and Threatened Wildlife and Plants are based on whether the species meets the definition of “endangered species” or of “threatened species” in section 3 of the Act. The Act directs the Service to make these determinations solely on the basis of the best scientific and commercial data available. Furthermore, the Act directs the Service to consider economic impacts only when designating critical habitat. Therefore, we may not consider economic impacts when determining the status of a species. We understand that the regulations imposed by the listing of the hyacinth macaw will have an effect on those involved in the pet bird industry, especially bird breeders. The 4(d) rule that we are putting in place streamlines the permitting process by deferring to existing laws that are protective of hyacinth macaws in the course of import and export and not requiring permits under the Act for certain types of activities. Additionally, we are not prohibiting interstate commerce of hyacinth macaw within the United States (see 4(d) Rule, below).

    Comment (6): Some commenters requested that captive birds in the United States be considered a separate and self-sustaining population from the wild population because the wild populations are in need of immediate help and should be managed and listed independently under the Act.

    Our Response: We have determined that the Act does not allow for captive wildlife to be assigned separate legal status from their wild counterparts on the basis of their captive state, including through designation as a separate distinct population segment (DPS) (80 FR 34500; June 16, 2015).

    Comment (7): One commenter stated that the proposed rule does not address the many positive steps that have been taken to conserve the hyacinth macaw in the wild. The commenter referenced the work of the Hyacinth Macaw Project specifically.

    Our Response: We included a detailed description of the work being done by the Hyacinth Macaw Project under Conservation Measures in the November 28, 2016, revised proposed rule (81 FR 85488, November 28, 2016 see pp. 85499-85501) and “Conservation Actions” in the July 6, 2012, proposed rule (77 FR 39965, see pp. 39971-39972). Our final rule considers and incorporates additional information we subsequently received from the President of the Hyacinth Macaw Institute and Coordinator for the Hyacinth Macaw Project, Neiva Guedes.

    Comment (8): Two commenters pointed to a recent increase in deforestation within the hyacinth macaw's range as a reason why the species should be listed as endangered rather than threatened.

    Our Response: The deforestation rate is generally decreasing from historical levels (see Factor A discussion, below), although we recognize that the rates of deforestation may fluctuate annually, with some years having a higher rate than other years. If the deforestation rates are maintained or further reduced, the loss of all native habitat from these areas, including the species of trees needed by the hyacinth macaw for food and nesting, and the hyacinth macaw's risk of extinction, is not as imminent as predicted. Additionally, Brazil has implemented plans to reduce deforestation in the Amazon (PPCDAm) and Cerrado (PPCerrado) and has obtained significant reduction of the deforestation rate after 12 years of the PPCDAm and 6 years of PPCerrado (see Factor D discussion, below). Therefore, we do not find that the hyacinth macaw is currently in danger of extinction.

    Comment (9): One commenter stated that deforestation stabilization does not equate with regeneration and does not account for negative impacts of historical habitat disturbance, which effects manduvi in the Pantanal, upon which the hyacinth macaw relies almost exclusively for nesting.

    Our Response: Although the recruitment of the manduvi tree has been severely reduced and is expected to become increasingly rare in the future, active management has contributed to the increase in the hyacinth macaw population in the Pantanal, and farmers have begun to protect hyacinth macaws on their property. Additionally, hyacinth macaws have been reported in various trees species and even on cliffs on the border of the Pantanal (see Essential Needs of the Species, above), although the majority of their nests are in Brazil nut (Bertholettia excels) (in Pará) and manduvi (in the Pantanal). Further, hyacinth macaws in the Gerais region now use rock crevices for nesting. While we do not know if the hyacinth macaws in this region will respond in the same way to the loss of nesting trees as those in the Gerais region, it is possible that if these primary nesting trees become scarcer, hyacinth macaws may adapt to using cavities of other trees (van der Meer 2013, p. 3) or perhaps even cliff faces.

    Comment (10): One commenter stated that we provide conflicting data on annual deforestation rates in the Gerais region because we stated that annual deforestation rates were more than 14,200 km2 (5,483 mi2) each year from 2002 to 2008, an estimated 12,949 km2 (4,999 mi2) per year from 2000 to 2005, and 11,812 km2 (4,560 mi2) per year from 2005 to 2010.

    Our Response: We cited the best available data from research that used time frames that overlap or vary; therefore, it is difficult to make comparisons between studies and across years to provide a linear estimate of the annual deforestation rates within the species' range. Estimates of the deforestation rate from 2002 to 2008 of 14,200 km2 (5,483 mi2) each year are based on data from the PROBIO program (Projeto de Conservação e Utilização Sustentável da Diversidade Biológica) using imagery from 2002 (Beuchle et al. 2015, p. 117). The Project to Monitor Deforestation of Brazilian Biomes by Satellite (PMDBBS) used this baseline data to estimate deforestation rates from 2002 through 2008 in the Cerrado (see Table 2, below), and to map cleared areas from 2008 to 2009, 2009 to 2010, and 2010 to 2011; these data are also cited by Brazilian Ministry of the Environment (Ministério do Meio Ambiente) (MMA) (2015, p. 9) and World Wildlife Fund—United Kingdom (WWF-UK) (2011b, p. 2). The PMDBBS is one of the official national biome scale estimates for the Brazilian biomes. Estimates of the deforestation rate we cited from 2000 to 2005 of 12,949 km2 (4,999 mi2) per year and from 2005 to 2010 of 11,812 km2 (4,560 mi2) per year are from Beuchle et al. (2015, pp. 124-125), who were comparing their results to PMDBBS (see Factor A discussion, below).

    Comment (11): Some commenters, while not opposed to the listing of the species, requested a rule under section 4(d) of the Act, which would allow ownership and interstate trade of the species to occur without obtaining a permit under the Act.

    Our Response: Ownership of a listed species is not prohibited by the Act and, therefore, does not require a permit. Section 4(d) of the Act allows the Service to apply the prohibitions of section 9 or to provide measures that are necessary and advisable to provide for the conservation of threatened species. Therefore, whenever we list a species as a threatened species, we may issue regulations as we deem necessary and advisable to conserve the species under a 4(d) rule. We determined that listing the hyacinth macaw as threatened under the Act is appropriate, and as part of our determination, this final listing includes a 4(d) rule for the species articulating the measures that we deemed is necessary and advisable for the conservation of the species. See 4(d) Rule, below, for more discussion.

    Comment (12): Two commenters stated that the proposed 4(d) rule is not adequate because it does not stem demand for illegally obtained hyacinth macaws and makes wild-sourced supply of hyacinth macaws more accessible to breeders.

    Our Response: The 4(d) rule generally adopts the existing conservation regulatory requirements of CITES and the WBCA as the appropriate regulatory provisions for the import and export of certain hyacinth macaws. CITES is an international agreement between governments and ensures that the international trade of CITES-listed plants and animals does not threaten the survival of the species in the wild. Trade must be authorized through a system of permits and certificates that are provided by the designated CITES Scientific and Management Authorities of each CITES Party. The hyacinth macaw is listed in Appendix I of CITES. For species included in CITES Appendix I, international trade is permitted only under exceptional circumstances, which generally precludes commercial trade. The United States implements CITES through the Act and our implementing regulations at 50 CFR part 23. It is unlawful for any person subject to the jurisdiction of the United States to engage in any trade in any specimens contrary to the provisions of CITES, or to possess any specimens traded contrary to the provisions of CITES, the Act, or part 23. Protections for CITES-listed species are provided independently of whether a species is an endangered species or a threatened species under the Act.

    Based on trade data obtained from the CITES Trade Database (accessed on January 12, 2018), from the time the hyacinth macaw was uplisted to CITES Appendix I in October 1987 through 2015, less than 3 percent of the live hyacinth macaws reported in trade were wild-sourced (see Factor B discussion and Table 4, below).

    Two other laws in the United States apart from the Act provide protection from the illegal import of wild-caught birds into the United States: The WBCA and the Lacey Act (18 U.S.C. 42-43; 16 U.S.C. 3371-3378). The WBCA ensures that exotic bird species are not harmed by international trade and encourages wild bird conservation programs in countries of origin. Under the WBCA and our implementing regulations (50 CFR 15.11), it is unlawful to import into the United States any exotic bird species listed under CITES except under certain circumstances. The Service may issue permits to allow import of listed birds for scientific research, zoological breeding or display, cooperative breeding, or personal pet purposes when the applicant meets certain criteria (50 CFR 15.22-15.25). Under the Lacey Act, in part, it is unlawful: (1) To import, export, transport, sell, receive, acquire, or purchase any fish, or wildlife taken, possessed, transported, or sold in violation of any law, treaty, or regulation of the United States or in violation of any Indian tribal law, or (2) to import, export, transport, sell, receive, acquire, or purchase in interstate or foreign commerce any fish or wildlife taken, possessed, transported, or sold in violation of any law or regulation of any State or in violation of any foreign law. For example, because the take of wild-caught hyacinth macaws would be in violation of Brazil's Environmental Crimes Law, the subsequent import of hyacinth macaws would violate the Lacey Act. Similarly, under the Lacey Act it is unlawful to import, export, transport, sell, receive, acquire, or purchase specimens of this species traded contrary to CITES.

    Based in large part on the protection from illegal and legal trade afforded to the hyacinth macaw by CITES, the WBCA, and the Lacey Act, the best available data indicate that legal and illegal trade of hyacinth macaws is not currently occurring at levels that are affecting the population of the species in the wild or would negatively affect any efforts aimed at the recovery of wild populations of the species. Although illegal trapping for the pet trade occurred at high levels during the 1980s, it has decreased significantly and we found no information suggesting that illegal trapping and trade of wild hyacinth macaws are current threats to the species. Therefore, we find that our 4(d) rule contains all the prohibitions and authorizations necessary and advisable for the conservation of the hyacinth macaw.

    Comment (13): One commenter stated that interstate and international transport of hyacinth macaws seems to be a generally accepted practice of the exotic pet trade, and one that is expressly endorsed by the 4(d) rule, yet it is extremely dangerous and often detrimental to the animal's health and well-being.

    Our Response: International transport is guided by part 50 CFR part 14, subpart J—Standards for the Humane and Healthful Transport of Wild Mammals and Birds to the United States. As mentioned earlier, importers/exporters must meet the requirement of this and other requirements in order to import their birds into the United States. These regulations are enforced by the Service. Interstate transport is guided by the Animal Welfare Act (AWA) (7 U.S.C. 2131 et seq.), which is the Federal law in the United States that regulates the treatment of animals in research, exhibition, transport, and by dealers (United States Department of Agriculture 2017, unpaginated). While other laws, policies, and guidelines may include additional species coverage or specifications for animal care and use, all refer to the AWA as the minimum acceptable standard. The AWA is enforced by the U.S. Department of Agriculture, Animal and Plant Health Inspection Service. Therefore, we determine that these laws and regulations adequately promote the humane treatment and transport of hyacinth macaws.

    Comment (14): One commenter recommended there be an exception for legitimate parrot owners and opined that the United States should not confiscate private property (i.e., legitimately purchased pets) because of a problem occurring in Brazil, especially when there are already laws to protect wild parrots.

    Our Response: There is no prohibition for ownership of lawfully acquired hyacinth macaws. With regards to import/export, we proposed exceptions for personal pet parrot owners in the 4(d) rule to allow a person to import or export either: (1) A specimen that was held in captivity prior to the date this species is listed under the Act; or (2) a captive-bred specimen, without a permit issued under the Act, provided the export is authorized under CITES and the import is authorized under CITES and the WBCA. A person may deliver, receive, carry, transport, or ship a hyacinth macaw in interstate commerce in the course of a commercial activity, or sell or offer to sell in interstate commerce a hyacinth macaw without a permit under the Act. However, the import and export of birds into and from the United States, taken from the wild after the date this species is listed under the Act; conducting an activity that could take or incidentally take hyacinth macaws; and foreign commerce will need to meet the requirements of 50 CFR 17.31 and 17.32, including obtaining a permit under the Act. See 4(d) Rule, below, for more discussion.

    Comment (15): One commenter believed that we should have listed the species as endangered because they believed that it is in danger of extinction in a significant portion of its range.

    Our Response: Under the Act and our implementing regulations, a species may warrant listing if it is an endangered or threatened species. The Act defines “endangered species” as any species that is in danger of extinction throughout all or a significant portion of its range (16 U.S.C. 1532(6)), and “threatened species” as any species that is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range (16 U.S.C. 1532(20)). Because we have determined that the hyacinth macaw is threatened throughout all of its range, under the Final Policy on Interpretation of the Phrase “Significant Portion of Its Range” in the Endangered Species Act's Definitions of “Endangered Species” and “Threatened Species” (79 FR 37578; July 1, 2014) (SPR Policy), if a species warrants listing throughout all of its range, no portion of the species' range can be a “significant” portion of its range.

    While it is the Service's position under the SPR Policy that no further analysis of “significant portion of its range” in this circumstance is consistent with the language of the Act, we recognize that the SPR Policy is currently under judicial review, so we also took the additional step of considering whether there could be any significant portions of the species' range where the species is in danger of extinction. We evaluated whether there is substantial information indicating that there are any portions of the hyacinth macaw's range: (1) That may be “significant,” and (2) where the species may be in danger of extinction. In practice, a key part of identifying portions appropriate for further analysis is whether the threats are geographically concentrated. The hyacinth macaw's primary driver of its status is habitat destruction. This threat is affecting the species throughout its entire range and is of similar magnitude throughout its range; therefore, there is not a meaningful geographical concentration of threats to the hyacinth macaw. As a result, even if we were to undertake a detailed SPR analysis, there would not be any portions of the species' range where the threats are harming the species to a greater degree such that the species is in danger of extinction in that portion.

    Comment (16): One commenter stated that the Service was obligated to issue a final regulation based on the proposal to list the hyacinth macaw as endangered in 2012, or issue a notice of withdrawal. They asserted the Service should have to go through the same requirements and procedures as for a downlisting by making a full scientific finding of why listing the hyacinth macaw as endangered is no longer warranted before it can repropose to list the species as threatened.

    Our Response: We are obligated to make listing determinations under the Act based on the best available scientific and commercial information. In our 2012 proposed rule (77 FR 39965; July 6, 2012), we found that the hyacinth macaw was in danger of extinction (an endangered species) based on information estimating the original vegetation of the Amazon, Cerrado, and Pantanal, including the hyacinth macaw's habitat, would be lost between the years 2030 and 2050 due to deforestation, combined with the species' naturally low reproductive rate, highly specialized nature, hunting, competition, and effects of climate change. However, subsequent to publishing that proposal, we received new information from the public and peer review. As a result of this information, we reevaluated impacts to the species, made technical corrections, and assessed additional information regarding conservation efforts. Subsequently, we revised our determination in consideration of the new information and public comments we received to conclude that the hyacinth macaw's risk of extinction is not as imminent as previously predicted, and we published a revised proposed rule that opened a new comment period to allow the public the opportunity to submit additional comments in light of this new information (81 FR 85488; November 28, 2016).

    Comment (17): One commenter stated that, while the proposed 4(d) rule is an amendment of an existing 4(d) rule for several other species of parrots at 50 CFR 17.41(c), it leaves out two provisions of that existing rule: (1) The exception for import and export of captive-bred specimens, and (2) interstate commerce. They assert that because the Service includes these provisions in the preamble of the proposed 4(d) rule but does not include the actual text in the draft rule, the Service did not provide sufficient notice and opportunity for public comment.

    Our Response: In the revised proposed rule, under Proposed Regulation Promulgation (81 FR 85488, November 28, 2016, see pp. 81 FR 85506-85507), we proposed to amend 50 CFR 17.41 by revising paragraph (c) introductory text, paragraphs (c)(1), (c)(2) introductory text, (c)(2)(ii) introductory text, and (c)(2)(ii)(E). The amendatory instruction and regulatory text were formatted in accordance with Office of the Federal Register standards and only include those provisions of the existing text that are being revised. The proposed regulatory text for 50 CFR 17.41(c), together with the text we were not proposing to amend in that paragraph of the CFR, encompasses the whole of the proposed 4(d) rule for the hyacinth macaw. As the commenter notes, we explain the proposed 4(d) rule for the hyacinth macaw in the preamble of the revised proposed rule (81 FR 85488, November 28, 2016, see pp. 85505-85506). We accepted public comments on the revised proposed rule to list the hyacinth macaw as a threatened species, including the proposed 4(d) rule (81 FR 85488; November 28, 2016), for 60 days, ending January 27, 2017. We have complied with the notice-and-comment requirements of the Administrative Procedure Act (5 U.S.C. chapter 5) and the Act.

    Comment (18): One commenter stated that neither CITES nor the WBCA provide for public notice and comment, which is required for permits for endangered species under the Act. They indicated the public would receive no notice about import/export or interstate movement of these parrots, which makes it difficult to track and protect these species from the pet trade.

    Our Response: It is true that neither CITES nor the WBCA provide for public notice and comment for interstate movement of species. It is also true that there is required notice and comment for permits for endangered species under the Act. However, there is no notice-and-comment requirement for permits for threatened species. We found the hyacinth macaw to be a threatened species; therefore, the notice-and-comment provision for permits under the Act does not apply in this case. Additionally, we found it was not necessary or advisable for the conservation of the hyacinth macaw to extend the permit requirements to certain import/export and interstate transport because we did not find the pet trade to be a threat to the species. Further, interstate commerce within the United States was not found to threaten the hyacinth macaw, and the best available data indicate that legal and illegal trade of hyacinth macaws is not currently occurring at levels that are affecting the population of the species in the wild or would negatively affect any efforts aimed at the recovery of wild populations of the species.

    Comment (19): One commenter stated that the Service provides no logical basis for the proposed 4(d) rule's assumption that “generally accepted animal husbandry practices” or breeding procedures do not result in harm and harassment as covered under the Act's prohibition on take.

    Our Response: While the Act does not define “harm” or “harassment,” the Service's regulations at 50 CFR 17.3 provide definitions for those terms. “Harm” is defined as an act which actually kills or injures wildlife and “harassment,” when applied to captive wildlife, does not include generally accepted animal husbandry practices or breeding procedures as defined by the Service's regulations at 50 CFR 17.3. Consequently, such actions would not be prohibited or require a permit under the Act.

    Comment (20): One commenter stated that wildlife-trade management authorities have shown that fraudulent permitting has been a frequent occurrence in many illicitly traded species across the globe (United Nations Office on Drugs and Crime 2016) and this impacts the hyacinth macaw.

    Our Response: Although we recognize that fraudulent permitting may occur as part of the global wildlife trade, we have no information indicating that fraudulent permitting practices are impacting the hyacinth macaw. Furthermore, the commenter did not provide any information regarding fraudulent permitting specific to hyacinth macaws.

    Comment (21): One commenter suggested an alternative 4(d) rule for the hyacinth macaw, which they say would better further the conservation of the species. The commenter suggested that any trade in captive-bred specimens must be limited to specimens legitimately designated as source code D instead of codes C, D, or F under CITES, and that commercial interstate commerce should not be exempted. (Note: Source codes indicate the source of the specimen used on CITES permits and certificates. See 4(d) Rule, below, for more discussion.)

    Our Response: We considered the commenter's alternative approach to the 4(d) rule, and ultimately we determined that the import and export requirements of 50 CFR 17.41(c) provide the necessary and advisable conservation measures needed for this species. Interstate commerce within the United States was not found to threaten the hyacinth macaw, and the best available data indicate that legal and illegal trade of hyacinth macaws is not currently occurring at levels that are affecting the population of the species in the wild or would negatively affect any efforts aimed at the recovery of wild populations of the species.

    Background

    Section 4 of the Act (16 U.S.C. 1533) and the implementing regulations in part 424 of title 50 of the Code of Federal Regulations (50 CFR part 424) set forth procedures for adding species to, removing species from, or reclassifying species on the Federal Lists of Endangered and Threatened Wildlife and Plants. The Act defines “endangered species” as any species that is in danger of extinction throughout all or a significant portion of its range (16 U.S.C. 1532(6)), and “threatened species” as any species that is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range (16 U.S.C. 1532(20)).

    We summarize below the information on which we based our final determination and evaluation of the five factors provided in section 4(a)(1) of the Act. We are also including hyacinth macaws under a rule authorized under section 4(d) of the Act. This 4(d) rule contains the prohibitions and authorizations necessary and advisable for the conservation of the hyacinth macaw.

    Species Information Taxonomy and Species Description

    The hyacinth macaw is one of three species of the Anodorhynchus genus and the largest bird of the parrot family, Family Psittacidae, (Guedes and Harper 1995, p. 395; Munn et al. 1989, p. 405). It measures approximately 1 meter (m) (3.3 feet (ft)) in length. Average female and male wing lengths measure approximately 400 to 408 millimeters (mm) (1.3 ft), respectively. Average tail lengths for females and males are approximately 492 mm (1.6 ft) and 509 mm (1.7 ft), respectively (Forshaw 1989, p. 388). Hyacinth macaws are characterized by a predominately cobalt-blue plumage, black underside of wing and tail, and unlike other macaws, have feathered faces and lores (areas of a bird's face from the base of the bill to the front of the eyes). In addition, they have bare yellow eye rings, bare yellow patches surrounding the base of their lower mandibles, large and hooked gray-black bills, and dark-brown irises. Their legs, which are dark gray in most birds but lighter gray to white in older adults, are short and sturdy to allow the bird to hang sideways or upside down while foraging. Immature birds are similar to adults, but with shorter tails and paler yellow bare facial skin (Juniper and Parr 1998, pp. 416-417; Guedes and Harper 1995, p. 395; Munn et al. 1989, p. 405; Forshaw 1989, p. 388).

    The hyacinth macaw experiences late maturity, not reaching first reproduction until 8 or 9 years old (Guedes 2009, p. 117). Hyacinth macaws are monogamous and faithful to nesting sites; a couple may reproduce for more than a decade in the same nest. They nest from July to January in tree cavities and, in some parts of its range, cliff cavities (Tortato and Bonanomi 2012, p. 22; Guedes 2009, pp. 4, 5, 12; Pizo et al. 2008, p. 792; Pinho and Nogueira 2003, p. 35; Abramson et al. 1995, p. 2). The hyacinth macaw lays two smooth, white eggs approximately 48 mm (1.9 inches (in)) long and 36 mm (1.4 in) wide. Eggs are usually found in the nest from August until December (Guedes 2009, p. 4; Juniper and Parr 1998, p. 417; Guedes and Harper 1995, p. 406). The female alone incubates the eggs for approximately 28 to 30 days. The male remains near the nest to protect it from invaders, but may leave 4 to 6 times a day to forage and collect food for the female (Schneider et al. 2006, pp. 72, 79; Guedes and Harper 1995, p. 406). Chicks are mostly naked, with sparse white down feathers at hatching. Young are fed regurgitated, chopped palm nuts (Munn et al. 1989, p. 405). Most chicks fledge at 105 to 110 days old; however, separation from the parents is a slow process. Fledglings will continue to be fed by the parents for 6 months, when they begin to break hard palm nuts themselves, and may remain with the adults for 16 months, after which they will join groups of other young birds (Schneider et al. 2006, pp. 71-72; Guedes and Harper 1995, pp. 407-411).

    Hyacinth macaws naturally have a low reproductive rate, a characteristic common to all parrots, due, in part, to asynchronous hatching. Although hyacinth macaws lay two eggs, usually only one chick survives (Guedes 2009, p. 31; Faria et al. 2008, p. 766; Kuniy et al. 2006, p. 381; Guedes, 2004b, p. 6; Munn et al. 1989, p. 409). Not all hyacinth nests fledge young, and due to the long period of chick dependence, hyacinth macaws breed only every 2 years (Faria et al. 2008, p. 766; Schneider et al. 2006, pp. 71-72; Guedes 2004b, p. 7; Pinho and Nigueira 2003, p. 30; Guedes and Harper 1995, pp. 407-411; Munn et al. 1989, p. 409). In a study of the Pantanal, which contains the largest population of hyacinth macaws, it was suggested that only 15-30 percent of adults attempt to breed; it may be that the same or an even smaller percentage in Pará and Gerais attempt to breed (Munn et al. 1989, p. 409).

    Range and Population

    At one time, hyacinth macaws were widely distributed, occupying large areas of Central Brazil into the Bolivian and Paraguayan Pantanal (Guedes 2009, pp. xiii, 11; Pinho and Nogueira 2003, p. 30; Whittingham et al. 1998, p. 66; Guedes and Harper 1995, p. 395). Today, the species is limited to three areas totaling approximately 537,000 square kilometers (km2), (207,337 square miles (mi2)) almost exclusively within Brazil: (1) Eastern Amazonia in Pará, Brazil, south of the Amazon River along the Tocantins, Xingu, and Tapajós rivers; (2) the Gerais region of northeastern Brazil, including the states of Maranhão, Piauí, Goiás, Tocantins, Bahia, and Minas Gerais; and (3) the Pantanal of Mato Grosso and Mato Grosso do Sul, Brazil, and marginally in Bolivia and Paraguay. These populations of hyacinth macaws inhabit those portions of the species' original range that experienced the least pressure from bird catchers, meat and feather hunters, and agricultural developers (Munn et al. 1989, pp. 406-407).

    Prior to the arrival of Indians and Europeans to South America, there may have been between 100,000 and 3 million hyacinth macaws (Munn et al. 1989, p. 412); however, due to the species' large but patchy range, an estimate of the original population size when the species was first described (1790) is unattainable (Collar et al. 1992, p. 253). Although some evidence indicates that the hyacinth macaw was abundant before the mid-1980s (Guedes 2009, p. 11; Collar et al. 1992, p. 253), the species significantly declined throughout the 1980s due to an estimated 10,000 birds illegally captured during the 1980s for the pet trade and a further reduction in numbers due to habitat loss and hunting. Population estimates prior to 1986 are lacking, but a very rapid population decline is suspected to have taken place over the last 31 years (three generations) (Birdlife International (BLI) 2014a, unpaginated). In 1986, the total population of hyacinth macaws was estimated to be 3,000, with a range between 2,500 and 5,000 individuals; 750 occurred in Pará, 1,000 in Gerais, and 1,500 in Pantanal (Guedes 2004b, p. 2; Collar et al. 1992, p. 253; Munn et al. 1989, p. 413). In 2003, the population was estimated at 6,500 individuals; 5,000 of which were located in the Pantanal region, and 1,000-1,500 in Pará and Gerais, combined (BLI 2017, unpaginated; Guedes 2009, p. 11; Brouwer 2004, unpaginated). Observations of hyacinth macaws in the wild have increased in Paraguay, especially in the northern region (Espinola 2013, pers. comm.), but no quantitative data are available. Locals report the species increasing in Bolivia; between 100 and 200 hyacinth macaws are estimated to occur in the Bolivian Pantanal, with estimates up to 300 for the country (Guedes 2012, p. 1; Pinto-Ledezma 2011, p. 19; BLI 2017, unpaginated; BLI 1992, p. 4).

    The 2003 estimate indicates a substantial increase in the Pantanal population, although the methods or techniques used to estimate the population is not described. Therefore, the reliability of the estimation techniques, as well as the accuracy of the estimated increase, is not known (Santos, Jr. 2013, pers. comm.). Despite the uncertainty in the estimated population increase, the Pantanal is the stronghold for the species and has shown signs of recovery since 1990, most likely as a response to conservation projects (BLI 2017, unpaginated; Antas et al. 2006, p. 128; Pinho and Nogueira 2003, p. 30). The overall population trend for the hyacinth macaw throughout its range is reported as decreasing (BLI 2016, unpaginated), although there are no extreme fluctuations reported in the number of individuals (BLI 2016, unpaginated).

    Essential Needs of the Species

    Hyacinth macaws use a variety of habitats in the Pará, Gerais, and Pantanal regions. Each region features a dry season that prevents the growth of extensive closed-canopy tropical forests and maintains the more open habitat preferred by this species. In Pará, the species prefers palm-rich várzea (flooded forests), seasonally moist forests with clearings, and savannas. In the Gerais region, hyacinth macaws are located within the Cerrado biome, where they inhabit dry open forests in rocky, steep-sided valleys and plateaus, gallery forests (a stretch of forest along a river in an area of otherwise open country), and Mauritia palm swamps. In the Pantanal region, hyacinth macaws frequent gallery forests and palm groves with wet grassy areas (Juniper and Parr 1998, p. 417; Guedes and Harper 1995, p. 395; Munn et al. 1989, p. 407).

    Hyacinth macaws have a specialized diet consisting of the fruits of various palm species, which are inside an extremely hard nut that only the hyacinth macaw can easily break (Guedes and Harper 1995, p. 400; Collar et al. 1992, p. 254). Hyacinth macaws are highly selective in choice of palm nut; they have to be the right size and shape, as well as have an extractable kernel with the right lignin pattern (Brightsmith 1999, p. 2; Pittman 1993, unpaginated). They forage for palm nuts and water on the ground, but may also forage directly from the palm tree and drink fluid from unripe palm fruits. Hyacinth macaws also feed on the large quantities of nuts eliminated by cattle in the fields and have been observed in close proximity to cattle ranches where waste piles are concentrated (Juniper and Parr 1998, p. 417; Yamashita 1997, pp. 177, 179; Guedes and Harper 1995, pp. 400-401; Collar et al. 1992, p. 254).

    In each of the three regions where hyacinth macaws occur, they use only a few specific palm species. In Pará, hyacinth macaws have been reported to feed on Maximiliana regia (inajá), Orbignya martiana (babassu), Orbignya phalerata (babacú) and Astrocaryum sp. (tucumán). In the Gerais region, hyacinth macaws feed on Attalea funifera (piacava), Syagrus coronata (catolé), and Mauritia vinifera (buriti). In the Pantanal region, hyacinth macaws feed exclusively on Scheelea phalerata (acuri) and Acrocomia totai (bocaiúva) (Antas et al. 2006, p. 128; Schneider et al. 2006, p. 74; Juniper and Parr 1998, p. 417; Guedes and Harper 1995, p. 401; Collar et al. 1992, p. 254; Munn et al. 1989, pp. 407-408). Although hyacinth macaws prefer bocaiúva palm nuts over acuri, bocaiúva is only readily available from September to December, which coincides with the peak of chick hatching; however, the acuri is available throughout the year and constitutes the majority of this species' diet in the Pantanal (Guedes and Harper 1995, p. 400).

    Hyacinth macaws have specialized nesting requirements. As a secondary tree nester, they require large, mature trees with preexisting tree holes to provide nesting cavities large enough to accommodate them (Tortato and Bonanomi 2012, p. 22; Guedes 2009, pp. 4-5, 12; Pizo et al. 2008, p. 792; Abramson et al. 1995, p. 2). In Pará, the species nests in holes of Bertholettia excelsa (Brazil nut). In the Gerais region, nesting may occur in large dead Mauritia vinifera (buriti), but is most commonly found in natural rock crevices. In the Pantanal region, the species nests almost exclusively in Sterculia striata (manduvi) as it is one of the few tree species that grows large enough to supply cavities that can accommodate the hyacinth's large size. Manduvi trees must be at least 60 years old, and on average 80 years old, to provide adequate cavities (Guedes 2009, pp. 59-60; Pizo et al. 2008, p. 792; Santos Jr. et al. 2006, p. 185). Nesting has also been reported in Pithecellobium edwalii (angio branco), Enterolobium contortisiliquum (ximbuva), Vitex sp. (tarumá), and the cliff face of mountains on the border of the Pantanal (van der Meer 2013, p. 24; Guedes 2004b, p. 6; Kuniy et al. 2006, p. 381; Santos Jr. et al. 2006, p. 180; Pinho and Nogueira 2003, pp. 30, 33; Guedes 2002, p. 4; Juniper and Parr 1998, p. 417; Guedes and Harper 1995, p. 402; Collar et al. 1992, p. 255; Munn et al. 1989, p. 408).

    Conservation Status

    In 1989, the hyacinth was listed on the Official List of Brazilian Fauna Threatened with Extinction by the Brazilian Institute of Environment and Natural Resources (IBAMA), the government agency that controls the country's natural resources (Lunardi et al. 2003, p. 283; IBAMA Ordinance No. 1522, of December 19, 1989). Due to actions to combat trafficking of animals, the hyacinth macaw was removed from the list in 2014 (Instituto Chico Mendes de Conservação da Bioversidade 2016, unpaginated). It is listed as “critically endangered” by the State of Minas Gerais and “vulnerable” by the State of Pará (Garcia and Marini 2006, p. 153). In Paraguay, the hyacinth macaw is listed as in danger of extinction (Bauer 2012, pers. comm.).

    From 2000 to 2013, this species was classified as “endangered” by the International Union for Conservation of Nature (IUCN). However, in 2014, the hyacinth macaw was downlisted to “vulnerable” because evidence suggested that it had not declined as rapidly as previously thought. A “vulnerable” taxon is considered to be facing a high risk of extinction in the wild, whereas an “endangered” taxon is considered to be facing a very high risk of extinction in the wild (IUCN 2012, unpaginated). The hyacinth macaw is also listed as Appendix I on the CITES list. Species included in CITES Appendix I are considered threatened with extinction, and international trade is permitted only under exceptional circumstances, which generally precludes commercial trade.

    Factors Affecting the Species

    Section 4 of the Act (16 U.S.C. 1533), and its implementing regulations in title 50 of the Code of Federal Regulations at 50 CFR part 424, set forth the procedures for adding species to the Federal Lists of Endangered and Threatened Wildlife and Plants. Under section 4(a)(1) of the Act, we may list a species based on (A) The present or threatened destruction, modification, or curtailment of its habitat or range; (B) overutilization for commercial, recreational, scientific, or educational purposes; (C) disease or predation; (D) the inadequacy of existing regulatory mechanisms; or (E) other natural or manmade factors affecting its continued existence.

    Most of the information on the hyacinth macaw is from the Pantanal region, as this is the largest and most studied population. The species occurs only marginally within Bolivia and Paraguay as extensions from the Brazilian Pantanal population, and there is little information on the species in those countries. We found little information on the status of the Pará and Gerais populations; therefore, we evaluated impacts to these populations by a broader region (e.g., the Amazon biome for Pará and the Cerrado biome for Gerais).

    Parrots in general have traits that increase their vulnerability of extinction (Lee 2010, p. 3; Thiollay 2005, p. 1121; Guedes 2004a, p. 280; Wright et al. 2001, p. 711; Munn et al. 1989, pp. 407-409). The specialized nature and reproductive biology of the hyacinth macaw contribute to low recruitment of juveniles and decrease the ability to recover from reductions in population size caused by anthropogenic disturbances (Faria et al. 2008, p. 766; Wright et al. 2001, p. 711). This species' vulnerability to extinction is further impacted by deforestation that negatively affects the availability of essential food and nesting resources; hunting that removes individuals from already small populations; and other factors that further reduce naturally low reproductive rates, recruitment, and the population. Additionally, the hyacinth macaw has highly specialized food and nest-site requirements (Faria et al. 2008, p. 766; Pizo et al. 2008, p. 795; Munn et al. 1998, p. 409; Johnson et al. 1997, p. 186; Guedes and Harper 1995, p. 400), as they feed on and nest in very limited number of tree species. Therefore, hyacinth macaws are particularly vulnerable to extinction due to the loss of food sources and nesting sites (Faria et al. 2008, p. 766; Pizo 2008, p. 795; Munn et al. 1989, pp. 407-409; Johnson et al. 1997, p. 186).

    Factor A. The Present or Threatened Destruction, Modification, or Curtailment of Its Habitat or Range Deforestation

    Natural ecosystems across Latin America are being transformed due to economic development, international market demands, and government policies. In Brazil, demand for soybean oil and soybean meal has increased, causing land conversion to significantly increase to meet this demand (Barona et al. 2010, pp. 1-2). Much of the recent surge in cropland area expansion is taking place in the Brazilian Amazon and Cerrado regions (Nepstad et al. 2008, p. 1738). Brazil has also become the world's largest exporter of beef. Over the past decade, more than 10 million hectares (ha) (24.7 million acres (ac)) were cleared for cattle ranching, and the government is aiming to double the country's share of the beef export market to 60 percent by 2018 (Butler 2009, unpaginated).

    Pará: Pará is one of the Brazilian states that constitute the Amazon biome (Greenpeace 2009, p. 2). This biome contains more than just the well-known tropical rainforests; it also encompasses other ecosystems, including floodplain forests and savannas. Between 1995 and 2009, conversion of floodplain forests in the Amazon region to cattle ranching expanded significantly and was the greatest cause of deforestation (da Silva 2009, p. 3; Lucas 2009, p. 1; Collar et al. 1992, p. 257).

    Cattle ranching has been present in the várzea (floodplain forests) of the Amazon for centuries (Arima and Uhl, 1997, p. 433). However, since the late 1970s, state subsidies and massive infrastructure development have facilitated large-scale forest conversion and colonization for cattle ranching (Barona et al. 2010, p. 1). Certain factors have led to a significant expansion of this land use. The climate of the Brazilian Amazon is favorable for cattle ranching; frosts do not occur in the north of Brazil; and rainfall is more evenly distributed throughout the year, increasing pasture productivity and reducing the risk of fire. Additionally, the price of land in Pará has been lower than in central and south Brazil, resulting in ranchers establishing larger farms in Pará (Arima and Uhl, 1997, p. 446).

    Although the immediate cause of deforestation in the Amazon was predominantly the expansion of pasture between 2000 and 2006 (Barona et al. 2010, p. 8), the underlying cause may be the expansion of soy cultivation in other areas, leading to a displacement of pastures farther north into parts of Pará and causing additional deforestation (Barona et al. 2010, pp. 6, 8).

    In the Brazilian North region, including Pará, cattle occupy 84 percent of the total area under agricultural and livestock uses. This area, on average, expanded 9 percent per year over 10 years, causing 70-80 percent of deforestation (Nepstad et al. 2008, p. 1739). Pará itself contains two-thirds of the Brazilian Amazonia cattle herd (Arima and Uhl 1997, p. 343), with a sizable portion of the state classified as cattle-producing area (Walker et al. 2009, p. 69). For 7 months of the year, cattle are grazed in the várzea, but are moved to the upper terra firma the other 5 months (Arima and Uhl, 1997, p. 440). Intense livestock activity can affect seedling recruitment via trampling and grazing. Cattle also compact the soil such that regeneration of forest species is severely reduced (Lucas 2009, pp. 1-2). This type of repeated disturbance can lead to an ecosystem dominated by invasive trees, grasses, bamboo, and ferns (Nepstad et al. 2008, p. 1740).

    Pará has long been known as the epicenter of illegal deforestation (Dias and Ramos 2012, unpaginated) and has one of the highest deforestation rates in the Brazilian Amazon (Butler 2016, unpaginated). From 1988 to 2016, the state lost 143,159 km2 (55,274 mi2), with annual rates varying between 1,741 and 8,870 km2 (672 and 3,425 mi2) (Brazil's National Institute for Space Research (INPE) 2016, unpaginated; Butler 2016, unpaginated) (Table 1). Since 2004, deforestation rates in Pará have generally decreased. However, rates rose 35 percent in 2013, decreased in 2014, and increased in 2015 and 2016 (INPE 2016, unpaginated) (Table 1). The impacts to and loss of biodiversity within the two large regions of the Brazilian Amazon located in the state of Pará are due to not only deforestation across the landscape but also within-forest disturbance, such as wildfire and selective logging, resulting in a loss of biodiversity beyond what is expected based on deforestation alone. Within-forest disturbance can increase even as deforestation rates fall (Barlow et al. 2016, p. 144).

    Table 1—Deforestation in Pará (2004-2016) (INPE 2016) Year Accumulated
  • deforested
  • area (km2)
  • Annual
  • deforested
  • area (km2)
  • 2004 * 98,257 8,870 2005 104,156 5,899 2006 109,815 5,659 2007 115,341 5,526 2008 120,948 5,607 2009 125,229 4,281 2010 128,999 3,770 2011 132,007 3,008 2012 133,748 1,741 2013 136,094 2,346 2014 137,981 1,887 2015 140,134 2,153 2016 143,159 3,025 * Accumulation since 1988.

    Given the role cattle ranching plays in national and international markets and the profitability of ranching, significant expansion of cattle herds in the Brazilian Amazon has continued (Walker et al. 2009, p. 68). The remaining forested areas of Pará are at risk of being cleared; Pará is one of the states where most of Brazil's agriculture expansion is taking place (British Broadcasting Company News 2014, unpaginated). Furthermore, modeled future deforestation is concentrated in eastern Amazonia, which includes Pará, where the density of paved highways (existing and planned) will continue to be highest for several decades (Soares-Filho et al. 2006, p. 522).

    Gerais: The Gerais region is within the Cerrado biome, a 2-million-km2 (772,204-mi2) area consisting of plateaus and depressions with vegetation that varies from dense grasslands with sparse shrubs and small trees to almost closed woodland (Pinto et al. 2007, p. 14; da Silva 1997, p. 437; Ratter et al. 1997, p. 223). In the Cerrado, hyacinth macaws now mostly nest in rock crevices, most likely a response to the destruction of nesting trees (Collar et al. 1992, p. 255). These crevices will likely remain constant and are not a limiting factor. However, deforestation for agriculture, primarily soy crops, and cattle ranching threaten the remaining native cerrado vegetation, including palm species the hyacinth macaw relies on as a food source.

    Approximately 50 to 80 percent of the original Cerrado vegetation has been lost due to conversion to agriculture and pasture, and the area continues to suffer high rates of habitat loss (Grecchi et al. 2015, p. 2865; Beuchle et al. 2015, p. 121; WWF 2015, p. 2; Soares-Filho et al. 2014, p. 364; Pearce 2011, unpaginated; WWF-UK 2011b, p. 2; Carvalho et al. 2009, p. 1393; BLI 2008, unpaginated; Pinto et al. 2007, p. 14; Klink and Machado 2005, p. 708; Marini and Garcia 2005, p. 667; WWF 2001, unpaginated; da Silva 1997, p. 446; da Silva 1995, p. 298). From 2002 to 2008, the demand for land conversion in the Cerrado resulted in an annual deforestation rate of more than 14,200 km2 (5,483 mi2) (PROBIO program (Projeto de Conservação e Utilização Sustentável da Diversidade Biológica); Ministério do Meio Ambiente (MMA) 2015, p. 9; WWF-UK 2011b, p. 2; Beuchle et al. 2015, p. 117). At this rate, the vegetation of the Cerrado region was disappearing faster than the Amazon rainforest (Pearce 2011, unpaginated; WWF-UK 2011c, p. 19; Pennington et al. 2006, in Beuchle et al. 2015, p. 117; Klink and Machado 2005, p. 708; Ratter et al. 1997, p. 228). However, the annual deforestation rate from 2008 to 2009 and 2009 to 2010 in the Cerrado slowed by 46 percent and 16 percent respectively (MMA 2015, p. 9; Critical Ecosystem Partnership Fund (CEPF) 2016, p. 145) (Table 2). In a comparison study, the loss of natural vegetation decreased to an estimated 12,949 km2 (4,999 mi2) per year from 2000 to 2005, and 11,812 km2 (4,560 mi2) per year from 2005 to 2010 (Beuchle et al. 2015, pp. 124-125).

    Since 2008, annual monitoring of deforestation in the Cerrado has taken place through a government program that monitors each of the Brazilian biomes. Compared to the deforestation rates of the early 2000s, deforestation has decreased about 40 percent (CEPF 2016, p. 145). Although the annual rate of deforestation is generally decreasing, the total amount of forested habitat continues to experience a slow and steady decline (MMA 2015, p. 9) (Table 2).

    ER13AU18.032

    The remaining natural vegetation of the Cerrado is highly fragmented (only 20 percent of the original biome is considered intact) and continues to be pressured by conversion for soy plantations and extensive cattle ranching (WWF-UK 2011b, p. 2; WWF-UK 2011c, p. 21; Carvalho et al. 2009, p. 1393; BLI 2008, unpaginated). About 6 in every 10 ha (15 of 25 ac) of the Cerrado are suitable for mechanized agriculture (WWF-UK 2011b, p. 2). Maranhão, Tocantins, Piauí, and Bahia, states where hyacinth macaws occur, are undergoing rapid conversion, mostly to soy crops (CEPF 2016, p. 151). In two of these states, deforestation increased by 40 percent in Toncantins (INPE 2016, unpaginated) and by 25 percent in Maranhão (Butler 2016, unpaginated) in 2016 compared to the deforestation rate in 2015. Soy production will continue to grow as the beans have many uses for food, feed, and industry in Brazil and abroad (CEPF 2016, p. 152). Furthermore, the Brazilian government has proposed a 731,735-km2 (282,524-mi2) agricultural development, of which 91 percent occurs in the Cerrado, with little regard for the environment, at least as of 2015 (Clark 2015 and Miranda 2015, in CEPF 2016, p. 95). Additionally, the conversion of land for biofuel production is likely imminent, creating a market for the expansion and establishment of new areas for soy, castor beans, other oil-bearing plants, and sugar cane (Carvalho et al. 2009, p. 1400).

    Given that the Cerrado is the most desirable biome for agribusiness expansion and contains approximately 40 million ha (99 million ac) of environmental surplus, which is land that exceeds the conservation requirements of the forest code and that could be legally deforested (see Factor D discussion, below) (Soares-Filho et al. 2014, p. 364), this region will likely continue to suffer high deforestation rates. Projections for coming decades show the largest increase in agricultural production occurring in the Cerrado (CEPF 2016, p. 145).

    Pantanal: The Pantanal is a 140,000-km2 (54,054-mi2) seasonally flooded wetland interspersed with higher areas not subject to inundation (cordilleras), covered with cerrado or seasonal forests (Santos Jr. 2008, p. 133; Santos Jr. et al. 2007, p. 127; Harris et al. 2005, p. 715; Mittermeier et al. 1990, p. 103). Transitions during the 1990s to more intensive cattle ranching methods led to the conversion of more forests to pasture and the introduction of nonnative grasses. Ninety-five percent of the Pantanal is privately owned; 80 percent of the privately owned land is used for cattle ranches, making cattle ranching the predominant economic activity in this region and the greatest cause of habitat loss in the Pantanal (van der Meer 2013, p. 5; Guedes and Vicente 2012, pp. 146-147, 148; Guedes 2009, p. 12; Pizo et al. 2008, p. 793; Harris et al. 2006, pp. 165, 175-176; Harris et al. 2005, pp. 715-716, 718; Pinho and Nogueira 2003, p. 30; Seidl et al. 2001, p. 414; Guedes and Harper 1995, p. 396; Mittermeier 1990, pp. 103, 107-108).

    Manduvi, the tree that hyacinth macaws almost exclusively use for nesting in this region, grow in cordilleras, which constitute only 6 percent of the vegetative area of the Pantanal (van der Meer 2013, p. 6; Pizo et al. 2008, p. 793; Johnson et al. 1997, p. 186). Many of these patches and corridors are surrounded by seasonally flooded grasslands used as rangeland for cattle during the dry season (Johnson et al. 1997, p. 186). During the flooding season (January to June), up to 80 percent of the Pantanal is flooded and ranchers move cattle to cordilleras, increasing cattle pressure on upland forests (van der Meer 2013, p. 3; Guedes 2002, p. 3). These upland forests are often removed and converted to cultivated pastures with exotic grasses (van der Meer 2013, p. 6; Santos Jr. 2008, p. 136; Santos Jr. et al. 2007, p. 127; Harris et al. 2006, p. 165; Harris et al. 2005, p. 716; Pinho and Nogueira 2003, p. 30; Seidl et al. 2001, p. 414; Johnson et al. 1997, p. 186). Clearing land to establish pasture is perceived as the economically optimal land use, while land not producing beef is often perceived as unproductive (Seidl et al. 2001, pp. 414-415).

    Since 2002, regular monitoring of land use and vegetative cover in the Upper Paraguay Basin, which includes the Pantanal, has taken place. While the annual rate of deforestation is decreasing, satellite monitoring of the area indicates a slow and steady increase in deforested area (Table 3, below).

    ER13AU18.033

    When clearing land for pastures, palm trees are often left, as the cattle will feed on the palm nuts (Pinho and Nogueira 2003, p. 36). In fact, hyacinth macaws occur near cattle ranches and feed off the palm nuts eliminated by the cattle (Juniper and Parr 1998, p. 417; Yamashita 1997, pp. 177, 179; Guedes and Harper 1995, pp. 400-401; Collar et al. 1992, p. 254). However, other trees, including potential nesting trees, are often removed (Snyder et al. 2000, p. 119). Even in areas where known nesting trees were left and the surrounding area was cleared, competition with each other and other macaw species became so fierce that hyacinth macaws were unable to reproduce; both eggs and chicks were killed by competitors (see Factor C discussion, below).

    Other activities associated with cattle ranching, such as grazing, burning, compaction, the introduction of exotic grasses, and fragmentation, negatively impacts the nesting trees of the hyacinth macaw (Guedes 2013, pers. comm.; Guedes and Vicente 2012, pp. 149-150; Santos Jr. et al. 2007, p. 128; Harris et al. 2006, p. 175; Snyder et al. 2000, p. 119). For example, fire is a common method for renewing pastures, controlling weeds, and controlling pests (e.g., ticks); however, fires frequently become uncontrolled and burn patches and corridors of manduvi trees during the dry season (Harris et al. 2005, p. 716; Johnson et al. 1997, p. 186). Although fire can promote cavity formation in manduvi trees, frequent fires prevent trees from surviving to a size capable of providing suitable cavities, and cause a high rate of nesting-tree loss (Guedes 1993 in Johnson et al. 1997, p. 187). Five percent of manduvi trees are lost each year to deforestation, fire, and storms (Guedes 1995, in Santos Jr. et al. 2006, pp. 184-185; Guedes and Vicente 2012, p. 157).

    In addition to the impact of fire on recruitment of manduvi trees, cattle directly impact the density of manduvi seedlings in the Pantanal. Cattle forage on and trample manduvi seedlings, affecting the recruitment of this species to be able to reach a size large enough to accommodate hyacinth macaws (Pizo et al. 2008, p. 793; Johnson et al. 1997, p. 187; Mittermeier et al. 1990, p. 107). Only those manduvi trees at least 60 years old are capable of providing these cavities (Pizo et al. 2008, p. 792; Santos Jr. et al. 2006, p. 185). The minimum diameter at breast height (DBH) for trees to potentially contain a cavity suitable for hyacinth macaws is 50 centimeters (cm) (20 in), while all manduvi trees greater than 100 cm (39 in) DBH contain suitable nest cavities. However, there is low recruitment of manduvi trees in classes greater than 5 cm (2 in) DBH, a strong reduction in the occurrence of trees greater than 50 cm (20 in) DBH, and very few trees greater than 110 cm (43 in) DBH (Santos Jr. et al. 2007, p. 128). Only 5 percent of the existing adult manduvi trees (trees with a DBH greater than 50 cm (20 in)) in south-central Pantanal (Guedes 1993, in Johnson et al. 1997, p. 186) and 11 percent in southern Pantanal (van der Meer 2013, p. 16) contain suitable cavities for hyacinth macaws. Thus, potential nesting sites are rare and will become increasingly rare in the future (Santos Jr. et al. 2007, p. 128).

    Impacts of Deforestation: Because the hyacinth macaw has highly specialized diet and nesting requirements, it is particularly vulnerable to the loss of these resources (Faria et al. 2008, p. 766; Pizo 2008, p. 795; Munn et al. 1989, pp. 407-409; Johnson et al. 1997, p. 186). The loss of tree species used by hyacinth macaws negatively impacts the species by reducing availability of food resources, creating a shortage of suitable nesting sites, increasing competition, and resulting in lowered recruitment and a reduction in population size (Lee 2010, pp. 2, 6, 12; Santos Jr. et al. 2007, p. 128; Johnson et al. 1997, p. 188).

    Its specialized diet makes the hyacinth macaw vulnerable to changes in food availability. Inadequate nutrition can contribute to poor health and reduced reproduction in parrots generally (McDonald 2003, in Lee 2010, p. 6). Changes in palm fruit availability decreases reproduction in hyacinth macaws (Guedes 2009, pp. 42-43, 44). In Pará and the Gerais region, where food sources are threatened, persistence of the species is a concern given that one of the major factors thought to have contributed to the critically endangered status of the Lear's macaw (Anodorhynchus leari) is the loss of its specialized food source, Syagrus sp. (licuri palm) stands, to cattle grazing (Collar et al. 1992, p. 257).

    Hyacinth macaws can tolerate a certain degree of human disturbance at their breeding sites (Pinho and Noguiera 2003, p. 36). However, the number of usable cavities increases with the age of the trees in the forest (Newton 1994, p. 266), and clearing land for agriculture and cattle ranching, cattle trampling and foraging, and burning of forest habitat result in the loss of mature trees with natural cavities of sufficient size and a reduction in recruitment of native species that could eventually provide nesting cavities.

    A shortage of nest sites can jeopardize the persistence of the hyacinth macaw by constraining breeding density, resulting in lower recruitment and a gradual reduction in population size (Santos Jr. et al. 2007, p. 128; Johnson et al. 1997, p. 188; Guedes and Harper 1995, p. 405; Newton 1994, p. 265). This reduction may lead to long-term effects on the viability of the hyacinth macaw population, especially in Pará and the Pantanal where persistence of nesting trees is compromised (Santos Jr. et al. 2007, p. 128; Santos Jr. et al. 2006, p. 181). Although a species may survive the initial deforestation, the resulting lack of food resources and breeding sites may reduce the viability of the population and make the species vulnerable to extinction (Sodhi et al. 2009, p. 517).

    In response to the loss of its nesting tree in the Gerais region, hyacinth macaws now use rock crevices for nesting. Hyacinth macaws have been reported in various trees species and even on cliffs on the border of the Pantanal, although the majority of their nests are in Brazil nut (in Pará) and manduvi (in the Pantanal) (see Essential Needs of the Species, above). We do not know if the hyacinth macaws in the Pantanal will respond in the same way to the loss of nesting trees as those in the Gerais region; however, it is possible that if these primary nesting trees become scarcer, hyacinth macaws may adapt to using cliff faces or cavities of other trees (van der Meer 2013, p. 3). Deforestation in these regions would likely impact any alternative nesting trees and food sources, resulting in the same negative effect on the hyacinth macaw. Furthermore, competition for limited nesting sites and food would continue.

    Factor B. Overutilization for Commercial, Recreational, Scientific, or Educational Purposes Hunting

    In Pará and the Gerais region, hunting removes individual hyacinth macaws vital to the already small populations (Brouwer 2004, unpaginated; Collar et al. 1992, p. 257; Munn et al. 1989, p. 414). Hyacinth macaws in Pará are hunted for subsistence and the feather trade by some Indian groups (Brouwer 2004, unpaginated; Munn et al. 1989, p. 414). Because the hyacinth macaw is the largest species of macaw, it may be targeted by subsistence hunters, especially by settlers along roadways (Collar et al. 1992, p. 257). The Gerais region is poor, and animal protein is not as abundant as in other regions; therefore, meat of any kind, including the large hyacinth macaw, is sought as a protein source (Collar et al. 1992, p. 257; Munn et al. 1989, p. 414). Additionally, increased commercial sale of feather art by Kayapo Indians of Gorotire may be of concern given that 10 hyacinth macaws are required to make a single headdress (Collar et al. 1992, p. 257).

    Because the hyacinth macaw populations in Pará and the Gerais region are estimated at only 1,000-1,500 individuals combined, the removal of any individuals from these small populations has a negative effect on reproduction and the ability of the species to recover. Any continued hunting for either meat or for the sale of feather art is likely to contribute to the decline of the hyacinth macaw in these regions, particularly when habitat conversion is also taking place.

    Hunting, capture, and trade of animal species are prohibited without authorization throughout the range of the hyacinth macaw (Clayton 2011, p. 4; Snyder et al. 2000, p. 119; Environmental Crimes Law (Law No. 9605/98); Stattersfield and Capper 1992, p. 257; Munn et al. 1989, p. 415; Official List of Brazilian Endangered Animal Species (Order No. 1.522/1989) (IBAMA 1989); Brazilian Constitution (title VIII, chapter VI, 1988); Brazilian Law No. 5197/1967; UNEP, n.d., unpaginated). However, continued hunting in some parts of its range is evidence that existing laws are not being adequately enforced. Without greater enforcement of laws, hunting will continue to impact the hyacinth macaw (see Factor D discussion, below).

    Pet Trade

    In the 1970s and 1980s, substantial trade in hyacinth macaws was reported, but actual trade was likely significantly greater given the amount of smuggling, routing of birds through countries not parties to CITES, and internal consumption in South America (Collar et al. 1992, p. 256; Munn et al. 1989, pp. 412-413). Trade in parrots in the 1980s was particularly high due to a huge demand from developed countries, including the United States, which was the main consumer of parrot species at that time (Rosales et al. 2007, pp. 85, 94; Best et al. 1995, p. 234). In the late 1980s and early 1990s, reports of hyacinth macaw trapping included one trapper who worked an area for 3 years removing 200-300 wild hyacinth macaws a month during certain seasons and another trapper who caught 1,000 hyacinth macaws in 1 year and knew of other teams operating at similar levels (Silva (1989a) and Smith (1991c) in Collar et al. 1992, p. 256). More than 10,000 hyacinth macaws are estimated to have been taken from the wild in the 1980s (Smith 1991c, in Collar et al. 1992, p. 256; Munn et al. 1987, in Guedes 2009, p. 12). In the years following the enactment of the WBCA, studies found lower poaching levels than in prior years, suggesting that import bans in developed countries reduced poaching levels in exporting countries (Wright et al. 2001, pp. 715, 718).

    Table 4—CITES Trade Database: Approximate Number of Imports/Exports of Hyacinth Macaw With Identified Sources and Purposes of Trade Source Approximate
  • number of birds
  • Importer
  • reported
  • quantity
  • Exporter
  • reported
  • quantity
  • Purpose Approximate
  • number of birds
  • Importer
  • reported
  • quantity
  • Exporter
  • reported
  • quantity
  • Live Total 1,488 1,435 Breeding in Captivity or Artificial Propagation 688 827 Live/Captive Source 1,342 1,356 Educational 29 25 Live/Wild Source 37 14 Hunting Trophy 1 0 Live/Pre-Convention 20 22 Law Enforcement, Judicial, Forensic 0 3 Live/Unknown Source 13 7 Medical 1 31 Live/Confiscated 32 3 Reintroduction into Wild 4 0 Live/No Source Identified 44 33 Personal 361 123 Total Specimens 1,661 1,756 Circus or Travelling Exhibition 3 7 Scientific 35 244 Commercial 336 348 Zoo 138 49 Not Reported 65 99 Total Specimens 1,661 1,756

    The data in Table 4 are based on CITES trade data obtained from the CITES Trade Database (accessed on January 12, 2018), from 1987 through 2015. Because there may be a lag time in the data reported relative to when the hyacinth macaw was uplisted to Appendix I in CITES (October 22, 1987), a few entries in the database between 1987 and 2015 categorize the hyacinth macaw as Appendix II. There are differences in the manner in which the importing and exporting countries report their trade, and some data may be contradictory or incorrectly reported.

    We found little additional information on illegal trade of this species in international markets. One study found that illegal pet trade in Bolivia continues to involve CITES-listed species; the authors speculated that similar problems exist in Peru and Brazil (Herrera and Hennessey 2007, p. 298). In that same study, 11 hyacinth macaws were found for sale in a Santa Cruz market from 2004 to 2007 (10 in 2004, and 1 in 2006) (Herrera and Hennessey 2009, pp. 233-234). Larger species, like the hyacinth macaw, were frequently sold for transport outside of the country, mostly to Peru, Chile, and Brazil (Herrera and Hennessey 2009, pp. 233-234). During a study conducted from 2007 to 2008, no hyacinth macaws were recorded in 20 surveyed Peruvian wildlife markets (Gastañaga et al. 2010, pp. 2, 9-10). We found no other data on the presence of hyacinth macaws in illegal trade.

    Although illegal trapping for the pet trade occurred at high levels during the 1980s, trade has decreased significantly from those levels. International trade of parrots was significantly reduced during the 1990s as a result of tighter enforcement of CITES regulations, stricter measures under European Union legislation, and adoption of the WBCA, along with adoption of national legislation in various countries (Snyder et al. 2000, p. 99) (see Factor D discussion, below). We found no information indicating trade is currently impacting the hyacinth macaw.

    Factor C. Disease or Predation

    In the Pantanal, predation and disease are factors affecting reproductive success of the hyacinth macaw (Guedes 2009, pp. 5, 8, 42; Guedes 2004b, p. 7). Predation accounted for 52 percent of lost eggs during the incubation period in a 10-year study in the Miranda region of the Pantanal (Guedes 2009, pp. 5, 74). Of the nests that produced chicks, 38 percent of chicks were lost due to predation by species such as carnivorous ants (Solenopsis sp.), other insects, collared forest falcon (Micrastur semitorquatus), and spectacled owl (Pulsatrix perspicillata). The toco toucan (Ramphastos toco) and great horned owl (Bubo virginianus) are also suspected of chick predation, but this has not yet been confirmed (Guedes 2009, pp. 6, 79-81; Pizo et al. 2008, p. 795). Of 582 eggs monitored over 6 years in the Nhecolândia region of the Pantanal, approximately 24 percent (n = 138 eggs) were lost to predators (Pizo et al. 2008, pp. 794, 795). Several species preyed upon hyacinth macaw eggs, including toco toucans, purplish jays (Cyanocorax cyanomelas), white-eared opossums (Didelphis albiventris), and coatis (Nasua nasua) (Guedes 2009, pp. 5, 23, 46, 58, 74-75; Pizo et al. 2008, p. 795). The toco toucan was the main predator, responsible for 12.4 percent of the total eggs lost and 53.5 percent of the eggs lost annually in the Nhecolândia region (Pizo et al. 2008, pp. 794, 795). Most predators leave some sort of evidence behind; however, toco toucans swallow hyacinth macaw eggs whole, leaving no evidence behind. This ability may lead to an underestimate of nest predation by toucans (Pizo et al. 2008, p. 793).

    Incidence of disease, such as hoof-and-mouth disease and brucellosis, and of ectoparasites, has been observed in hyacinth macaws (Arima and Uhl, 1997, p. 446; Allgayer et al. 2009, p. 974). Pará ranchers and technicians concurred that there's a lower incidence of disease (e.g., hoof-and-mouth disease, brucellosis) and ectoparasites in Pará than in central and south Brazil (Arima and Uhl, 1997, p. 446). A study of free-living nestlings from the Pantanal detected ectoparasites in 3 percent and scars in 6 percent of birds, suggesting the occurrence of parasitism. The ectoparasites were identified as Philornis sp. (Diptera: Muscidae). However, the absence of blood and intestinal parasites in samples collected for 4 consecutive years indicates that there is a low prevalence of parasitism in hyacinth macaw nestlings (Allgayer et al. 2009, pp. 974, 977).

    Factor D. Inadequacy of Existing Regulatory Mechanisms Brazil

    Hunting, capture, and trade of animal species are prohibited without authorization (Environmental Crimes Law (Law No. 9605/98)). In general, wildlife species and their nests, shelters, and breeding grounds are subject to Brazilian laws designed to provide protection (Clayton 2011, p. 4; Snyder et al. 2000, p. 119; Environmental Crimes Law (Law No. 9605/98); Stattersfield and Capper 1992, p. 257; IBAMA 1989; Brazilian Constitution (title VIII, chapter VI, 1988); Brazilian Law No. 5197/1967; United Nations Environment Programme (UNEP), n.d., unpaginated). The forests of Brazil are specifically subject to several Brazilian laws designed to protect them. Destruction and damaging of forest reserves, cutting trees in forest reserves, and causing fire in forests, among other actions, without authorization are prohibited (Clayton 2011, p. 5; Environmental Crimes Law (Law No. 9605/98); UNEP, n.d., unpaginated).

    Protected Areas: The main biodiversity protection strategy in Brazil is the creation of Protected Areas (National Protected Areas System) (Federal Act 9.985/00) (Santos Jr. 2008, p. 134). Various regulatory mechanisms (Law No. 11.516, Act No. 7.735, Decree No. 78, Order No. 1, and Act No. 6.938) in Brazil direct Federal and State agencies to promote conservation of the country's natural resources through protection of lands and the establishment and management of protected areas (ECOLEX 2007, pp. 5-7). These mechanisms generally aim to protect endangered wildlife and plant species, genetic resources, overall biodiversity, and native ecosystems on Federal, State, and privately owned lands (e.g., Law No. 9.985, Law No. 11.132, Resolution No. 4, and Decree No. 1.922). Brazil's Protected Areas were established in 2000, and may be categorized as “strictly protected” or “sustainable use” based on their overall management objectives. Strictly protected areas include national parks, biological reserves, ecological stations, natural monuments, and wildlife refuges protected for educational and recreational purposes and scientific research. Protected areas of sustainable use (national forests, environmental protection areas, areas of relevant ecological interest, extractive reserves, fauna reserves, sustainable development reserves, and private natural heritage reserves) allow for different types and levels of human use with conservation of biodiversity as a secondary objective. As of 2005, Federal and State governments strictly protected 478 areas totaling 37,019,697 ha (14,981,340 ac) in Brazil (Rylands and Brandon 2005, pp. 615-616). Other types of areas contribute to the Brazilian Protected Areas System, including indigenous reserves and areas managed and owned by municipal governments, nongovernmental organizations, academic institutions, and private sectors (Rylands and Brandon 2005, p. 616).

    The Amazon contains a balance of strictly prohibited protected areas (49 percent of protected areas) and sustainable use areas (51 percent) (Rylands and Brandon 2005, p. 616). We found no information on the occurrence of the hyacinth macaw in any protected areas in Pará. The Cerrado biome is one of the most threatened biomes and is underrepresented among Brazilian protected areas; only 2.25 percent of the original extent of the Cerrado is protected (Marini et al. 2009, p. 1559; Klink and Machado 2005, p. 709; Siqueira and Peterson 2003, p. 11). Within the Cerrado, the hyacinth macaw is found within the Araguaia National Park in Goiás and the Parnaíba River Headwaters National Park (BLI 2014b; Ridgely 1981, p. 238). In 2000, the Pantanal was designated as a Biosphere Reserve by the United Nations Educational, Scientific and Cultural Organization (UNESCO) (Santos Jr. 2008, p. 134). Only 4.5 percent of the Pantanal is categorized as protected areas (Harris et al. 2006, pp. 166-167), including strictly protected areas and indigenous areas (Klink and Machado 2005, p. 709). Within these, the hyacinth macaw occurs only within the Pantanal National Park (Collar et al 1992; Ridgely 1981, p. 238). The distribution of Federal and State protected areas are uneven across biomes, yet all biomes need substantially more area to be protected to meet the recommendations established in priority-setting workshops held by Brazil's Ministry of the Environment. These workshops identified 900 areas for conservation of biodiversity and all biomes, including the Amazon, Cerrado, and Pantanal (Rylands and Brandon 2005, pp. 615-616).

    The Ministry of Environment is working to increase the amount of protected areas in the Pantanal and Cerrado regions; however, the Ministry of Agriculture is looking at using an additional 1 million km2 (386,102 mi2) for agricultural expansion, which will speed up deforestation (Harris et al. 2006, p. 175). These competing priorities make it difficult to enact and enforce regulations that protect the habitat of this species. Additionally, after the creation of protected areas, a delay in implementation or a lack of local management commitment often occurs, staff limitations make it difficult to monitor actions, and a lack of acceptance by society or a lack of funding make administration and management of the area difficult (Santos Jr. 2008, p. 135; Harris et al. 2006, p. 175). Furthermore, ambiguity in land titles allows illegal occupation and clearing of forests in protected areas, such as federal forest reserves (Schiffman 2015, unpaginated). The designation of the Pantanal as a Biosphere Reserve is almost entirely without merit because of a lack of commitment by public officials (Santos Jr. 2008, p. 134).

    Awareness of the urgency in protecting the biodiversity of the Cerrado biome is increasing (Klink and Machado 2005, p. 710). The Brazilian Ministry of the Environment's National Biodiversity Program and other government-financed institutes, such as the Brazilian Environmental Institute, Center for Agriculture Research in the Cerrado, and the National Center for Genetic Resources and Biotechnology, are working together to safeguard the existence and viability of the Cerrado. Additionally, nongovernmental organizations such as Fundaço Pró-Natureza, Instituto Sociedade População e Natureza, and World Wildlife Fund have provided valuable assessments and are pioneering work in establishing extractive reserves (Ratter et al. 1997, pp. 228-229). Other organizations are working to increase the area of federal Conservation Units, a type of protected area, that currently represent only 1.5 percent of the biome (Ratter et al. 1997, p. 229).

    The Brazilian government, under its Action Plan for the Prevention and Control of Deforestation and Burning in the Cerrado—Conservation and Development (PPCerrado) (2010), committed to recuperating at least 8 million ha (20 million ac) of degraded pasture by the year 2020, reducing deforestation by 40 percent in relation to the average recorded between 1999 and 2008, decreasing forest fires, expanding sustainable practices, and monitoring remaining natural vegetation. It also planned to expand the areas under protection in the Cerrado to 2.1 million ha (5 million ac) (Ribeiro et al. 2012, p. 11; WWF-UK 2011b, p. 4). This plan is based off the success of the Plan of Action for Prevention and Control of Deforestation in the Legal Amazon (PPCDAm), which has reduced the deforestation rate by approximately 80 percent in relation to the 2004 rate (Department of Policies to Combat Deforestation 2016, p. 6).

    Both plans since their inception have achieved important results. The PPCDAm started in 2004 and PPCerrado in 2010. Results achieved for the PPCDAm include, but are not limited to: 50 million ha (124 million ac) of protected areas; sustainable agriculture—low carbon agriculture; improvements of the monitoring systems; strengthening inspection with integrated actions between IBAMA, Federal Police, Army and National Force of Public Security; and a moratorium of soybean production in illegally deforested areas in the Amazon (Department of Policies to Combat Deforestation 2016, pp. 11-12). Results achieved by the PPCerrado include: Development (in progress) of land-cover monitoring systems to guide the preparation of public policies and support enforcement actions for this biome; development of a rural environmental registry; integrated fire management in conservation units; development of monitoring systems for burned areas and deforestation; sustainable agriculture—low carbon agriculture; environmental inspection, with 20,000 embargoed areas and $75 million of fines, including 287 inspection operations in protected areas, indigenous lands, highways, and steel industries; and training of 2,400 families for forest and community management (Department of Policies to Combat Deforestation 2016, pp. 8-9). Moreover, the plan has influenced and guides a series of public policies, programs, and projects implemented in the Cerrado, including international cooperation projects in line with the objectives of the PPCerrado. In 2015, the third phase of the PPCDAm (2012-2015) and the second phase of the PPCerrado (2014-2015) was completed. The next phase of the PPCerrado will guide federal actions in the period 2016-2020, with the main indicator as the annual deforestation rate in the Cerrado biome (Department of Policies to Combat Deforestation 2016, p. 16).

    We do not have information on the deforestation rate in the Cerrado biome in relation to the implementation of the PPCerrado. However, Brazil has obtained significant reduction of the deforestation rate after 12 years of the PPCDAm and 6 years of PPCerrado, with most of the reduction occurring within the Amazon basin. Challenges persist, along with the need for strengthened and innovative actions (Department of Policies to Combat Deforestation 2016, p. 7).

    Many challenges limit the effectiveness of the protected areas system. Brazil is faced with competing priorities of encouraging development for economic growth and resource protection. In the past, the Brazilian government, through various regulations, policies, incentives, and subsidies, has actively encouraged settlement of previously undeveloped lands, which facilitated the large-scale habitat conversions for agriculture and cattle-ranching that occurred throughout the Amazon, Cerrado, and Pantanal biomes (WWF-UK 2011b, p. 2; WWF 2001, unpaginated; Arima and Uhl, 1997, p. 446; Ratter et al. 1997, pp. 227-228). The risk of intense wild fires may increase in areas, such as protected areas, where cattle are removed and the resulting accumulation of plant biomass serves as fuel (Santos Jr. 2013, pers. comm.; Tomas et al. 2011, p. 579).

    The states where the hyacinth macaw occurs contain 53 protected areas (Parks.it, n.d., unpaginated). However, the species occurs in only three National Parks within those protected areas; none of these areas is effectively protected (BLI 2014b, unpaginated; Collar et al. 1992, p. 257; Rogers 2006, unpaginated; Ridgely 1981, p. 238). The hyacinth macaw continues to be hunted in Pará and the Gerais region, and habitat loss due to agricultural expansion and cattle ranching is occurring in all three regions. Therefore, it appears that Brazil's protected areas system does not adequately protect the hyacinth macaw or its habitat, either because the species is found outside the protected areas or not adequately protected within them.

    Farmland Environmental Registry: The Ministry of Environment and The Nature Conservancy have worked together to implement the Farmland Environmental Registry to curb illegal deforestation in the Amazon, which in turn would reduce impacts to species such as the hyacinth macaw that are negatively affected by deforestation. This program was launched in the states of Mato Grosso and Pará; it later became the model for the Rural Environmental Registry that monitors all of Brazil for compliance with the Forest Code (see discussion below). This plan helped Paragominas, a municipality in Pará, be the first in Brazil to come off the government's blacklist of top Amazon deforesters. After 1 year, 92 percent of rural properties in Paragominas had been entered into the registry, and deforestation was cut by 90 percent (Dias and Ramos 2012, unpaginated; Vale 2010, unpaginated). In response to this success, Pará launched its Green Municipalities Program in 2011. The purpose of this project is to reduce deforestation in Pará by 80 percent by 2020, and strengthen sustainable rural production. To accomplish this goal, the program seeks to create partnerships between local communities, municipalities, private initiatives, IBAMA, and the Federal Public Prosecution Service and to focus on local pacts, deforestation monitoring, implementation of the Rural Environmental Registry, and structuring municipal management (Veríssimo et al. 2013, pp. 3, 6, 12-13). The program aims to show how it is possible to develop a new model for an activity identified as a major cause of deforestation (Dias and Ramos 2012, unpaginated; Vale 2010, unpaginated).

    Forest Code: Brazil's Forest Code, passed in 1965, is a central component of the nation's environmental legislation; it dictates the minimum percentage and type of woodland that farmers, timber companies, and others must leave intact on their properties (Barrionuevo 2012, unpaginated; Boadle 2012, unpaginated). Since 2001, the Forest Code has required landowners to conserve native vegetation on their rural properties. This requirement includes setting aside a Legal Reserve that comprises 80 percent of the property if it is located in the Amazon and 20 percent in other biomes. The Forest Code also designated environmentally sensitive areas as Areas of Permanent Preservation (APPs) to conserve water resources and prevent soil erosion; APPs include Riparian Preservation Areas to protect riverside forest buffers and Hilltop Preservation Areas to protect hilltops, high elevations, and steep slopes (Soares-Filho et al. 2014, p. 363).

    For years, this law was widely ignored by landowners and not enforced by the government, as evidenced by the high deforestation rates (Leahy 2011, unpaginated; Pearce 2011, unpaginated; Ratter et al. 1997, p. 228). However, as deforestation rates increased in the early 2000s, Brazil began cracking down on illegal deforesters and used satellite imagery to track deforestation, resulting in decreased deforestation rates (Soares-Filho et al. 2014, p. 363; Barrionuevo 2012, unpaginated; Boadle 2012, unpaginated; Darlington 2012, unpaginated). Efforts to strengthen enforcement of the Forest Code increased pressure on the farming sector, which resulted in a backlash against the Forest Code and industry's proposal of a new Forest Code (Soares-Filho et al. 2014, p. 363).

    In 2011, reforms to Brazil's Forest Code were debated in the Brazilian Senate. The reforms were favored by the agricultural industry but were greatly opposed by conservationists. At that time, the expectation of the bill being passed resulted in a spike in deforestation (Darlington 2012, unpaginated; Moukaddem 2011, unpaginated; WWF-UK 2011a, unpaginated). A new Forest Code was passed in 2012, and although the new reforms were an attempt at a compromise between farmers and environmentalists, many claim the new bill reduces the total amount of land required to be maintained as forest and will increase deforestation, especially in the Cerrado (Soares-Filho et al. 2014, p. 364; Boadle 2012, unpaginated; Darlington 2012, unpaginated; Do Valle 2012, unpaginated; Greenpeace 2012, unpaginated).

    Stakeholders in favor of stronger conservation opposed the new law due to the complexity of the rule, challenges in implementation, and a lack of adequate protection of Brazil's forests. The new Forest Code carries over conservation requirements for Legal Reserves and Riparian Preservation Areas. However, changes in the definition of Hilltop Preservation Areas reduced their total area by 87 percent. Additionally, due to more flexible protections and differentiation between conservation and restoration requirements, Brazil's environmental debt (areas of Legal Reserve and Riparian Preservation Areas deforested illegally before 2008 that, under the previous Forest Code, would have required restoration at the landowner's expense) was reduced by 58 percent (Soares-Filho et al. 2014, p. 363). The legal reserve debt was forgiven for “small properties,” which ranged from 20 ha (49 ac) in southern Brazil to 440 ha (1,087 ac) in the Amazon; this provision has resulted in approximately 90 percent of Brazilian rural properties qualifying for amnesty from the restoration requirement.

    Further reductions in the environmental debt resulted from: (1) Reducing the Legal Reserve restoration requirement from 80 percent to 50 percent in Amazonian municipalities that are predominately occupied by protected areas; (2) including Riparian Preservation Areas in the calculation of the Legal Reserve area (total area they are required to preserve); and (3) relaxing Riparian Preservation Area restoration requirements on small properties. These new provisions effectively reduced the total amount of land farmers are required to preserve and municipalities and landowners are required to restore. Reductions were uneven across states and biomes, with the Amazon and Cerrado biomes being two of the three biomes most affected and vulnerable to deforestation.

    Altogether, provisions of the new Forest Code have reduced the total area to be restored from approximately 50 million ha (124 million ac) to approximately 21 million ha (52 million ac) (Soares-Filho et al. 2014, p. 363; Boadle 2012, unpaginated). Furthermore, the old and new Forest Codes allow legal deforestation of an additional 88 million ha (217 million ac) on private properties deemed to constitute an “environmental surplus,” which are areas that are not conserved by the Legal Reserve and Riparian Preservation Area conservation requirements. The Cerrado alone contains approximately 40 million ha (99 million ac) of habitat designated as environmental surplus that could be legally deforested (Soares-Filho et al. 2014, p. 364).

    Although the Forest Code reduces restoration and preservation requirements, which in turn increases the threat to the hyacinth macaw, it introduces new mechanisms to address fire management, forest carbon, and payments for ecosystem services, which could reduce deforestation and result in environmental benefits to the hyacinth macaw. The most important mechanism may be the Environmental Reserve Quota (ERQ). The ERQ is a tradable legal title to areas with intact or regenerating native vegetation exceeding the Forest Code requirements. It provides the opportunity for landowners who, as of July 2008, did not meet the area-based conservation requirements of the law, to instead “compensate” for their legal reserve shortages by purchasing surplus compliance obligations from properties that would then maintain native vegetation in excess of the minimum legal reserve requirements. This mechanism could provide forested lands with monetary value, creating a trading market. The ERQ could potentially reduce 56 percent of the Legal Reserve debt (Soares-Filho et al. 2014, p. 364).

    The new Forest Code requires landowners to take part in a mapping and registration system for rural properties that serves as a means for landowners to report their compliance with the code in order to remain eligible for state credit and other government support. On May 6, 2014, the Ministry for the Environment published a regulation formally implementing the mapping system and requiring all rural properties be enrolled by May 2015. However, on May 5, 2015, the deadline was extended to May 4, 2016. According to information provided by the Ministry for the Environment, at that time 1,407,206 rural properties had been registered since the new code became effective. This number covers an area of 196,767,410 ha (486,222,859 ac) and represents 52 percent of all rural areas in Brazil for which registration is mandatory (Filho et al. 2015, unpaginated). This system could facilitate the market for ERQs and payments for ecosystem services.

    It is unclear whether the Brazilian Government will be able to effectively enforce the new law (Barrionuevo 2012, unpaginated; Boadle 2012, unpaginated; Greenpeace 2012, unpaginated). The original code was largely ignored by landowners and not enforced, leading to Brazil's high rates of deforestation (Boadle 2012, unpaginated). Although Brazil's deforestation rates declined between 2005 and 2010, 2011 marked the beginning of an increase in rates due to the expectation of the new Forest Code being passed. Another slight increase occurred in 2013, then doubled over 6 months (Schiffman 2015, unpaginated). Corruption in the government, land fraud, and lack of penalties for infractions have contributed to increases in illegal deforestation (Schiffman 2015, unpaginated). Additionally, amnesty afforded by the new Forest Code has led to the perception that illegal deforesters are unlikely to be prosecuted or could be exonerated in future law reforms (Schiffman 2015, unpaginated; Soares-Filho et al. 2014, p. 364). Enforcement is often nonexistent in Brazil as IBAMA is underfunded and understaffed. Only 1 percent of the fines imposed on individuals and corporations for illegal deforestation is actually collected (Schiffman 2015, unpaginated). In Pará, one of two states where most of the clearing is occurring, 78 percent of logging between August 2011 and July 2012 was illegal (Schiffman 2015, unpaginated). Furthermore, while much logging is being conducted illegally, there is concern that even if regulations are strictly adhered to, the development is not sustainable (Schiffman 2015, unpaginated). Some level of deforestation is highly likely to continue and will continue to compromise the status of the species.

    Additional Regulatory Mechanisms: To protect the main breeding habitat of the hyacinth macaw, Mato Grosso State Senate passed State Act 8.317 in 2005, which prohibits the cutting of manduvi trees, but not others. Although this law protects nesting trees, other trees around nesting trees are cut, exposing the manduvi tree to winds and storms. Manduvi trees end up falling or breaking, rendering them useless for the hyacinth macaws to nest in (Santos Jr. 2008, p. 135; Santos Jr. et al. 2006, p. 186).

    International Laws

    The hyacinth macaw is protected under CITES, an international agreement between governments to ensure that the international trade of CITES-listed plant and animal species does not threaten species' survival in the wild. Under this treaty, CITES Parties (member countries or signatories) regulate the import, export, and re-export of specimens, parts, and products of CITES-listed plant and animal species. Trade must be authorized through a system of permits and certificates that are provided by the designated CITES Management Authority of each CITES Party. Brazil, Bolivia, and Paraguay are Parties to CITES.

    The hyacinth macaw was listed in Appendix I of CITES on October 22, 1987. An Appendix-I listing includes species threatened with extinction whose trade is permitted only under exceptional circumstances, which generally precludes commercial trade. The import of an Appendix-I species generally requires the issuance of both an import and export permit. Import permits for Appendix-I species are issued only if findings are made that the import would be for purposes that are not detrimental to the survival of the species and that the specimen will not be used for primarily commercial purposes (CITES Article III(3)). Export permits for Appendix-I species are issued only if findings are made that the specimen was legally acquired and trade is not detrimental to the survival of the species, and if the issuing authority is satisfied that an import permit has been granted for the specimen (CITES Article III(2)).

    The import of hyacinth macaws into the United States is also regulated by the Wild Bird Conservation Act (WBCA), which was enacted on October 23, 1992. The purpose of the WBCA is to promote the conservation of exotic birds by ensuring that all imports of exotic birds to the United States are biologically sustainable and not detrimental to the species in the wild. The WBCA generally restricts the importation of most CITES-listed live or dead exotic birds. Import of dead specimens is allowed for scientific purposes and museum specimens. Permits may be issued to allow import of listed birds for various purposes, such as scientific research, zoological breeding or display, or personal pets, when certain criteria are met. The Service may approve cooperative breeding programs and subsequently issue import permits under such programs. Wild-caught birds may be imported into the United States if certain standards are met and they are subject to a management plan that provides for sustainable use. At this time, the hyacinth macaw is not part of a Service-approved cooperative breeding program, and wild-caught birds have not been approved for importation.

    The Lacey Act was originally passed in 1900, and was the first Federal law protecting wildlife. Today, it provides civil and criminal penalties for the illegal trade of animals and plants. Under the Lacey Act, in part, it is unlawful to import, export, transport, sell, receive, acquire, or purchase any fish, or wildlife taken, possessed, transported, or sold: (1) In violation of any law, treaty, or regulation of the United States or in violation of any Indian tribal law; or (2) in interstate or foreign commerce, any fish or wildlife taken, possessed, transported, or sold in violation of any law or regulation of any State or in violation of any foreign law. Therefore, for example, because the take of wild-caught hyacinth macaws would be in violation of Brazil's Environmental Crimes Law (9605/98), the subsequent import of hyacinth macaws into the United States would be in violation of the Lacey Act. Similarly, under the Lacey Act it is unlawful to import, export, transport, sell, receive, acquire, or purchase specimens of these species traded contrary to CITES.

    Although illegal trapping for the pet trade occurred at high levels during the 1980s, trade has decreased significantly from those levels. International trade of parrots was significantly reduced during the 1990s as a result of tighter enforcement of CITES regulations, stricter measures under European Union legislation, and adoption of the WBCA, along with adoption of national legislation in various countries (Snyder et al. 2000, p. 99). We found no information indicating trade is currently impacting the hyacinth macaw population.

    Habitat loss for the hyacinth macaw continues despite regulatory mechanisms intended to protect Brazil's forests. The lack of supervision and resources prevent these laws from being properly implemented (Guedes 2012, p. 3), as evidenced by ongoing deforestation in the Amazon, Cerrado, and Pantanal. As described above, the hyacinth macaw's food and nesting trees are removed for agriculture and cattle ranching, and fire is used to clear land and maintain pastures. Therefore, without greater enforcement of laws, deforestation will continue to impact the hyacinth macaw and its food and nesting resources.

    Factor E. Other Natural or Manmade Factors Affecting Its Continued Existence Climate Change

    Changes in Brazil's climate and associated changes to the landscape may result in additional habitat loss for the hyacinth macaw. Across Brazil, temperatures are projected to increase and precipitation to decrease (Carabine and Lemma 2014, p. 11; Siqueira and Peterson 2003, p. 2). The latest Intergovernmental Panel on Climate Change assessment estimates temperature changes in South America by 2100 to range from 1.7 to 6.7 degrees Celsius (°C) (3.06 to 12.06 degrees Fahrenheit (°F)) under medium and high emission scenarios and 1 to 1.5 °C (1.8 to 2.7 °F) under a low emissions scenario (Magrin et al. 2014, p. 1502; Carabine and Lemma 2014, p. 10). Projected changes in rainfall in South America vary by region. Reductions are estimated for northeast Brazil and the Amazon (Magrin et al. 2014, p. 1502; Carabine and Lemma 2014, pp. 10-11). At a national level, climate change may induce significant reductions in forestland in all Brazilian regions (Féres et al. 2009, pp. 12, 15).

    Temperature increases in Brazil are expected to be greatest over the Amazon rainforest, where Pará is located, with models indicating a strong warming and drying of this region during the 21st century, particularly after 2040 (Marengo et al. 2011, pp. 8, 15, 27, 39, 48; Féres et al. 2009, p. 2). Estimates of temperature changes in Amazonia are 2.2 °C (4 °F) under a low greenhouse gas emission scenario and 4.5 °C (8 °F) under a high-emission scenario by the end of the 21st century (2090-2099) (Marengo et al. 2011, p. 27). Several models indicate Amazonia is at a high risk of forest loss and more frequent wildfires (Magrin et al. 2007, p. 596). Some leading global circulation models suggest extreme weather events, such as droughts, will increase in frequency or severity due to global warming. As a result, droughts in Amazonian forests could become more severe in the future (Marengo et al. 2011, p. 48; Laurance et al. 2001, p. 782). For example, the 2005 drought in Amazonia was a 1-in-20-year event; however, those conditions may become a 1-in-2-year event by 2025, and a 9-in-10-year event by 2060 (Marengo et al. 2011, p. 28). Impacts of deforestation are greater under drought conditions as fires set for forest clearances burn larger areas (Marengo et al. 2011, p. 16). Additionally, drought increases the vulnerability of seasonal forests of the Amazon, such as those found in eastern Amazonia, to wildfires during droughts (Laurance et al. 2001, p. 782).

    Previous work has indicated that, under increasing temperature and decreasing rainfall conditions, the rainforest of the Amazon could be replaced with different vegetation. Some models have predicted a change from forests to savanna-type vegetation over parts of, or perhaps the entire, Amazon in the next several decades (Magrin et al. 2014, p. 1523; Marengo et al. 2011, pp. 11, 18, 29, 43; Magrin et al. 2007, pp. 583, 596). In the regions where the hyacinth macaw occurs, the climate features a dry season, which prevents the growth of an extensive closed-canopy tropical forest. Therefore, the transition of the Amazon rainforests could provide additional suitable habitat for the hyacinth macaw. However, we do not know how the specific food and nesting resources the hyacinth macaw uses will be impacted if there is an increase in the dry season. Furthermore, there are uncertainties in this modeling, and the projections are not definitive outcomes. In fact, some models indicate that conditions are likely to get wetter in Amazonia in the future (Marengo et al. 2011, pp. 28-29). These uncertainties make it challenging to predict the likely effects of continued climate change on the hyacinth macaw.

    Temperatures in the Cerrado, which covers the Gerais region, are also predicted to increase; the maximum temperature in the hottest month may increase by 4 °C (7.2 °F) and by 2100 may increase to approximately 40 °C (104 °F) (Marini et al. 2009, p. 1563). Along with changes in temperature, other models have predicted a decrease in tree diversity and range sizes for birds in the Cerrado.

    Projections based on a 30-year average (2040-2069) indicate serious effects to Cerrado tree diversity in coming decades (Marini et al. 2009, p. 1559; Siqueira and Peterson 2003, p. 4). In a study of 162 broad-range tree species, the potential distributional area of most trees was projected to decline by more than 50 percent. Using two climate change scenarios, 18-56 species were predicted to go extinct in the Cerrado, while 91-123 species were predicted to decline by more than 90 percent in the potential distributional area (Siqueira and Peterson 2003, p. 4).

    Of the potential impacts of predicted climate-driven changes on bird distribution, extreme temperatures seemed to be the most important factor limiting distribution, revealing their physiological tolerances (Marini et al. 2009, p. 1563). In a study on changes in range sizes for 26 broad-range birds in the Cerrado, range sizes are expected to decrease over time, and significantly so as soon as 2030 (Marini et al. 2009, p. 1564). Changes ranged from a 5-percent increase to an 80-percent decrease under two dispersal scenarios for 2011-2030, 2046-2065, and 2080-2099 (Marini et al. 2009, p. 1561). The largest potential loss in range size is predicted to occur among grassland and forest-dependent species in all timeframes (Marini et al. 2009, p. 1564). These species will likely have the most dire future conservation scenarios because these habitat types are the least common (Marini et al. 2009, p. 1559). Although this study focused on broad-range bird species, geographically restricted birds, such as hyacinth macaw, are predicted to become rarer (Marini et al. 2009, p. 1564).

    Whether species will or will not adapt to new conditions is difficult to predict; synergistic effects of climate change and habitat fragmentation, or other factors, such as biotic interactions, may hasten the need for conservation even more (Marini et al. 2009, p. 1565). Although there are uncertainties in the climate-change modeling discussed above, the overall trajectory is one of increased warming under all scenarios. Species like the hyacinth macaw, whose habitat is limited, population is reduced, are large in physical size, and are highly specialized are more vulnerable to climatic variations and at a greater risk of extinction (Guedes 2009, p. 44).

    We do not know how the habitat of the hyacinth macaw may change under these conditions, but we can assume some change will occur. The hyacinth macaw is experiencing habitat loss due to widespread expansion of agriculture and cattle ranching. Climate change has the potential to further decrease the specialized habitat needed by the hyacinth macaw; the ability of the hyacinth macaw to cope with landscape changes due to climate change is questionable given the specialized needs of the species. Furthermore, one of the factors that affected reproductive rates of hyacinth macaws in the Pantanal was variations in temperature and rainfall (Guedes 2009, p. 42). Hotter, drier years, as predicted under different climate change scenarios, could result in greater impacts to hyacinth macaw reproduction due to impacts on palm fruit and thereby foraging success, and could increase competition with other bird and mammal species for limited resources.

    Low Reproductive Rates and Competition

    The specialized nature and reproductive biology of the hyacinth macaw contribute to low recruitment of juveniles and decrease the ability to recover from reductions in population size caused by anthropogenic disturbances (Faria et al. 2008, p. 766; Wright et al. 2001, p. 711). This species' vulnerability to extinction is further heightened by deforestation that negatively affects the availability of essential food and nesting resources. In addition to direct impacts on food and nesting resources and hyacinth macaws themselves, several other factors affect the reproductive success of the hyacinth macaw. In the Pantanal, competition, predation, disease, destruction or flooding of nests, and climatic conditions and variations are factors affecting reproductive success of the hyacinth macaw (Guedes 2009, pp. 5, 8, 42; Guedes 2004b, p. 7).

    In the Pantanal, competition for nesting sites is intense. The hyacinth macaw nests almost exclusively in manduvi trees; however, 17 other bird species, small mammals, and honey bees (Apis mellifera) also use manduvi cavities (Guedes and Vicente 2012, pp. 148, 157; Guedes 2009, p. 60; Pizo et al 2008, p. 792; Pinho and Nogueira 2003, p. 36). Bees are even known to occupy artificial nests that could be used by hyacinth macaws (Pinho and Nogueira 2003, p. 33; Snyder et al. 2000, p. 120). Manduvi is a key species for the hyacinth macaw; these cavities are already limited and there is evidence of decreased recruitment of this species of tree (Santos Jr. et al. 2006, p. 181). Competition for nesting cavities is exacerbated because manduvi trees must be at least 60 years old, and on average 80 years old, to produce cavities large enough to be used by the hyacinth macaw (Guedes 2009, pp. 59-60; Pizo et al. 2008, p. 792; Santos Jr. et al. 2006, p. 185). Given that there is currently a limited number of manduvi trees in the Pantanal of adequate size capable of accommodating the hyacinth macaw, evidence of reduced recruitment of these sized manduvi, and numerous species that also use this tree, competition will certainly increase as the number of manduvi decreases, further affecting reproduction by limiting tree cavities available to the hyacinth macaw for nesting (Guedes 2009, p. 60). Furthermore, a shortage of suitable nesting sites could lead to increased competition resulting in an increase in infanticide and egg destruction by other hyacinth macaws and other macaw species (Lee 2010, p. 2). Black vultures (Coragyps atratus), collared forest falcons, and red-and-green macaws (Ara chloropterus) break hyacinth macaw eggs when seeking nesting cavities (Guedes 2009, p. 75).

    A 10-year study conducted in the Miranda region of the Pantanal concluded that the majority of hyacinth macaw nests (63 percent) failed, either partially or totally, during the egg phase. While predation accounted for 52 percent of lost eggs during incubation (see Factor C discussion, above), the remaining eggs lost during the 10-year study of the Miranda region did not hatch due to infertility, complications during embryo development, inexperience of young couples that accidentally smash their own eggs while entering and exiting the nest, breaking by other bird and mammal species wanting to occupy the nesting cavity, and broken trees and flooding of nests (Guedes 2009, p. 75). Of the 320 nests that saw eggs hatch and chicks born, 49 percent experienced a total or partial loss of chicks (Guedes 2009, pp. 68). From the chicks that were born, on average 37 percent (n=183) failed before leaving the nest because of mortality or predation (Guedes 2009, pp. 66, 78). Of these chicks that did not survive, 62 percent (n=114) were lost due to starvation, low temperature, disease or infestation by ectoparasites, flooding of nests, and breaking of branches; the other 38 percent (n=69) were lost to predation (Guedes 2009, pp. 79).

    Variations in temperature and rainfall may also affect reproduction of the hyacinth macaw in the Pantanal (Guedes 2009, p. 42). Years with higher temperatures and lower rainfall experience decreased production of fruits and foraging, leading to a decrease in reproduction of hyacinth macaws the following year (Guedes 2009, pp. 42-44). This decrease is especially problematic for a species that relies on only two species of palm nuts as a source of food. Competition with other bird and mammal species may also increase during low food years. Acuri are available year round, even during times of fruit scarcity, making it a resource many other species also depend on during unfavorable periods (Guedes 2009, p. 44). Additionally, the El Niño event during the 1997-98 breeding season caused hotter, wetter conditions favoring breeding pairs, but survival of the chicks was reduced. In 1999, a longer breeding period was observed following drier, colder conditions caused by the La Niña that same year; however, 54 percent of the eggs were lost that year (Guedes 2009, p. 43).

    Conservation Measures

    A network of nongovernmental organizations, Rede Cerrado, has been established to promote local sustainable-use practices for natural resources (Klink and Machado 2005, p. 710). Rede Cerrado provided the Brazilian Ministry of the Environment recommendations for urgent actions for the conservation of the Cerrado. As a result, a conservation program was established to integrate actions for conservation in regions where agropastoral activities, which is agriculture practice of growing crops and raising livestock, were especially intense and damaging (Klink and Machado 2005, p. 710). Conservation International, The Nature Conservancy, and World Wildlife Fund have worked to promote alternative economic activities, such as ecotourism, sustainable use of fauna and flora, and medicinal plants, to support the livelihoods of local communities (Klink and Machado 2005, p. 710). Although these programs demonstrate awareness of the need for protection and efforts in protecting the Cerrado, we have no details on the specific work or accomplishments of these programs, or how they would affect, or have affected, the hyacinth macaw and its habitat.

    In 1990, the Hyacinth Macaw Project (Projecto Arara Azul) began with support from the University for the Development of the State (Mato Grosso do Sul) and the Pantanal Region (Brouwer 2004, unpaginated; Guedes 2004b, p. 28; Pittman 1999, p. 39). This program works with local landowners, communities, and tourists to monitor the hyacinth macaw, study the biology of this species, manage the population, and promote its conservation and ensure its protection in the Pantanal (Santos Jr. 2008, p. 135; Harris et al. 2005, p. 719; Brouwer 2004, unpaginated; Guedes 2004a, p. 281). Studies have addressed feeding, reproduction, competition, habitat survival, chick mortality, behavior, nests, predation, movement, and threats contributing to the reduction in the wild population (Guedes 2009, p. xiii; Guedes 2004a, p. 281). Because there are not enough natural nesting sites in this region, the Hyacinth Macaw Project began installing artificial nest boxes; more than 180 have been installed. Hyacinth macaws have adapted to using the artificial nests, leading to more reproducing couples and successful fledging of chicks. Species that would otherwise compete with hyacinth macaws for nesting sites have also benefitted from the artificial nests as a result of reduced competition for natural nesting sites. Hyacinth macaws reuse the same nest for many years; eventually the nests start to decay or become unviable. The Hyacinth Macaw Project also repairs these nests (natural and artificial) so they are not lost. In areas where suitable cavities are scarce, the loss of even one nest could have substantial impacts on the population. Additionally, wood boards are used to make cavity openings too small for predators, while still allowing hyacinth macaws to enter (Brouwer 2004, unpaginated; Guedes 2004a, p. 281; Guedes 2004b, p. 8).

    In nests with a history of unsuccessful breeding, the Hyacinth Macaw Project has also implemented chick management, with the approval of the Committee for Hyacinth Macaw Conservation coordinated by IBAMA. Hyacinth macaw eggs are replaced with chicken eggs, and the hyacinth eggs are incubated in a field laboratory. After hatching, chicks are fed for a few days, and then reintroduced to the original nest or to another nest with a chick of the same age. This process began to increase the number of chicks that survived and fledged each year (Brouwer 2004, unpaginated; Guedes 2004a, p. 281; Guedes 2004b, p. 9).

    Awareness has also been raised with local cattle ranchers. Attitudes have begun to shift, and ranchers are proud of having macaw nests on the property. Local inhabitants also served as project collaborators (Guedes 2004a, p. 282; Guedes 2004b, p. 10). This shift in attitude has also diminished the threat of illegal trade in the Hyacinth Macaw Project area (Brouwer 2004, unpaginated).

    The Hyacinth Macaw Project has contributed to the increase of the hyacinth population in the Pantanal since the 1990s (Harris et al. 2005, p. 719). Nest and chick management implemented by the Hyacinth Macaw Project has led to an increase in the Pantanal population; for every 100 couples that reproduce, 4 juveniles survive and are added to the population. Additionally, hyacinth macaws have expanded to areas where the species previously disappeared, as well as new areas (Guedes 2012, p. 1; Guedes 2009, pp. 4-5, 8, 35-36, 39, 82).

    Nest boxes can have a marked effect on breeding numbers of many species on a local scale (Newton 1994, p. 274), and having local cattle ranchers appreciate the presence of the hyacinth macaw on their land helps diminish the effects of habitat destruction and illegal trade. However, the Hyacinth Macaw Project area does not encompass the entire Pantanal region. Active management has contributed to the increase in the hyacinth population, and farmers have begun to protect hyacinth macaws on their property, but land conversion for cattle ranching continues to occur in the Pantanal. If cattle grazing and trampling of manduvi saplings, as well as the burning of pastures for maintenance continues, the hyacinth's preferred natural cavities will be severely limited and the species will completely rely on the installation of artificial nest boxes, which is currently limited to the Hyacinth Macaw Project area. Furthermore, survival of hyacinth macaw eggs and chicks are being impacted by predation, competition, climate variations, and other natural factors. Even with the assistance of the Hyacinth Macaw Project, only 35 percent of eggs survive to the juvenile stage.

    Finding

    Section 4 of the Act (16 U.S.C. 1533) and the implementing regulations in part 424 of title 50 of the Code of Federal Regulations (50 CFR part 424) set forth procedures for adding species to, removing species from, or reclassifying species on the Federal Lists of Endangered and Threatened Wildlife and Plants. As required by the Act, we conducted a review of the status of the species and considered the five factors in assessing whether the hyacinth macaw is in danger of extinction throughout all or a significant portion of its range (endangered) or likely to become endangered within the foreseeable future throughout all or a significant portion of its range (threatened). We examined the best scientific and commercial information available regarding factors affecting the status of the hyacinth macaw. We reviewed the petition, information available in our files, information provided by peer review and public comments, and other available published and unpublished information.

    In considering what factors may constitute threats, we must look beyond the mere exposure of the species to the factor to determine whether the species responds to the factor in a way that causes actual impacts to the species. If there is exposure to the factor, but no response, or only a positive response, that factor is not a threat. If there is exposure and the species responds negatively, the factor may be a threat and we then attempt to determine if it may drive or contribute to the risk of extinction of the species such that the species warrants listing as an endangered or threatened species as those terms are defined by the Act.

    Across its range, the hyacinth macaw is losing habitat, including those essential food and nesting resources, to expanding agriculture and cattle ranching. Pará has long been the epicenter of illegal deforestation primarily caused by cattle ranching. Large-scale forest conversion for colonization and cattle ranching due to state subsidies, infrastructure development, favorable climate in Pará, lower prices for land, and expansion of soy cultivation in other areas has led to displacement of pastures into parts of Pará. Although deforestation rates decreased between 2005 and 2012, Amazon deforestation rates increased in 2013, 2015, and 2016 (see Table 1, above).

    In the Gerais region, more than 50 percent of the original Cerrado vegetation has been lost due to conversion to agriculture and pasture. Although annual deforestation rates have decreased, the amount of remaining hyacinth macaw habitat continues its slow and steady decrease. Remaining Cerrado vegetation continues to be lost to conversion for soy plantations and extensive cattle ranching. Projections for coming decades show the largest increase in agricultural production occurring in the Cerrado.

    The greatest cause of habitat loss in the Pantanal is the expansion of cattle ranching. Only 6 percent of the Pantanal landscape is cordilleras, higher areas where the manduvi occur. These upland forests, including potential nesting trees, are often removed and converted to pastures for grazing during the flooding season; however, palm species used by hyacinth macaws for food are usually left because cattle also feed on the palm nuts. Fire is a common method for renewing pastures, controlling weeds, and controlling pests in the Pantanal, although uncontrolled fires are known to impact patches of manduvi. Fires can help in the formation of cavities, but too frequent fires can prevent trees from surviving to a size capable of providing suitable cavities and can cause a high rate of tree loss. Five percent of manduvi trees are lost each year due to deforestation, fires, and storms.

    In addition to the direct removal of trees and the impact of fire on forest establishment, cattle impact forest recruitment. Intense livestock activity can affect seedling recruitment via trampling and grazing. Cattle also compact the soil such that regeneration of forest species is severely reduced. This type of repeated disturbance can lead to an ecosystem dominated by invasive trees, grasses, bamboo, and ferns. Manduvi, which contain the majority of hyacinth macaw nests, are already limited in the Pantanal; only 5 percent of the existing adult manduvi trees in south-central Pantanal and 11 percent in the southern Pantanal contain suitable cavities for hyacinth macaws. Evidence of severely reduced recruitment of manduvi trees suggests that this species of tree, of adequate size to accommodate the hyacinth macaw, is not only scarce now but likely to become increasingly scarce in the future.

    Deforestation for agriculture and cattle ranching, cattle trampling and foraging, and burning of forest habitat result in the loss of mature trees with natural cavities of sufficient size and a reduction in recruitment of native species that could eventually provide nesting cavities. A shortage of nest sites can jeopardize the persistence of the hyacinth macaw by constraining breeding density, resulting in lower recruitment and a gradual reduction in population size. This situation may lead to long-term effects on the viability of the hyacinth macaw population, especially in Pará and the Pantanal where persistence of nesting trees is compromised. While the Hyacinth Macaw Project provides artificial nest alternatives, such nests are only found within the project area.

    Loss of essential tree species also negatively impacts the hyacinth macaw by increasing competition for what is already a shortage of suitable nest sites. In the Pantanal, the hyacinth macaw nests almost exclusively in manduvi trees. The number of manduvi large enough to provide suitable cavities is already limited. Additionally, 17 other bird species, small mammals, and honey bees also use manduvi cavities. Competition has been so fierce that hyacinth macaws were unable to reproduce, and it resulted in an increase in egg destruction and infanticide. As the number of suitable trees is further limited, competition for adequate cavities to accommodate the hyacinth macaw will certainly increase, reducing the potential for hyacinth macaws to reproduce. In the Gerais region, hyacinth macaws mostly nest in rock crevices, most likely a response to the destruction of nesting trees; we do not know if the hyacinth macaws in the Pantanal will respond in the same way to the loss of nesting trees. Although it is possible that hyacinth macaws could use alternative nesting trees in Pará and the Pantanal, deforestation in these regions would impact alternative nesting trees, as well as food sources, resulting in the same negative effect on the hyacinth macaw. Furthermore, competition for limited nesting and food resources would continue.

    Deforestation also reduces the availability of food resources. The species' specialized diet makes it vulnerable to changes in food availability. Another Anodorhynchus species, the Lear's macaw, is critically endangered due, in part, to the loss of its specialized food source (licuri palm stands). Inadequate nutrition can contribute to poor health and is known to have reduced reproduction in hyacinth macaws. In Pará and the Gerais region, where food sources are being removed, persistence of the species is a concern.

    In addition to direct impacts on food and nesting resources and hyacinth macaws themselves, several other factors affect the reproductive success of the hyacinth macaw. Information indicates that hyacinth macaws in Pará and Gerais are hunted as a source of protein and for feathers to be used in local handicrafts. Although we do not have information on the numbers of macaws taken for these purposes, given the small populations in these two regions, any loss of potentially reproducing individuals could have a devastating effect on the ability of those populations to increase. Additionally, in the Pantanal, predation, variations in temperature and rainfall, and ectoparasites all contribute to loss of eggs and chicks, directly affecting the reproductive rate of hyacinth macaws.

    Brazil has various laws to protect its natural resources. Despite these laws and plans to significantly reduce deforestation, expanding agriculture and cattle ranching has contributed to increases in deforestation rates in some years, and the total deforested area continues to increase each year. However, Brazil has obtained significant reduction of the deforestation rate after 12 years of the PPCDAm and 6 years of PPCerrado, with most of the reduction occurring within the Amazon basin. Additionally, hunting continues in some parts of the hyacinth macaw's range despite laws prohibiting this activity. Without effective implementation and enforcement of environmental laws, deforestation and hunting will continue to the detriment of hyacinth macaws.

    Climate change models have predicted increasing temperatures and decreasing rainfall throughout most of Brazil. There are uncertainties in this modeling, and the projections are not definitive outcomes. How a species may adapt to changing conditions is difficult to predict. We do not know how the habitat of the hyacinth macaw may vary under these conditions, but we can assume some change will occur. The hyacinth macaw is experiencing habitat loss due to widespread expansion of agriculture and cattle ranching. Effects of climate change have the potential to further decrease the specialized habitat needed by the hyacinth macaw; the ability of the hyacinth macaw to cope with landscape changes due to climate change is questionable given the specialized needs of the species. Furthermore, hotter, drier years, as predicted under different climate change scenarios, could result in greater impacts to hyacinth macaw reproduction due to impacts on palm fruit and thereby foraging success, and could increase competition with other bird and mammal species for limited resources.

    Based on the long-term trends of continued loss of habitat and associated loss of essential resources (nest sites and food sources) throughout the hyacinth macaws range, declines in the species remaining habitat and in its population are expected to continue into the foreseeable future. Pará is one of the states where most of Brazil's agriculture expansion is taking place. Modeled future deforestation is concentrated in this area. The Cerrado is the most desirable biome for agribusiness expansion and contains approximately 40 million ha (99 million ac) of “environmental surplus” that could be legally deforested; therefore, this region will likely continue to suffer deforestation. Ninety-five percent of the Pantanal is privately owned, 80 percent of which is used for cattle ranches. Clearing land to establish pasture is perceived as the economically optimal land use, while land not producing beef is often perceived as unproductive. Continued loss of remaining habitat will lead to long-term effects on the viability of the hyacinth macaw. Additionally, any factors that contribute to the loss of eggs and chicks ultimately reduce reproduction and recruitment of juveniles into the population and the ability of those populations to recover. Therefore, long-term survival of this species is a concern.

    In total, there are approximately 6,500 hyacinth macaws left in the wild, dispersed among three populations. Two of the populations, Pará and Gerais, contain 1,000-1,500 individuals combined; the Pantanal population contains 5,000 individuals. The current overall population trend for the hyacinth macaw is reported as decreasing, although there are no reports of extreme fluctuations in the number of individuals. The hyacinth macaw population has grown in the Pantanal; however, the growth is not sufficient to counter the continued and predicted future anthropogenic disturbances. Hyacinth macaws have a naturally low reproductive rate; not all hyacinth macaw chicks fledge; and due to the long period of chick dependence, hyacinth macaws breed only every 2 years. In the Pantanal population, which is the largest population of hyacinth macaws, only 15-30 percent of adults attempt to breed each year; it may be that as small or an even smaller percentage in Pará and Gerais attempt to breed. This relatively low recruitment of juveniles decreases the ability of a population to recover from reductions caused by anthropogenic disturbances. Thus, hyacinth macaws may not have a high enough reproduction rate and may not survive in areas where nest sites and food sources are destroyed. Because the hyacinth macaw has specialized food and nest site needs, it is at higher risk of extinction from the anthropogenic stressors described above.

    Section 3 of the Act defines an “endangered species” as “any species which is in danger of extinction throughout all or a significant portion of its range,” and a “threatened species” as “any species which is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.” After analyzing the species' status in light of the five factors discussed above, we find the hyacinth macaw is a “threatened species” as a result of the following: Continued deforestation and reduced recruitment of forests (Factor A), hunting (Factor B), predation and disease (Factor C), low reproduction rate and competition (Factor E), and effects of climate change (Factor E). Furthermore, despite regulatory mechanisms to protect the hyacinth macaw and the forests it depends on, deforestation and hunting for sustenance continues.

    In our 2012 proposed rule (77 FR 39965; July 6, 2012), we found that the hyacinth macaw was in danger of extinction (an endangered species) based on estimates indicating the original vegetation of the Amazon, Cerrado, and Pantanal, including the hyacinth macaw's habitat, would be lost between the years 2030 and 2050 due to deforestation, combined with its naturally low reproductive rate, highly specialized nature, hunting, competition, and effects of climate change. While deforestation rates between 2002 and 2014 indicate a decrease in the annual deforestation rate, and there has been a decrease in deforestation compared to historical rates, there continues to be a slow and steady increase in the total area deforested. Deforestation rates in Pará decreased by 20 percent between 2013 and 2014, increased by 14 percent in 2015, and increased by 41 percent in 2016. However, the PPCDAm has reduced the deforestation rate by approximately 80 percent in relation to the 2004 rate in the Legal Amazon. Recent estimates of deforestation indicate annual deforestation rates in the Cerrado and Pantanal have decreased by approximately 40 and 37 percent, respectively, although within two states in the Cerrado, Tocantins and Maranhão, deforestation increased in 2016 by 40 and 25 percent, respectively. We recognize that deforestation rates may fluctuate annually, with some years having a higher rate than other years. However, because the annual rate of deforestation is decreasing over the long term, the loss of all native habitat from these areas, including the species of trees needed by the hyacinth macaw for food and nesting, is not as immediate as initially predicted. Therefore, even with the additional habitat loss that is imminent, we do not find that the hyacinth macaw is currently in danger of extinction.

    The hyacinth macaw remains a species particularly vulnerable to extinction due to the interaction between continued habitat loss within the foreseeable future and its highly specialized needs for food and nest trees. The term “foreseeable future” describes the extent to which we can reasonably rely on the predictions about the future in making determinations about the future conservation status of the species. Based on the best available scientific studies and information assessing land-use trends, lack of enforcement of laws, predicted landscape changes under climate-change scenarios, the persistence of essential food and nesting resources, and predictions about how those threats may impact the hyacinth macaw or similar species, we conclude that the species is likely to be in danger of extinction in the foreseeable future throughout all of its range. On the basis of the best scientific and commercial information, we find that the hyacinth macaw meets the definition of a “threatened species” under the Act, and we are listing the hyacinth macaw as threatened throughout its range.

    Significant Portion of its Range

    Under the Act and our implementing regulations, a species warrants listing if it is endangered or threatened. The Act defines “endangered species” as any species that is in danger of extinction throughout all or a significant portion of its range (16 U.S.C. 1532(6)), and “threatened species” as any species that is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range (16 U.S.C. 1532(20)). Because we have determined that the hyacinth macaw is threatened throughout all of its range, under the Final Policy on Interpretation of the Phrase “Significant Portion of Its Range” in the Endangered Species Act's Definitions of “Endangered Species and “Threatened Species” (79 FR 37578; July 1, 2014) (SPR Policy), if a species warrants listing throughout all of its range, no portion of the species' range can be a “significant” portion of its range. The SPR policy is applied to all status determinations, including analyses for the purposes of making listing, delisting, and reclassification determinations. The procedure for analyzing whether any portion is an SPR is similar, regardless of the type of status determination we are making.

    While under the SPR Policy no further analysis of “significant portion of its range” in this circumstance is required, we recognize that the SPR Policy is currently under judicial review, so we also took the additional step of considering whether there could be any significant portions of the species' range where the species is in danger of extinction. We evaluated whether there is substantial information indicating that there are any portions of the species' range: (1) That may be “significant,” and (2) where the species may be in danger of extinction. In practice, a key part of identifying portions appropriate for further analysis is whether the threats are geographically concentrated. For the hyacinth macaw, the primary driver of its status is habitat destruction. This threat is affecting the species throughout its entire range and is of similar magnitude throughout its range; therefore, there is not a meaningful geographical concentration of threats to the hyacinth macaw. As a result, even if we were to undertake a detailed SPR analysis, there would not be any portions of the species' range where the threats are harming the species to a greater degree such that it is in danger of extinction in that portion.

    4(d) Rule

    When a species is listed as endangered, certain actions are prohibited under section 9 of the Act and our regulations at 50 CFR 17.21. These include, among others, prohibitions on take within the United States, within the territorial seas of the United States, or upon the high seas; import; export; and shipment in interstate or foreign commerce in the course of a commercial activity. Exceptions to the prohibitions for endangered species may be granted in accordance with section 10 of the Act and our regulations at 50 CFR 17.22.

    The Act does not specify particular prohibitions and exceptions to those prohibitions for threatened species. Instead, under section 4(d) of the Act, the Secretary, as well as the Secretary of Commerce depending on the species, was given the discretion to issue such regulations as deemed necessary and advisable to provide for the conservation of such species. The Secretary also has the discretion to prohibit by regulation with respect to any threatened species any act prohibited under section 9(a)(1) of the Act. For the hyacinth macaw, the Service is exercising our discretion to issue a 4(d) rule. By adopting the 4(d) rule, we are incorporating all prohibitions and provisions of 50 CFR 17.31 and 17.32, except that import and export of certain hyacinth macaws into and from the United States and certain acts in interstate commerce are allowed without a permit under the Act, as explained below.

    Import and Export

    The 4(d) rule imposes a prohibition on imports and exports (by incorporating 50 CFR 17.31), but creates exceptions for certain hyacinth macaws. The 4(d) rule largely adopts the existing conservation regulatory requirements of CITES and the WBCA as the appropriate regulatory provisions for the import and export of certain hyacinth macaws. The import and export of birds into and from the United States, taken from the wild after the date this species is listed under the Act; conducting an activity that could take or incidentally take hyacinth macaws; and foreign commerce must meet the requirements of 50 CFR 17.31 and 17.32, including obtaining a permit under the Act. However, the 4(d) rule allows a person to import or export without a permit issued under the Act if the specimen either: (1) Was held in captivity prior to the date this species is listed under the Act; or (2) is a captive-bred specimen, provided the export under either of these scenarios is authorized under CITES and the import is authorized under CITES and the WBCA. If a specimen was taken from the wild and held in captivity prior to the date this species is listed under the Act, the importer or exporter must provide documentation to support that status, such as a copy of the original CITES permit indicating when the bird was removed from the wild or museum specimen reports. For captive-bred birds, the importer must provide either a valid CITES export/re-export document issued by a foreign Management Authority that indicates that the specimen was captive bred by using a source code on the face of the permit of either “C,” “D,” or “F.” Exporters of captive-bred birds must provide a signed and dated statement from the breeder of the bird confirming its captive-bred status, and documentation on the source of the breeder's breeding stock. The source codes of C, D, and F for CITES permits and certificates are as follows:

    (C) Animals bred in captivity in accordance with Resolution Conf. 10.16 (Rev.), as well as parts and derivatives thereof, exported under the provisions of Article VII, paragraph 5 of the Convention.

    (D) Appendix-I animals bred in captivity for commercial purposes in operations included in the Secretariat's Register, in accordance with Resolution Conf. 12.10 (Rev. CoP15), and Appendix-I plants artificially propagated for commercial purposes, as well as parts and derivatives thereof, exported under the provisions of Article VII, paragraph 4, of the Convention.

    (F) Animals born in captivity (F1 or subsequent generations) that do not fulfill the definition of “bred in captivity” in Resolution Conf. 10.16 (Rev.), as well as parts and derivatives thereof.

    The 4(d) rule's provisions regarding captive-bred birds apply to birds bred in the United States and abroad. The terms “captive-bred” and “captivity” used in the 4(d) rule are defined in the regulations at 50 CFR 17.3 and refer to wildlife produced in a controlled environment that is intensively manipulated by man from parents that mated or otherwise transferred gametes in captivity. Although the 4(d) rule requires a permit under the Act to “take” (including harm and harass) a hyacinth macaw, our regulations at 50 CFR 17.3 establish that “take,” when applied to captive wildlife, does not include generally accepted animal husbandry practices, breeding procedures, or provisions of veterinary care for confining, tranquilizing, or anesthetizing, when such practices are not likely to result in injury to the wildlife.

    We assessed the conservation needs of the hyacinth macaw in light of the broad protections provided to the species under CITES and the WBCA. The hyacinth macaw is listed in Appendix I under CITES, a treaty which contributes to the conservation of the species by monitoring international trade and ensuring that trade in Appendix I species is not detrimental to the survival of the species (see Conservation Status, above). The purpose of the WBCA is to promote the conservation of exotic birds and to ensure that imports of exotic birds into the United States do not harm them (see Factor D discussion, above). The best available commercial data indicate that legal and illegal trade of hyacinth macaws is not currently occurring at levels that are affecting the populations of the hyacinth macaw in its three regions. Accordingly, we find that the import and export requirements of the 4(d) rule provide the necessary and advisable conservation measures that are needed for this species. This 4(d) rule streamlines the permitting process by deferring to existing laws that are protective of hyacinth macaws in the course of import and export and not requiring permits under the Act for certain types of activities.

    Interstate Commerce

    Under the 4(d) rule, a person may deliver, receive, carry, transport, or ship a hyacinth macaw in interstate commerce in the course of a commercial activity, or sell or offer to sell in interstate commerce a hyacinth macaw without a permit under the Act. At the same time, the prohibitions on take under 50 CFR 17.21 as extended to threatened species under 50 CFR 17.31 will apply under this 4(d) rule, and any interstate commerce activities that could incidentally take hyacinth macaws or otherwise prohibited acts in foreign commerce will require a permit under 50 CFR 17.32.

    Persons in the United States have imported and exported captive-bred hyacinth macaws for commercial purposes and for scientific purposes, but trade has been very limited (UNEP-WCMC 2011, unpaginated). We have no information to suggest that interstate commerce activities are associated with threats to the hyacinth macaw or would negatively affect any efforts aimed at the recovery of wild populations of the species; therefore, we are not placing into effect any prohibitions on interstate commerce of hyacinth macaw within the United States. Because the species is otherwise protected in the course of interstate commercial activities under the take provisions and foreign commerce provisions contained in 50 CFR 17.31, and international trade of this species is regulated under CITES, we find that this 4(d) rule contains all the prohibitions and authorizations necessary and advisable for the conservation of the hyacinth macaw.

    Required Determinations National Environmental Policy Act (42 U.S.C. 4321 et seq.)

    We have determined that we do not need to prepare an environmental assessment, as defined under the authority of the National Environmental Policy Act of 1969, in connection with regulations adopted under Section 4(a) of the Endangered Species Act. We published a notice outlining our reasons for this determination in the Federal Register on October 25, 1983 (48 FR 49244).

    References Cited

    A list of all references cited in this document is available at http://www.regulations.gov, Docket No. FWS-R9-ES-2012-0013, or upon request from the U.S. Fish and Wildlife Service, Ecological Services, Branch of Foreign Species (see FOR FURTHER INFORMATION CONTACT).

    Authors

    The primary authors of this document are staff members of the Branch of Foreign Species, Ecological Services Program, U.S. Fish and Wildlife Service.

    List of Subjects in 50 CFR Part 17

    Endangered and threatened species, Exports, Imports, Reporting and recordkeeping requirements, Transportation.

    Regulation Promulgation

    Accordingly, we amend part 17, subchapter B of chapter I, title 50 of the Code of Federal Regulations, as set forth below:

    PART 17—ENDANGERED AND THREATENED WILDLIFE AND PLANTS 1. The authority citation for part 17 continues to read as follows: Authority:

    16 U.S.C. 1361-1407; 1531-1544; 4201-4245, unless otherwise noted.

    2. Amend § 17.11(h) by adding an entry for “Macaw, hyacinth” in alphabetical order under BIRDS to the List of Endangered and Threatened Wildlife, to read as follows:
    § 17.11 Endangered and threatened wildlife.

    (h) * * *

    Common name Scientific name Where listed Status Listing citations and
  • applicable rules
  • *         *         *         *         *         *         * BIRDS *         *         *         *         *         *         * Macaw, hyacinth Anodorhynchus hyacinthinus Wherever found T 83 FR [insert Federal Register page where the document begins], 8/13/2018; 50 CFR 17.41(c) 4d. *         *         *         *         *         *         *
    3. Amend § 17.41 by revising paragraph (c) introductory text, paragraph (c)(1), and paragraph (c)(2)(ii) introductory text, and by adding paragraph (c)(2)(ii)(D) to read as follows:
    § 17.41 Special rules—birds.

    (c) The following species in the parrot family: Salmon-crested cockatoo (Cacatua moluccensis), yellow-billed parrot (Amazona collaria), white cockatoo (Cacatua alba), and hyacinth macaw (Anodorhynchus hyacinthinus).

    (1) Except as noted in paragraphs (c)(2) and (c)(3) of this section, all prohibitions and provisions of §§ 17.31 and 17.32 of this part apply to these species.

    (2) * * *

    (ii) Specimens held in captivity prior to certain dates: You must provide documentation to demonstrate that the specimen was held in captivity prior to the dates specified in paragraphs (c)(2)(ii)(A), (B), (C), or (D) of this section. Such documentation may include copies of receipts, accession or veterinary records, CITES documents, or wildlife declaration forms, which must be dated prior to the specified dates.

    (D) For hyacinth macaws: September 12, 2018 (the date this species was listed under the Endangered Species Act of 1973, as amended (Act) (16 U.S.C. 1531 et seq.)).

    Dated: July 2, 2018. James W. Kurth, Deputy Director, U.S. Fish and Wildlife Service, Exercising the Authority of the Director, U.S. Fish and Wildlife Service.
    [FR Doc. 2018-17319 Filed 8-10-18; 8:45 am] BILLING CODE 4333-15-P
    83 156 Monday, August 13, 2018 Proposed Rules DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 52 [Document Number AMS-FV-14-0088, SC-18-328] United States Standards for Grades of Processed Vegetables AGENCY:

    Agricultural Marketing Service, USDA.

    ACTION:

    Notice.

    SUMMARY:

    The Agricultural Marketing Service (AMS) of the Department of Agriculture (USDA) proposes to revise the U.S. Standards for Grades of Canned Lima Beans, U.S. Standards for Grades of Canned Mushrooms, U.S. Standards for Grades of Pickles, and U.S. Standards for Grades of Green Olives. AMS is proposing to replace the term “midget” with “petite” in the canned lima bean, canned mushroom, and pickle standards, and to remove “midget” completely from the green olive standards as there is an alternative term. AMS is also proposing to replace the two-term grading system (dual nomenclature) with a single term to describe each quality level in the canned lima bean, canned mushroom, and green olive standards. Editorial changes would also be made to the grade standards that conform to recent changes made in other grade standards.

    DATES:

    Comments must be submitted on or before October 12, 2018.

    ADDRESSES:

    Interested persons are invited to submit written comments to the USDA, Specialty Crops Inspection Division, 100 Riverside Parkway, Suite 101, Fredericksburg, VA 22406; fax: (540) 361-1199; or at www.regulations.gov. Comments should reference the dates and page number of this issue of the Federal Register. Comments will be posted without change, including any personal information provided. All comments received within the comment period will become part of the public record maintained by the Agency and will be made available to the public via www.regulations.gov. Comments will be made available for public inspection at the above address during regular business hours or can be viewed at: www.regulations.gov.

    FOR FURTHER INFORMATION CONTACT:

    Lindsay H. Mitchell at the address above, by phone (540) 361-1120; fax (540) 361-1199; or, email [email protected] Copies of the proposed U.S. Standards for Grades of Canned Lima Beans, U.S. Standards for Grades of Canned Mushrooms, U.S. Standards for Grades of Pickles, and U.S. Standards for Grades of Green Olives are available at http://www.regulations.gov. Copies of the current U.S. Standards for Grades of Canned Lima Beans, U.S. Standards for Grades of Canned Mushrooms, U.S. Standards for Grades of Pickles, and U.S. Standards for Grades of Green Olives are available on the Specialty Crops Inspection Division website at www.ams.usda.gov/grades-standards/vegetables.

    SUPPLEMENTARY INFORMATION:

    Section 203(c) of the Agricultural Marketing Act of 1946 (7 U.S.C. 1621-1627) as amended, directs and authorizes the Secretary of Agriculture “to develop and improve standards of quality, condition, quantity, grade, and packaging, and recommend and demonstrate such standards in order to encourage uniformity and consistency in commercial practices.”

    The Agricultural Marketing Service (AMS) is committed to carrying out this authority in a manner that facilitates the marketing of agricultural commodities and makes copies of official standards available upon request. The U.S. Standards for Grades of Fruits and Vegetables that no longer appear in the Code of Federal Regulations are maintained by AMS at: http://www.ams.usda.gov/grades-standards. AMS is proposing revisions to these U.S. Standards for Grades using the procedures that appear in part 36 of Title 7 of the Code of Federal Regulations (7 CFR part 36).

    Background

    AMS continually reviews all fruit and vegetable grade standards to ensure their usefulness to the industry, modernize language, and remove duplicative terminology. On May 13, 2013, AMS received a petition from the Little People of America stating they “are trying to raise awareness around and eliminate the use of the word midget.” The petition further stated, “Though the use of the word midget by the USDA when classifying certain food products is benign, Little People of America, and the dwarfism community, hopes that the USDA would consider phasing out the term midget.”

    AMS determined that six grade standards contained the term “midget”—U.S. Standards for Grades of Canned Lima Beans, U.S. Standards for Grades of Canned Mushrooms, U.S. Standards for Grades of Pickles, U.S. Standards for Grades of Green Olives, U.S. Standards for Grades of Processed Raisins, and U.S. Standards for Grades of Shelled Pecans. The shelled pecans and processed raisins were separated out and are covered in two rules due to additional changes being made.

    Before developing these proposed revisions, AMS solicited comments and suggestions about the grade standards from the Grocery Manufacturers Association, U.S. Dry Bean Council, American Mushroom Institute, Pickle Packers International, Inc., and the California Olive Committee. The consensus from the U.S. Dry Bean Council, American Mushroom Institute, and Pickle Packers International, Inc. was to proceed with replacing “midget” with “petite” in each of the three standards. The California Olive Committee stated there would be no issue with removing the term “midget” completely from the standards as that would leave “petite” for the size designation.

    In addition to replacing “midget” with “petite” or removing “midget,” AMS is also proposing to remove dual nomenclature in U.S. Standards for Grades of Canned Lima Beans, U.S. Standards for Grades of Canned Mushrooms, and U.S. Standards for Grades of Green Olives. More recently developed standards use a single term, such as “U.S. Grade A” or “U.S. Grade B,” to describe each level of quality within a grade standard. Older grade standards used dual nomenclature, such as “U.S. Grade A or U.S. Fancy,” “U.S. Grade B or U.S. Extra Standard,” or “U.S. Grade B or U.S. Choice,” and “U.S. Grade C or U.S. Standard,” to describe the same level of quality. The terms “U.S. Fancy,” “U.S. Extra Standard” or “U.S. Choice,” and “U.S. Standard” would be removed and the terms “U.S. Grade A,” “U.S. Grade B,” and “U.S. Grade C” would be used exclusively.

    Finally, AMS is proposing editorial changes to these grade standards, i.e., updating the name of a table to better reflect content, removing specific address for viewing or obtaining color standards, updating a grade designation in a scoresheet to align with language used throughout standard, and updating the Code of Federal Regulations (CFR) references where applicable. Information on obtaining color standards is available in the Fresh and Processed Equipment Catalog on the AMS website at https://www.ams.usda.gov/grades-standards/how-purchase-equipment-and-visual-aids. These revisions will provide a format that is consistent with those of other grade standards (75 FR 43141). The following table summarizes the changes currently under consideration by AMS.

    U.S. standards for grades of Effective date Remove or replace “midget” Other proposed revisions Canned Lima Beans 3/20/60 Replace with “Petite” in Table II in Sizes of canned lima beans section Change level of quality designations to single terms in the Grades of canned lima beans and Color sections.
  • Correct CFR citation for standard of identity to 21 CFR 155.200 in the Identity section.
  • Replace Processed Products information and address with “USDA Headquarters in Washington, DC” in the General section. Canned Mushrooms 4/7/62 Replace with “petite” in the Sizes of canned mushrooms in the styles of whole and buttons section Change level of quality designations to single terms in the Grades of canned mushrooms section.
  • Correct CFR citation for standard of identity to 21 CFR 155.200 in the Product description section.
  • Green Olives 9/8/67 Remove from Table I in the Sizes of whole style green olives section Change level of quality designations to single terms in the Grades of green olives and Uniformity of size sections and Tables IV and V in the Absence of defects section.
  • Change “D” to “Sstd” in the Score sheet for green olives section.
  • Pickles 4/22/91 Replace with “Petite” in Table II in the Sizes of whole pickles section and Table VI in the Requirements for grade section Change the title of Table III from “Recommended Pickle Ingredients All Styles Except Relish” to “Recommended Minimum Quantity of Pickle Ingredients All Styles Except Relish.”

    The proposed revisions to these grade standards would provide a common language for trade and better reflect the current marketing of fruits and vegetables.

    A 60-day comment period is provided for interested persons to submit comments on the proposed revised grade standards. Copies of the proposed revised standards are available at http://www.regulations.gov. After the 60-day comment period, AMS will move forward in accordance with 7 CFR 36.3(a)(1 through 3).

    Authority:

    7 U.S.C. 1621-1627.

    Dated: August 8, 2018. Bruce Summers, Administrator, Agricultural Marketing Service.
    [FR Doc. 2018-17283 Filed 8-10-18; 8:45 am] BILLING CODE 3410-02-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2018-0707; Product Identifier 2018-NM-067-AD] RIN 2120-AA64 Airworthiness Directives; Fokker Services B.V. 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 Fokker Services B.V. Model F28 airplanes. This proposed AD was prompted by reports that certain T-unions with an integral filter in the landing gear hydraulic control system disconnected from their housing and, in some cases, migrated. This proposed AD would require replacing certain T-unions with an integral filter with T-unions without an integral filter. We are proposing this AD to address the unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by September 27, 2018.

    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 Fokker Services B.V., Technical Services Dept., P.O. Box 1357, 2130 EL Hoofddorp, the Netherlands; telephone +31 (0)88-6280-350; fax +31 (0)88-6280-111; email [email protected]; internet http://www.myfokkerfleet.com. You may view this service information at the FAA, Transport Standards Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.

    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-2018-0707; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this NPRM, the regulatory evaluation, any comments received, and other information. The street address for Docket Operations (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Tom Rodriguez, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3226.

    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-2018-0707; Product Identifier 2018-NM-067-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

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2018-0076, dated April 6, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Fokker Services B.V. Model F28 airplanes. The MCAI states:

    With [Fokker Service Bulletins] SBF100-32-095 and SBF28-32-154, Fokker Services introduced the option of installing a T-union with an integral filter into the landing gear hydraulic control system. On some F28 Mark 0070 and Mark 0100 aeroplanes, the affected part was installed on the production line. Since introduction, occurrences were reported where the T-union filter disconnected from its housing, and in some cases migrated. In one occurrence, the migrated filter caused a flow reduction and inability to retract one of the main landing gear (MLG) legs.

    This condition, if not corrected, could lead to flow reduction along the hydraulic circuit and inability to completely extend one of the MLG legs, possibly resulting in damage to the aeroplane during landing, and consequent injury to occupants.

    To address this potential unsafe condition, Fokker Services issued the applicable SB [Fokker Service Bulletin SBF28-32-166; and Fokker Service Bulletin SBF100-32-170] to provide instructions to replace the affected parts with improved parts. Fokker Services also cancelled the SBs that introduced the affected parts.

    For the reason described above, this [EASA] AD requires replacement of the affected parts with T-unions without an integral filter. This [EASA] AD also prohibits the installation of affected parts.

    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-2018-0707.

    Related Service Information Under 1 CFR Part 51

    Fokker Services B.V. has issued Service Bulletin SBF28-32-166, dated February 21, 2018; and Service Bulletin SBF100-32-170, dated February 21, 2018. This service information describes procedures for removal of certain T-unions with an integral filter and installation of T-unions without an integral filter. 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

    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 the relevant information and determined the unsafe condition described previously is likely to exist or develop on other products of the same type design.

    Proposed Requirements of This NPRM

    This proposed AD would require accomplishing the actions specified in the service information described previously.

    Costs of Compliance

    We estimate that this proposed AD affects 4 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

    Estimated Costs Labor cost Parts cost Cost per
  • product
  • Cost on U.S. operators
    10 work-hours × $85 per hour = $850 $1,038 $1,888 $7,552
    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.

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

    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): Fokker Services B.V.: Docket No. FAA-2018-0707; Product Identifier 2018-NM-067-AD. (a) Comments Due Date

    We must receive comments by September 27, 2018.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Fokker Services B.V. Model F28 Mark 0070, 0100, 1000, 2000, 3000, and 4000 airplanes, certificated in any category, all manufacturer serial numbers.

    (d) Subject

    Air Transport Association (ATA) of America Code 32, Landing gear.

    (e) Reason

    This AD was prompted by reports that certain T-unions with an integral filter in the landing gear hydraulic control system disconnected from their housing and, in some cases, migrated. We are issuing this AD to prevent flow reduction along the hydraulic circuit and the possible inability to completely extend one or both of the main landing gear legs, which could result in damage to the airplane during landing, and consequent injury to occupants.

    (f) Compliance

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

    (g) Definitions

    For the purposes of this AD, the definitions in paragraphs (g)(1) through (g)(3) inclusive apply.

    (1) An affected part is any hydraulic T-union with an integral filter installed, having part number (P/N) QA07596 or P/N QA07597, installed on the production line or introduced in-service by Fokker Service Bulletin SBF100-32-095 or Fokker Service Bulletin SBF28-32-154, as applicable.

    (2) Group 1 airplanes are those that have an affected part installed.

    (3) Group 2 airplanes are those that do not have an affected part installed.

    (h) Required Actions

    For Group 1 airplanes, within 24 months after the effective date of this AD, modify the airplane in accordance with the Accomplishment Instructions of Fokker Service Bulletin SBF28-32-166, dated February 21, 2018; or Fokker Service Bulletin SBF100-32-170, dated February 21, 2018, as applicable. The corresponding part numbers of affected (old) parts and replacement (new) parts are specified in figure 1 to paragraph (h) of this AD.

    EN13AU18.000 (i) Parts Installation Prohibition

    No person may install an affected part on any airplane, as of the time specified in paragraph (i)(1) or (i)(2) of this AD, as applicable.

    (1) For Group 1 airplanes: After modification of the airplane as required by paragraph (h) of this AD.

    (2) For Group 2 airplanes: From the effective date of this AD.

    (j) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Section, Transport Standards Branch, 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 Section, send it to the attention of the person identified in paragraph (k)(2) of this AD. 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 Section, Transport Standards Branch, FAA; or the European Aviation Safety Agency (EASA); or Fokker Services B.V.'s EASA Design Organization Approval (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.

    (k) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2018-0076, dated April 6, 2018, 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-2018-0707.

    (2) For more information about this AD, contact Tom Rodriguez, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3226.

    (3) For service information identified in this AD, contact Fokker Services B.V., Technical Services Dept., P.O. Box 1357, 2130 EL Hoofddorp, the Netherlands; telephone +31 (0)88-6280-350; fax +31 (0)88-6280-111; email [email protected]; internet http://www.myfokkerfleet.com. You may view this service information at the FAA, Transport Standards Branch, 2200 South 216th St., Des Moines, WA. For information on the availability of this material at the FAA, call 206-231-3195.

    Issued in Des Moines, Washington, on August 5, 2018. Michael Kaszycki, Acting Director, System Oversight Division, Aircraft Certification Service.
    [FR Doc. 2018-17322 Filed 8-10-18; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF COMMERCE Bureau of Industry and Security 15 CFR part 774 [Docket No. 180227222-8222-01] Commerce Control List: Request for Comments Regarding Controls on Certain Spraying or Fogging Systems and “Parts” and “Components” Therefor AGENCY:

    Bureau of Industry and Security, Commerce.

    ACTION:

    Notice of inquiry.

    SUMMARY:

    The Bureau of Industry and Security (BIS), Department of Commerce, maintains the Export Administration Regulations, including the Commerce Control List (CCL). Certain items identified on the CCL are controlled for chemical/biological (CB) reasons, because they are identified on one of the common control lists maintained by the Australia Group (AG), which is a multilateral forum of countries (plus the European Union) that maintain export controls on specified chemicals, biological agents, and related equipment and technology that could be used in a chemical or biological weapons (CBW) program. Among the items subject to these CB controls are spraying or fogging systems described in Export Control Classification Number (ECCN) 2B352.i on the CCL. Through this notice, BIS is seeking public comments as part of a review of the effectiveness of its controls on these systems, and “parts” and “components” therefor, to ensure that the descriptions of these items on the CCL are clear, do not inadvertently control items in normal commercial use, accurately reflect CB-related technological capabilities and developments, and are consistent with the principal objective of the AG, which is to ensure that exports of certain chemicals, biological agents, and dual-use chemical and biological manufacturing facilities and equipment, do not contribute to the spread of chemical and biological weapons (CBW). This notice also requests public comments on potential alternatives to the current controls in ECCN 2B352.i.

    DATES:

    Comments must be received by BIS no later than October 12, 2018.

    ADDRESSES:

    Comments may be submitted via the Federal eRulemaking Portal (http://www.regulations.gov). You can find this notice by searching on its regulations.gov docket number, which is BIS-2018-0013. Comments may also be submitted via email to [email protected] or on paper to Regulatory Policy Division, Bureau of Industry and Security, U.S. Department of Commerce, Room 2099B, 14th Street and Pennsylvania Avenue NW, Washington, DC 20230. Please refer to RIN 0694-XC042 in all comments and in the subject line of email comments. All comments (including any personally identifying information) will be made available for public inspection and copying.

    FOR FURTHER INFORMATION CONTACT:

    For questions on the CB controls that apply to spraying or fogging systems described in ECCN 2B352.i, contact Richard P. Duncan, Ph.D., Director, Chemical and Biological Controls Division, Office of Nonproliferation and Treaty Compliance, Bureau of Industry and Security, Telephone: (202) 482-3343, Email: [email protected] For questions on the submission of comments in response to this notice of inquiry, contact Willard Fisher, Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce, Phone: (202) 482-2440.

    SUPPLEMENTARY INFORMATION:

    Background

    The Bureau of Industry and Security (BIS), Department of Commerce, maintains the Export Administration Regulations (EAR) (15 CFR parts 730-774), including the Commerce Control List (CCL) (Supplement No. 1 to part 774 of the EAR). Through this notice, BIS is seeking public comments as part of a review of the effectiveness of its controls on spraying or fogging systems, and “parts” and “components” therefor, that are described in paragraph (i) of Export Control Classification Number (ECCN) 2B352 on the CCL. The items controlled by ECCN 2B352.i are subject to chemical/biological (CB) controls on the CCL, because they are identified on one of the common control lists maintained by the Australia Group (AG), specifically, the AG “Control List of Dual-Use Biological Equipment and Related Technology and Software.” The AG is a multilateral forum consisting of 42 participating countries and the European Union that maintain export controls on specified chemicals, biological agents, and related equipment and technology that could be used in a chemical or biological weapons program.

    Current EAR Controls on Spraying or Fogging Systems

    Currently, ECCN 2B352.i controls complete spraying or fogging systems, spray booms, and arrays of aerosol generating units that are: (1) “specially designed” or modified for fitting to aircraft, “lighter than air vehicles,” or “unmanned aerial vehicles” (“UAVs”); and (2) capable of delivering, from a liquid suspension, an initial droplet volume median diameter (`VMD') of less than 50 microns at a flow rate of greater than 2 liters per minute. This ECCN also controls aerosol generating units that are “specially designed” for fitting to the aforementioned equipment.

    The Technical Notes immediately following ECCN 2B352.i clarify the scope of these controls and provide guidance on how to evaluate certain characteristics (e.g., droplet size) to determine whether specific equipment is controlled under this ECCN. Technical Note 1 states that aerosol generating units, for purposes of the controls in ECCN 2B352.i, are devices “specially designed” or modified for fitting to “aircraft” and include nozzles, rotary drum atomizers and similar devices. Technical Note 2 clarifies the scope of ECCN 2B352 by indicating that this ECCN does not control spraying or fogging systems and “parts” and “components” therefor, as described in 2B352.i, that are demonstrated not to be capable of delivering biological agents in the form of infectious aerosols. Technical Note 3 provides guidance on how to measure `VMD' for droplets produced by spray equipment or nozzles “specially designed” for use on “aircraft” or “UAVs,” indicating that, pending the adoption of internationally accepted standards, `VMD' should be measured using either of the following methods: (1) Doppler “laser” method; or (2) forward “laser” diffraction method.

    The control text in ECCN 2B352.i, as described above, is consistent with the corresponding controls described in the AG “Control List of Dual-Use Biological Equipment and Related Technology and Software,” which were established to address a very specific threat, i.e., the dissemination of biological agents from the air.

    Proposed Alternatives to the Current Controls in ECCN 2B352.i

    As part of its review of the ECCN 2B352.i controls on spraying or fogging systems, and “parts” and “components” therefor, BIS is considering expanding the scope of these controls to include: (1) Systems for the dissemination of chemicals controlled by ECCN 1C350 or 1C355 (currently, CB controls apply only to systems for the dissemination of biological agents controlled by ECCN 1C351); and (2) ground-based systems (currently, CB controls apply only to airborne systems). These changes are being considered because potential chemical/biological warfare (CBW) threats are likely to include the dissemination of chemical agents, as well as the dissemination of biological agents, and may well involve ground-based methods of dissemination, as well as airborne means of dissemination.

    Consequently, BIS is considering one or more of the following options with respect to the EAR controls on spraying or fogging systems, and “parts” and “components” therefor.

    (1) Removing the criterion in ECCN 2B352.i that currently limits CB controls to those systems that are “specially designed” or modified for fitting to “aircraft,” “lighter than air vehicles,” or “UAVs.” The rationale for this change is that the ability of such systems to produce an aerosol is not determined by whether the systems are ground-based or airborne.

    (2) Removing the criterion in ECCN 2B352.i based on initial droplet size (i.e., an initial droplet `VMD' of less than 50 microns). The rationale for this change is that initial droplet size is not necessarily a feature that is measured (or otherwise addressed) by all manufacturers of these systems. In addition, the initial droplet size currently indicated in ECCN 2B352.i is based solely on the airborne dissemination of biological agents (i.e., those controlled by ECCN 1C351) and would not necessarily apply to systems for the airborne dissemination of chemicals (i.e., those controlled by ECCN 1C350 or 1C355) or the ground-based dissemination of such chemicals or biological agents.

    (3) Lowering the flow rate at which spraying or fogging systems are controlled under ECCN 2B352.i. Currently, ECCN 2B352.i specifies a flow rate of “greater than 2 liters per minute.” However, BIS acknowledges that this change would involve determining a lower flow rate that would not catch typical commercial systems (e.g., systems designed for agricultural use), except when deemed necessary to ensure the continued effectiveness of CB controls on spraying or fogging systems.

    (4) Developing a control that would apply to spraying or fogging systems “specially designed” for the dissemination or dispersion of chemicals controlled by ECCN 1C350 or 1C355 or biological agents controlled by ECCN 1C351 in a manner likely to cause significant harm to humans or livestock or serious damage to crops.

    With respect to option #4 described above, note that paragraph (a)(1) of the definition of “specially designed” in Section 772.1 of the EAR states that an item is “specially designed” if, as a result of “development,” it “has properties peculiarly responsible for achieving or exceeding the performance levels, characteristics, or functions in the relevant ECCN or U.S. Munitions List (USML) paragraph.” Therefore, if the term “specially designed” were used in the control text for spraying or fogging systems in ECCN 2B352.i, the only systems that would be captured by these controls would be those that are peculiarly responsible for achieving the dissemination or dispersion of chemicals controlled by ECCN 1C350 or 1C355 or biological agents controlled by ECCN 1C351 in a manner likely to cause significant harm to humans or livestock or serious damage to crops (i.e., properties that would distinguish these systems from typical commercial systems, such as those designed for agricultural applications). Consequently, under option #4, the controls in ECCN 2B352.i would not apply to spraying or fogging systems designed for commercial use that have performance levels, characteristics, or functions that are capable of, but not peculiarly responsible for, achieving the dissemination or dispersion of chemicals controlled by ECCN 1C350 or 1C355 or biological agents controlled by ECCN 1C351 in the manner described above.

    Request for Comments

    BIS is publishing this notice of inquiry to obtain public comments as part of a review of the effectiveness of the EAR controls on spraying or fogging systems, and “parts” and “components” therefor, as currently described in ECCN 2B352.i. Specifically, BIS is seeking comments that address whether the descriptions of these items on the CCL: (1) Are clear; (2) do not inadvertently control items in normal commercial use; (3) accurately reflect CB-related technological capabilities and developments; and (4) are consistent with the principal objective of the AG, which is to ensure that exports of certain chemicals, biological agents, and dual-use chemical and biological manufacturing facilities and equipment do not contribute to the spread of chemical and biological weapons (CBW).

    The public comments submitted in response to this notice of inquiry should address specific aspects of the current controls in ECCN 2B352.i in relation to the four criteria described above. For example, if the current control text is not sufficiently clear or does not accurately reflect CB-related technological capabilities and developments, please identify the specific aspects in which the current controls fall short with respect to these criteria. In addition, please indicate: (1) The extent to which the existing controls in ECCN 2B352.i would apply to any spraying or fogging systems that are currently being manufactured and/or sold; or (2) if the existing controls do not apply to any current systems, what specific aspects (e.g., flow rate or `VMD') would differentiate such systems from the systems described in ECCN 2B352.i. Also, if applicable, describe the manner in which your company evaluates spraying or fogging equipment, and “parts” and “components” therefor, consistent with Technical Note 2 to ECCN 2B352 as described above, which states that this ECCN does not control items specified in 2B352.i if they are “demonstrated not to be capable of delivering biological agents in the form of infectious aerosols.”

    In addition, BIS encourages the public to submit comments on the aforementioned options to modify the current controls in ECCN 2B352.i. Comments on these options should focus on the extent to which they would satisfy the four criteria described above and also address the potential impact of these alternative controls on specific types of spraying or fogging systems (including “parts,” “components,” “accessories,” and “attachments” therefor) that are currently being manufactured and/or sold or that are likely to be manufactured and/or sold in the foreseeable future. Comments on option #4 (where the ECCN 2B352.i control text would include the term “specially designed”) should not only address this option with reference to the four criteria described above, but also identify any performance levels, characteristics, or functions that clearly distinguish commercial spraying or fogging systems from those systems having properties that are peculiarly responsible for achieving the dissemination or dispersion of chemicals controlled by ECCN 1C350 or 1C355 or biological agents controlled by ECCN 1C351 in a manner likely to cause significant harm to humans or livestock or serious damage to crops.

    Dated: August 6, 2018. Richard E. Ashooh, Assistant Secretary for Export Administration.
    [FR Doc. 2018-17249 Filed 8-10-18; 8:45 am] BILLING CODE 3510-33-P
    COMMODITY FUTURES TRADING COMMISSION 17 CFR Parts 39 and 140 RIN 3038-AE65 Exemption From Derivatives Clearing Organization Registration AGENCY:

    Commodity Futures Trading Commission.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Commodity Futures Trading Commission (Commission) is proposing amendments to its regulations to establish a regulatory framework within which the Commission may exempt a clearing organization that is organized outside of the United States (hereinafter referred to as “non-U.S. clearing organization”) from registration as a derivatives clearing organization (DCO) in connection with the clearing organization's clearing of swaps. In addition, the Commission is proposing certain amendments to its delegation provisions in its regulations.

    DATES:

    Comments must be received on or before October 12, 2018.

    ADDRESSES:

    You may submit comments, identified by “Exemption from Derivatives Clearing Organization Registration” and RIN number 3038-AE65, by any of the following methods:

    CFTC Comments Portal: https://comments.cftc.gov. Select the “Submit Comments” link for this rulemaking and follow the instructions on the Public Comment Form.

    Mail: Send to Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581.

    Hand Delivery/Courier: Follow the same instructions as for Mail, above.

    Please submit your comments using only one of these methods. To avoid possible delays with mail or in-person deliveries, submissions through the CFTC Comments Portal are encouraged.

    All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to https://comments.cftc.gov. You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act (FOIA), a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission's regulations.1

    1 17 CFR 145.9. Commission regulations referred to herein are found at 17 CFR chapter I (2018), and are accessible on the Commission's website at https://www.cftc.gov/LawRegulation/CommodityExchangeAct/index.htm.

    The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from https://comments.cftc.gov that it may deem to be inappropriate for publication, such as obscene language. All submissions that have been redacted or removed that contain comments on the merits of the rulemaking will be retained in the public comment file and will be considered as required under the Administrative Procedure Act and other applicable laws, and may be accessible under the FOIA.

    FOR FURTHER INFORMATION CONTACT:

    Eileen A. Donovan, Deputy Director, 202-418-5096, [email protected]; Parisa Abadi, Associate Director, 202-418-6620, [email protected]; Eileen R. Chotiner, Senior Compliance Analyst, 202-418-5467, [email protected]; Abigail S. Knauff, Special Counsel, 202-418-5123, [email protected]; Division of Clearing and Risk, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581.

    SUPPLEMENTARY INFORMATION:

    Table of Contents I. Background A. Project KISS B. Statutory and Regulatory Framework for Swaps Execution and Clearing C. Statutory and Regulatory Requirements for Registration and Operation of DCOs II. Proposed Amendments to Part 39 A. Regulation 39.1—Scope B. Regulation 39.2—Definitions C. Regulation 39.6—Exemption Provisions D. Regulation 39.9—Scope III. Proposed Amendments to Part 140—Delegations of Authority IV. Request for Comments V. Consideration of Costs and Benefits A. Introduction B. Proposed Regulation 39.6 C. Section 15(a) Factors VI. Related Matters A. Regulatory Flexibility Act B. Paperwork Reduction Act I. Background A. Project KISS

    The Commission is engaging in an agency-wide review of its rules, regulations, and practices to make them simpler, less burdensome, and less costly, and to make progress on G-20 regulatory reforms. This initiative is called Project KISS, which stands for “Keep It Simple, Stupid.” 2 The Commission is proposing to adopt regulations that would codify the policies and procedures that the Commission is currently following with respect to granting exemptions from DCO registration in order to make such policies and procedures transparent to all potential applicants.

    2See Remarks of Acting Chairman J. Christopher Giancarlo before the 42nd Annual International Futures Industry Conference in Boca Raton, FL, Mar. 15, 2017, available at https://www.cftc.gov/PressRoom/SpeechesTestimony/opagiancarlo-20. On February 24, 2017, President Donald J. Trump issued Executive Order 13777: Enforcing the Regulatory Reform Agenda (E.O. 13777). E.O. 13777 directs federal agencies, among other things, to designate a Regulatory Reform Officer and establish a Regulatory Reform Task Force. Although the CFTC, as an independent federal agency, is not bound by E.O. 13777, the Commission is nevertheless engaging in an agency-wide review of its rules, regulations, and practices to make them simpler, less burdensome, and less costly. See Request for Information, 82 FR 23756 (May 24, 2017).

    B. Statutory and Regulatory Framework for Swaps Execution and Clearing

    The Commodity Exchange Act (CEA) 3 provides that a clearing organization may not “perform the functions of a [DCO]” 4 with respect to swaps unless the clearing organization is registered with the Commission.5 However, the CEA also permits the Commission to conditionally or unconditionally exempt a clearing organization from registration for the clearing of swaps if the Commission determines that the clearing organization is subject to “comparable, comprehensive supervision and regulation” by appropriate government authorities in the clearing organization's home country.6

    3 7 U.S.C. 1 et seq.

    4 The term “derivatives clearing organization” is statutorily defined to mean a clearing organization in general. However, for purposes of the discussion herein, the term “DCO” refers to a Commission-registered DCO, the term “exempt DCO” refers to a derivatives clearing organization that is exempt from registration, and the term “clearing organization” refers to a clearing organization that: (a) Is neither registered nor exempt from registration with the Commission as a DCO; and (b) falls within the definition of “derivatives clearing organization” under section 1a(15) of the CEA, 7 U.S.C. 1a(15), and “clearing organization or derivatives clearing organization” under Regulation 1.3, 17 CFR 1.3.

    5 Section 5b(a) of the CEA, 7 U.S.C. 7a-1(a).

    6 Section 5b(h) of the CEA, 7 U.S.C. 7a-1(h). Section 5b(h) also permits the Commission to exempt from DCO registration a securities clearing agency registered with the Securities and Exchange Commission; however, the Commission is not proposing to exempt securities clearing agencies at this time.

    To date, the Commission has exempted four non-U.S. clearing organizations from DCO registration. The Commission is proposing to adopt regulations that would codify the policies and procedures that the Commission is currently following with respect to granting exemptions from DCO registration and would make such policies and procedures transparent to all potential applicants.

    C. Statutory and Regulatory Requirements for Registration and Operation of DCOs

    As previously noted, the CEA requires a clearing organization that clears swaps to be registered with the Commission as a DCO. However, in order to be registered and maintain registration as a DCO, a clearing organization must comply with the core principles for DCOs set forth in the CEA (DCO Core Principles) 7 and all applicable Commission regulations.8

    7 7 U.S.C. 7a-1(c)(2)(A).

    8See 17 CFR parts 1—190 including, in particular, part 39, which implements the DCO Core Principles.

    The Commission may conditionally or unconditionally exempt a clearing organization from registration for the clearing of swaps if the Commission determines that the clearing organization is subject to “comparable, comprehensive supervision and regulation” by the clearing organization's home country regulator(s). The Commission has construed “comparable, comprehensive supervision and regulation” to mean that the home country's supervisory and regulatory framework should be consistent with, and achieve the same outcome as, the statutory and regulatory requirements applicable to registered DCOs. This outcomes-based approach reflects the Commission's recognition that a foreign jurisdiction's supervisory and regulatory scheme applicable to its clearing organizations may differ from the Commission's in certain respects, but nevertheless may achieve the same underlying goals. This approach also supports the Commission's effort to strike an appropriate balance by focusing on the risk implications to the United States, while promoting global harmonization.

    Further, the Commission has deemed a supervisory and regulatory framework that conforms to the Principles for Financial Market Infrastructures (PFMIs) 9 to be comparable to, and as comprehensive as, the supervisory and regulatory requirements applicable to registered DCOs.10 Notably, the Commission was a key contributor to the joint efforts of the Committee on Payments and Market Infrastructures (CPMI) 11 and the Technical Committee of the International Organization of Securities Commissions (IOSCO) to develop the PFMIs, which apply to clearing organizations.12 In addition to contributing to the development of the PFMIs, the Commission serves as a member of the CPMI-IOSCO task force that monitors implementation of the PFMIs. The PFMIs are comparable to the DCO Core Principles and applicable Commission regulations in purpose and scope. Both address major elements critical to the safe and efficient operations of clearing organizations, such as risk management, adequacy of financial resources, default management, margin, settlement, and participation requirements.13 In light of the foregoing, the Commission believes that a supervisory and regulatory framework that adheres to the framework under the PFMIs achieves outcomes that are comparable to that of the supervisory and regulatory requirements applicable to registered DCOs. Accordingly, the Commission proposes to continue to use the PFMI framework as the benchmark for making a comparability determination with respect to a foreign jurisdiction's supervisory and regulatory scheme.

    9See CPMI-IOSCO, Principles for financial market infrastructures (Apr. 2012), available at http://www.iosco.org/library/pubdocs/pdf/IOSCOPD377-PFMI.pdf. The PFMIs define a “financial market infrastructure” as a “multilateral system among participating institutions, including the operator of the system, used for the purposes of clearing, settling, or recording payments, securities, derivatives, or other financial transactions.” See PFMIs, paragraph 1.8. Additionally, the PFMIs are “broadly designed to apply to all systemically important [financial market infrastructures].” See PFMIs, paragraph 1.20.

    10 This conclusion is consistent with previous Commission determinations. See, e.g., Regulation 50.52(b)(4)(i)(E), 17 CFR 50.52(b)(4)(i)(E) (permitting eligible affiliate counterparties that are located in certain jurisdictions to satisfy a condition to electing the exemption by clearing the swap through a DCO or a clearing organization that is subject to supervision by appropriate government authorities in the clearing organization's home country and that has been assessed to be in compliance with the PFMIs).

    11 CPMI was formerly the Committee on Payment and Settlement Systems; it was renamed effective September 1, 2014. See http://www.bis.org/press/p140901.htm.

    12 In order to promote effective and consistent global regulation of swaps, section 752 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) directs the Commission to consult and coordinate with foreign regulatory authorities on the establishment of consistent international standards with respect to the regulation of swaps, among other things. Section 752 of the Dodd-Frank Act, Public Law 111-203, 124 Stat. 1376 (2010), codified at 15 U.S.C. 8325.

    13See, e.g., Derivatives Clearing Organizations and International Standards, 78 FR 72476 (Dec. 2, 2013) (adopting final rules).

    II. Proposed Amendments to Part 39 A. Regulation 39.1—Scope

    The Commission is proposing to amend Regulation 39.1 to state that the provisions of subpart A of part 39 apply to any registered DCO or, as applicable, any entity applying to be registered as a DCO or applying to be exempt from DCO registration. Regulation 39.3, which is contained in subpart A and is not proposed to be amended, sets forth procedures for DCO registration. Proposed Regulation 39.6, which also would be contained in subpart A, would set forth the requirements for an exemption from DCO registration, as discussed below.

    B. Regulation 39.2—Definitions

    In connection with the proposed exemption regulations, the Commission is proposing to add five definitions to Regulation 39.2, for purposes of part 39 only.

    The Commission proposes to define the term “exempt derivatives clearing organization” to mean a derivatives clearing organization that the Commission has exempted from registration under section 5b(a) of the CEA, pursuant to section 5b(h) of the CEA and Regulation 39.6.

    The Commission proposes to define the term “good regulatory standing” to mean, with respect to a non-U.S. clearing organization that is authorized to act as a clearing organization in its home country, that either there has been no finding by the home country regulator of material non-observance of the PFMIs or other relevant home country legal requirements, or there has been such a finding by the home country regulator, but it has been or is being resolved to the satisfaction of the home country regulator by means of corrective action taken by the clearing organization. The Commission believes that this is a workable definition from the standpoint of both the Commission and the home country regulator in that it establishes a basis for providing the Commission with a high degree of assurance as to the clearing organization's observance of the PFMIs, while only seeking from the home country regulator a representation that it can reasonably make.

    The Commission proposes to define the term “home country” to mean, with respect to a non-U.S. clearing organization, the jurisdiction in which the clearing organization is organized.

    The Commission proposes to define the term “home country regulator,” with respect to a non-U.S. clearing organization, as an appropriate government authority which licenses, regulates, supervises, or oversees the clearing organization's clearing activities in the home country. The proposed definition is consistent with section 5b(h) of the CEA, which provides, in relevant part, that the Commission may exempt a clearing organization from registration for the clearing of swaps if the Commission determines that the clearing organization is subject to comparable, comprehensive supervision and regulation by the appropriate government authorities in the home country of the clearing organization. Use of the term “an appropriate government authority” rather than “the appropriate government authority” is intended to recognize that in some foreign jurisdictions there may be more than one government authority that supervises and regulates a clearing organization.

    The Commission proposes to define the term “Principles for Financial Market Infrastructures” as the PFMIs published by CPMI-IOSCO in April 2012, as updated, revised, or otherwise amended.14

    14 The Commission proposes to include this language to recognize that CPMI-IOSCO could offer further interpretation of or guidance on the PFMIs. See, e.g., CPMI-IOSCO, Resilience of central counterparties: Further guidance on the PFMI (July 2017), available at https://www.bis.org/cpmi/publ/d163.pdf.

    C. Regulation 39.6—Exemption Provisions

    Proposed Regulation 39.6 would implement section 5b(h) of the CEA by setting forth the regulatory framework within which the Commission may exempt a clearing organization from DCO registration in connection with the clearing of swaps. After section 5b(h) was enacted in 2010, clearing organizations outside the United States began inquiring as to how they could go about obtaining an exemption. Because the Commission had not yet developed a framework for granting exemptions, the Commission's Division of Clearing and Risk (DCR) began granting time-limited no-action relief to these clearing organizations which permit them to engage in swap clearing activity that would otherwise require registration as a DCO.15 After careful consideration of the issues involved, DCR staff presented initial thoughts on granting exemptions at a May 2014 meeting of the Commission's Global Markets Advisory Committee. Finally, in November 2014, DCR sent a letter to those clearing organizations that had received no-action relief, advising them on how to petition the Commission for an exemption. In response to petitions submitted in accordance with the terms of the letter, the Commission issued orders of exemption from DCO registration to ASX Clear (Futures) Pty Limited (ASX), Korea Exchange, Inc. (KRX), Japan Securities Clearing Corporation (JSCC), and OTC Clearing Hong Kong Limited (OTC Clear).16 Proposed Regulation 39.6 would codify the policies and procedures that the Commission is currently following with respect to granting exemptions from DCO registration and would make such policies and procedures transparent to all potential applicants for an exemption.

    15See, e.g., CFTC Letter No. 16-56 (May 31, 2016) (granting no-action relief to Shanghai Clearing House); CFTC Letter No. 14-107 (Aug. 18, 2014) (granting no-action relief to Clearing Corporation of India Ltd.); CFTC Letter No. 14-87 (June 26, 2014) (granting no-action relief to Korea Exchange, Inc.); CFTC Letter No. 14-68 (May 7, 2014) (granting no-action relief to OTC Clearing Hong Kong Limited and certain of its clearing members); CFTC Letter No. 14-07 (Feb. 6, 2014) (granting no-action relief to ASX Clear (Futures) Pty Limited); and CFTC Letter No. 12-56 (Dec. 17, 2012) (granting no-action relief to Japan Securities Clearing Corporation and certain of its clearing participants).

    16See ASX Amended Order of Exemption from Registration (Jan. 28, 2016), available at http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/asxclearamdorderdcoexemption.pdf; KRX Order of Exemption from Registration (Oct. 26, 2015), available at http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/krxdcoexemptorder10-26-15.pdf; JSCC Order of Exemption from Registration (Oct. 26, 2015), available at http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/jsccdcoexemptorder10-26-15.pdf; OTC Clear Order of Exemption from Registration (Dec. 21, 2015), available at http://www.cftc.gov/idc/groups/public/@otherif/documents/ifdocs/otccleardcoexemptorder12-21-15.pdf.

    1. Eligibility for Exemption

    Proposed Regulation 39.6(a) would provide that the Commission may exempt, conditionally or unconditionally, a non-U.S. clearing organization from registration as a DCO for the clearing of swaps for certain U.S. persons,17 and thereby exempt such clearing organization from compliance with the provisions of the CEA and Commission regulations applicable to DCOs, if the Commission determines that all of the eligibility requirements listed in proposed Regulation 39.6(a)(1) and (a)(2) are met, and the clearing organization satisfies the conditions set forth in Regulation 39.6(b).18 Each of these requirements is described below.

    17 The Commission proposes to use the definition of “U.S. person” as set forth in the Commission's Interpretive Guidance and Policy Statement Regarding Compliance With Certain Swap Regulations, 78 FR 45292, 45316-45317 (July 26, 2013), as such definition may be amended or superseded by a definition of the term “U.S. person” that is adopted by the Commission and applicable to this proposed regulation.

    18 The eligibility requirements listed in proposed Regulation 39.6(a)(1) and (a)(2) and the conditions set forth in proposed Regulation 39.6(b) would be pre-conditions to the Commission's issuance of any order exempting a clearing organization from the DCO registration requirements of the CEA and Commission regulations. Additional conditions that are unique to the facts and circumstances specific to a particular clearing organization could be imposed upon that clearing organization in the Commission's order of exemption, as permitted by section 5b(h) of the CEA.

    Proposed Regulation 39.6(a)(1) would codify the statutory requirement that the Commission may only exempt a clearing organization from DCO registration for the clearing of swaps if the Commission determines that the clearing organization is subject to comparable, comprehensive supervision and regulation. Proposed Regulation 39.6(a)(1)(i) would require that, in order to be eligible for an exemption from DCO registration, a clearing organization must be organized in a jurisdiction in which a home country regulator applies to the clearing organization, on an ongoing basis, statutes, rules, regulations, policies, or a combination thereof that, taken together, are consistent with the PFMIs.19 Under proposed Regulation 39.6(a)(1)(ii) and (iii), a clearing organization would be required to observe the PFMIs in all material respects and be in good regulatory standing in its home country. As previously noted, the Commission believes that operating within a regulatory framework consistent with the PFMIs would meet the CEA's requirement in section 5b(h) that, in order to qualify for an exemption, a clearing organization must be subject to comparable, comprehensive supervision and regulation by the appropriate government authorities in its home country.20

    19 The Commission notes that the regulatory framework of a particular jurisdiction may consist of one or multiple sources of authority. In particular, the inclusion of “policies” is intended to accommodate a jurisdiction in which a policy has the force of law, and a set of policies may, on its own, represent the jurisdiction's regulatory framework that is consistent with the PFMIs.

    20 In addition to the principles applicable to central counterparties and other FMIs, the PFMIs provide that central banks, market regulators, and other relevant authorities should observe five responsibilities. Consistent with this, the Commission expects that, in order to meet the standard of being subject to comparable, comprehensive supervision and regulation, a clearing organization's home country regulator will observe these responsibilities. In particular, Responsibility D Explanatory Note 4.4.1 provides that the home country regulator should adopt the PFMIs, and, “[w]hile the precise means through which the principles are applied may vary from jurisdiction to jurisdiction, all [CPMI] and IOSCO members are expected to apply the principles to the relevant FMIs in their jurisdictions to the fullest extent allowed by the legal framework in their jurisdiction.” PFMIs, paragraph 4.4.1. Therefore, the Commission would not find a home country regulator's statement that it requires a clearing organization to observe the PFMIs to be sufficient to meet the above standard for exemption, if the home country regulator has not itself adopted a regulatory framework that is consistent with the PFMIs.

    Proposed Regulation 39.6(a)(2) would provide that, in order for a clearing organization to be eligible for an exemption from DCO registration, a memorandum of understanding (MOU) or similar arrangement satisfactory to the Commission must be in effect between the Commission and the clearing organization's home country regulator,21 pursuant to which, among other things, the home country regulator agrees to provide to the Commission any information that the Commission deems necessary to evaluate the clearing organization's initial and continued eligibility for exemption or to review compliance with any conditions of such exemption. The Commission has customarily entered into MOUs or similar arrangements in connection with the supervision of non-U.S. clearing organizations that are registered as DCOs. In the context of exempt DCOs, satisfactory MOUs or similar arrangements with the home country regulator would include provisions for information sharing and cooperation, as well as for notification upon the occurrence of certain events, but the Commission would not expect to conduct routine site visits to exempt DCOs.

    21 In foreign jurisdictions where more than one regulator supervises and regulates a clearing organization, the Commission would expect to enter into an MOU or similar arrangement with more than one regulator.

    2. Conditions of Exemption

    Proposed Regulation 39.6(b) sets forth conditions to which an exempt DCO would be subject. These conditions are consistent with the conditions that the Commission has imposed on each of the clearing organizations to which it has previously issued orders of exemption.

    Under proposed Regulation 39.6(b)(1)(i), a U.S. person that is a clearing member of an exempt DCO would be permitted to clear swaps for itself and those persons identified in the definition of “proprietary account” set forth in Regulation 1.3. This provision is intended to permit a U.S. clearing member to clear for affiliates (including a parent or subsidiary) that are either U.S. or non-U.S. persons. The Commission recognizes that in some foreign jurisdictions, affiliates are considered to be “customers” and their positions are held in customer accounts. Clearing for affiliates under these circumstances would be permissible even if the affiliate positions are not held in an account that is an analogue to a proprietary account under the Commission's regulations.

    Similarly, proposed Regulation 39.6(b)(1)(ii) would provide that a non-U.S. person that is a clearing member of an exempt DCO may clear swaps for any affiliated U.S. person identified in the definition of “proprietary account” in Regulation 1.3. This complements the standard in paragraph (b)(1)(i) by clarifying that an exempt DCO may clear for affiliated entities when one or more of those entities is a U.S. person, even if the clearing member itself is not a U.S. person.

    Proposed Regulation 39.6(b)(1)(iii) would provide that a futures commission merchant (FCM) may be a clearing member of an exempt DCO, or maintain an account with an affiliated broker that is a clearing member, for the purpose of clearing swaps for the FCM itself and those persons identified in the definition of “proprietary account” in Regulation 1.3. Again, this provision is intended to permit what would be considered clearing of “proprietary” positions under the Commission's regulations, even if the positions would qualify as “customer” positions under the laws and regulations of an exempt DCO's home country. This provision would clarify that an exempt DCO may clear positions for FCMs if the positions are not “customer” positions under the Commission's regulations.

    The effect of proposed Regulation 39.6(b)(1) is to prohibit the clearing of FCM customer positions at an exempt DCO. Section 4d(f)(1) of the CEA makes it unlawful for any person to accept money, securities, or property (i.e., funds) from a swaps customer to margin a swap cleared through a DCO unless the person is registered as an FCM.22 Any swaps customer funds held by a DCO are also subject to the segregation requirements of section 4d(f)(2) of the CEA, and in order for a swaps customer to receive protection under this regime, particularly in an insolvency context, its funds must be carried by an FCM and deposited with a registered DCO.23 Absent that chain of registration, the swaps customer's funds may not be treated as customer property under the U.S. Bankruptcy Code 24 and the Commission's regulations. Because of this, it has been the Commission's policy to allow exempt DCOs to clear only proprietary positions of U.S. persons and FCMs. The proposed regulations would codify this approach.

    22 7 U.S.C. 6d(f)(1). This provision establishes a customer protection regime for swaps customers that is broadly similar to the regime for futures customers and options on futures customers under sections 4d(a) and (b) of the CEA. 7 U.S.C. 6d(a) and (b).

    23See Section 761(2) of the Bankruptcy Code, 11 U.S.C. 761(2) (defining a “clearing organization” as a derivatives clearing organization registered under the CEA), and Regulation 190.01(f), 17 CFR 190.01(f) (stating that for purposes of the part 190 bankruptcy rules, “clearing organization” has the same meaning as that set forth in section 761(2) of the Bankruptcy Code).

    24 11 U.S.C. 761-767.

    Proposed Regulation 39.6(b)(2) would codify the “open access” requirements of section 2(h)(1)(B) of the CEA with respect to swaps cleared by an exempt DCO to which one or more of the counterparties is a U.S. person.25 Paragraph (b)(2)(i) would require an exempt DCO to maintain rules providing that all such swaps with the same terms and conditions (as defined by product specifications established under the exempt DCO's rules) submitted to the exempt DCO for clearing are economically equivalent and may be offset with each other, to the extent that offsetting is permitted by the exempt DCO's rules. Paragraph (b)(2)(ii) would require an exempt DCO to maintain rules providing for non-discriminatory clearing of such a swap executed either bilaterally or on or subject to the rules of an unaffiliated electronic matching platform or trade execution facility, e.g., a swap execution facility.

    25 7 U.S.C. 2(h)(1)(B).

    Proposed Regulation 39.6(b)(3) would provide that an exempt DCO must consent to jurisdiction in the United States and designate an agent in the United States, for notice or service of process, pleadings, or other documents issued by or on behalf of the Commission or the U.S. Department of Justice in connection with any actions or proceedings against, or any investigations relating to, the exempt DCO or any U.S. person or FCM that is a clearing member or that clears swaps through an affiliated clearing member. The name of the designated agent would be submitted as part of the clearing organization's application for exemption. If an exempt DCO appoints another agent to accept such notice or service of process, the exempt DCO would be required to promptly inform the Commission of this change. This is consistent with requirements currently imposed in the registration orders of DCOs that are organized outside of the United States as well as in each of the orders of exemption that the Commission has issued.

    Proposed Regulation 39.6(b)(4) is a general provision that would require an exempt DCO to comply, and demonstrate compliance as requested by the Commission, with any condition of the exempt DCO's order of exemption.

    Proposed Regulation 39.6(b)(5) would require an exempt DCO to make all documents, books, records, reports, and other information related to its operation as an exempt DCO (books and records) open to inspection and copying by any Commission representative, and to promptly make its books and records available and provide them directly to Commission representatives, upon the request of a Commission representative. This condition of exemption is consistent with section 5b(h) of the CEA, which provides that the Commission may exempt a DCO from registration with conditions that may include requiring that the DCO be available for inspection by the Commission and make available all information requested by the Commission.26 The Commission notes that it does not anticipate conducting routine site visits to exempt DCOs. However, the Commission may request an exempt DCO to provide books and records related to its operation as an exempt DCO in order for the Commission to ensure that, among other things, the exempt DCO continues to meet the eligibility requirements for an exemption as well as the conditions of its exemption.27

    26See also Regulation 1.31, 17 CFR 1.31 (requiring, among other things, that books and records of DCOs and other registered entities be made available for inspection by Commission representatives).

    27 Although an MOU or similar arrangement would provide for information sharing whereby the home country regulator agrees to provide to the Commission any information that the Commission deems necessary to evaluate the clearing organization's initial and continued eligibility for exemption or to review compliance with any conditions of such exemption, the Commission would retain the authority to access books and records directly from an exempt DCO.

    Proposed Regulation 39.6(b)(6) would require that the exempt DCO provide an annual certification that it continues to observe the PFMIs in all material respects, within 60 days following the end of its fiscal year. Proposed Regulation 39.6(b)(7) would require that the Commission receive an annual written representation from a home country regulator that the exempt DCO is in good regulatory standing, within 60 days following the end of the exempt DCO's fiscal year. These requirements would help the Commission to assess an exempt DCO's continued eligibility for an exemption.

    3. Reporting Requirements

    Proposed Regulation 39.6(c) and (d) would require an exempt DCO to meet certain reporting requirements, which are consistent with the reporting requirements exempt DCOs currently meet.

    a. General Reporting Requirements

    Proposed Regulation 39.6(c)(1) sets forth general reporting requirements pursuant to which an exempt DCO must provide certain information directly to the Commission: (1) On a periodic basis (daily or quarterly); and (2) after the occurrence of a specified event, each in accordance with the submission requirements of Regulation 39.19(b).28 Such information may be used by the Commission, among other things, for the purposes of the Commission evaluating the continued eligibility of the exempt DCO for exemption, reviewing the exempt DCO's compliance with any conditions of its exemption, or conducting oversight of U.S. persons and their affiliates, and the swaps that they clear through the exempt DCO.

    28 Regulation 39.19(b), 17 CFR 39.19(b), requires that a DCO submit reports electronically and in a format and manner specified by the Commission, defines the term “business day,” and establishes the relevant time zone for any stated time, unless otherwise specified by the Commission. The Commission has specified that U.S. Central time will apply with respect to the daily reports that must be filed by exempt DCOs pursuant to proposed Regulation 39.6(c)(2)(i).

    Proposed Regulation 39.6(c)(2)(i) would require an exempt DCO to compile a report as of the end of each trading day, and submit it to the Commission by 10:00 a.m. U.S. Central time on the following business day, containing with respect to swaps: (A) Initial margin requirements and initial margin on deposit for each U.S. person; and (B) daily variation margin, separately listing the mark-to-market amount collected from or paid to each U.S. person. However, if a clearing member margins on a portfolio basis its own positions and the positions of its affiliates, and either the clearing member or any of its affiliates is a U.S. person, the exempt DCO would be required to report initial margin requirements and initial margin on deposit for all such positions on a combined basis for each such clearing member and to separately list the mark-to-market amount collected from or paid to each such clearing member, on a combined basis. These requirements are similar to certain reporting requirements in Regulation 39.19(c)(1) that apply to registered DCOs.29 These reports would provide the Commission with information regarding the cash flows associated with U.S. persons clearing swaps through exempt DCOs in order to analyze the risks presented by such U.S. persons and to assess the extent to which U.S. business is being cleared by each exempt DCO.

    29 Specifically, Regulation 39.19(c)(1) requires registered DCOs to submit daily reports to the Commission, by 10:00 a.m. on the following business day, which contain, among other things, initial margin requirements, initial margin on deposit, and daily variation margin for each clearing member. See Regulation 39.19(c)(1)(i)(A) and (c)(1)(i)(B), 17 CFR 39.19(c)(1)(i)(A) and (c)(1)(i)(B). These provisions require such information to be provided for each clearing member by house origin and by each customer origin. This distinction would not apply to an exempt DCO, which will only be permitted to clear transactions that the Commission would treat as “proprietary.” See discussion of proprietary and customer clearing supra section II.C.2.

    Proposed Regulation 39.6(c)(2)(ii) would require an exempt DCO to compile a report as of the last day of each fiscal quarter, and submit the report to the Commission no later than 17 business days after the end of the fiscal quarter, containing: (A) The aggregate clearing volume of U.S. persons during the fiscal quarter, and (B) the average open interest of U.S. persons during the fiscal quarter. If a clearing member is a U.S. person, this data would include the transactions and positions of the clearing member and all affiliates for which the clearing member clears; if a clearing member is not a U.S. person, the data would only have to include the transactions and positions of affiliates that are U.S. persons. Paragraph (C) of proposed Regulation 39.6(c)(2)(ii) would require that an exempt DCO's quarterly report to the Commission contain a list of U.S. persons and FCMs 30 that are either clearing members or affiliates of any clearing member, with respect to the clearing of swaps, as of the last day of the fiscal quarter. This information would enable the Commission, in conducting risk surveillance of U.S. persons and swaps markets more broadly, to better understand and evaluate the nature and extent of the cleared swaps activity of U.S. persons.

    30 Such FCMs may or may not be U.S. persons. The Commission is not proposing to require that exempt DCOs provide daily information regarding initial margin requirements, initial margin on deposit, and daily variation margin, or quarterly aggregate clearing volume or average open interest, with respect to swaps, for FCMs that are not U.S. persons (unless reporting would otherwise be required because such FCMs are affiliates of U.S. persons). However, the Commission has a supervisory interest in receiving information regarding which of its registered FCMs are clearing members or affiliates of clearing members, with respect to the clearing of swaps on an exempt DCO.

    Paragraphs (c)(2)(iii) through (c)(2)(viii) of proposed Regulation 39.6 each would require an exempt DCO to provide information to the Commission upon the occurrence of certain specified events. Several of the proposed required notifications are intended to provide the Commission with information relevant to the exempt DCO's continued eligibility for an exemption or its compliance with the conditions of its exemption. Proposed Regulation 39.6(c)(2)(iii) would require an exempt DCO to provide prompt notice to the Commission regarding any change in its home country regulatory regime that is material to the exempt DCO's continuing observance of the PFMIs, any requirements set forth in proposed Regulation 39.6, or the order of exemption issued by the Commission. In this regard, the Commission requests comment on whether an exempt DCO should make the determination of whether a change to the home country regulatory regime constitutes a “material” change to the exempt DCO's continuing observance of the PFMIs, any requirements set forth in proposed Regulation 39.6, or the Commission's order of exemption. Alternatively, the Commission requests comment on whether the Commission should require an exempt DCO to provide prompt notice of any change in its home country regulatory regime thereby allowing the Commission to determine whether a change is “material” to the exempt DCO's continuing observance of the PFMIs, any requirements set forth in proposed Regulation 39.6, or the Commission's order of exemption. Proposed Regulation 39.6(c)(2)(iv) would require an exempt DCO to provide to the Commission, to the extent that it is available to the exempt DCO, any assessment of the exempt DCO's observance (or the home country regulator's observance) of any of the PFMIs by a home country regulator or other national authority, or an international financial institution or international organization.31 Proposed Regulation 39.6(c)(2)(v) would require an exempt DCO to provide to the Commission, to the extent that it is available to the exempt DCO, any examination report, examination findings, or notification of the commencement of any enforcement or disciplinary action by a home country regulator. Proposed Regulation 39.6(c)(2)(vi) would require an exempt DCO to provide immediate notice to the Commission of any change with respect to its licensure, registration, or other authorization to act as a clearing organization in its home country.

    31 Such an international organization may include the International Monetary Fund or World Bank. See PFMIs, paragraph 1.33.

    Two of the event-specific required notifications would assist the Commission in its oversight of U.S. persons and FCMs clearing swaps. Proposed Regulation 39.6(c)(2)(vii) would require an exempt DCO to provide immediate notice to the Commission in the event of a default (as defined by the exempt DCO in its rules) by a U.S. person or FCM clearing swaps, including the name of the U.S. person or FCM, a list of the positions held by the U.S. person or FCM, and the amount of the U.S. person's or FCM's financial obligation. Proposed Regulation 39.6(c)(2)(viii) would require an exempt DCO to provide notice of any action that it has taken against a U.S. person or FCM, no later than two business days after the exempt DCO takes such action against a U.S. person or FCM. In particular, these provisions would require such reporting with respect to a default of, or an action taken against, an FCM, which may or may not be a U.S. person, in furtherance of the Commission's supervisory responsibilities with respect to registered FCMs. Proposed paragraphs (c)(2)(vii) and (c)(2)(viii) of Regulation 39.6 are similar to paragraphs (c)(4)(vii) and (c)(4)(xi) of Regulation 39.19, which apply to registered DCOs, respectively.

    b. Swap Data Reporting Requirements

    Proposed Regulation 39.6(d) would require that if a clearing member clears through an exempt DCO a swap that has been reported to a registered swap data repository (SDR) pursuant to part 45 of the Commission's regulations, the exempt DCO must report to an SDR data regarding the two swaps resulting from the novation of the original swap that had been submitted to the exempt DCO for clearing. In addition, an exempt DCO would be required to report the termination of the original swap accepted for clearing by the exempt DCO to the SDR to which the original swap was reported. Further, in order to avoid duplicative reporting for such transactions, an exempt DCO would be required to have rules that prohibit the part 45 reporting of the two new swaps by the counterparties to the original swap.32

    32 While the Commission recognizes that the counterparties to the original swap would otherwise be required to report the two new swaps under part 45 of the Commission's regulations, because an exempt DCO would be required to implement rules to the contrary at the direction of the Commission, such counterparties would be expected to comply with the rules of the exempt DCO in this case.

    4. Application Procedures

    Proposed Regulation 39.6(e) would describe the relevant application procedures for a clearing organization that seeks to be exempt from DCO registration, which are consistent with the application procedures the Commission has been using to evaluate petitions for exemption. Specifically, under proposed Regulation 39.6(e)(1), a clearing organization would be required to file an application for exemption with the Secretary of the Commission in the format and manner specified by the Commission. After reviewing the application, the Commission could: (1) Grant the exemption without conditions; (2) grant the exemption with conditions; or (3) deny the application for exemption.33 This provision mirrors language in Regulation 39.3(a)(1), which addresses the application procedures for registration as a DCO.

    33 As noted above, proposed Regulation 39.6(b) sets forth the pre-conditions that would apply to any exemption from registration as a DCO.

    Proposed Regulation 39.6(e)(2) would require an applicant to submit a complete application, including all applicable information and documentation as detailed in proposed Regulation 39.6(e)(2) and discussed below. It would provide that the Commission will not commence processing an application unless the application is complete. Proposed Regulation 39.6(e)(2) would further provide that an applicant may file with its completed application additional information that may be necessary or helpful to the Commission in processing the application. This provision is similar to certain provisions of Regulation 39.3(a)(2), which sets forth requirements with respect to applications for registration as a DCO.

    Under proposed Regulation 39.6(e)(2)(i), an applicant would be required to submit a cover letter providing general information identifying the applicant, its regulatory licenses or registrations, and relevant contact information. Proposed Regulation 39.6(e)(2)(ii)-(viii) would require an applicant for exemption to submit documents that would establish the applicant's eligibility for exemption under proposed Regulation 39.6(a), and would contain representations that the applicant would comply with the conditions of exemption, the general reporting requirements, and the swap data reporting requirements set forth in proposed Regulation 39.6(b), (c), and (d), respectively, and the terms and conditions of its order of exemption as issued by the Commission.

    Additionally, proposed Regulation 39.6(e)(2)(v) would require an applicant to submit to the Commission copies of its most recent disclosures necessary to observe the PFMIs, including the financial market infrastructure (FMI) disclosure template set forth in Annex A to the Disclosure Framework and Assessment Methodology (Disclosure Framework) for the PFMIs.34 The FMI disclosure template requires a clearing organization to provide a general description of itself and the markets it serves, a description of its general organization, an overview of the relevant legal and regulatory framework, a description of how it processes a transaction, and a summary narrative detailing its approach to observing each of the PFMIs. The Commission expects that the FMI disclosure template provided to the Commission would have been reviewed and updated within the previous two years.35 The FMI disclosure template is generally required by home country regulators that enforce the PFMIs and is necessary to achieve status as a qualified central counterparty (QCCP).36

    34See CPMI-IOSCO, Principles for financial market infrastructures: Disclosure framework and Assessment methodology (Dec. 2012), at 82 et seq., available at http://www.iosco.org/library/pubdocs/pdf/IOSCOPD396.pdf.

    35 PFMI Explanatory Note 3.23.7 provides that the Principle 23, Key Consideration 5 standard that responses to the Disclosure Framework should be completed “regularly” means that an FMI should review its responses “[a]t a minimum . . . every two years to ensure continued accuracy and usefulness.” PFMIs, paragraph 3.23.7.

    36 A QCCP is defined as an entity that (i) is licensed to operate as a central counterparty (CCP) and is permitted by the appropriate regulator to operate as such, and (ii) is prudentially supervised in a jurisdiction where the relevant regulator has established and publicly indicated that it applies to the CCP, on an ongoing basis, domestic rules and regulations that are consistent with the PFMIs. The failure of a CCP to achieve QCCP status could result in significant costs to its bank customers due to certain financial incentives for banks, including their subsidiaries and affiliates, to clear financial derivatives through QCCPs. See Basel Committee on Banking Supervision, Capital Requirements for Bank Exposures to Central Counterparties (Apr. 10, 2014), available at https://www.bis.org/publ/bcbs282.htm.

    Proposed Regulation 39.6(e)(3) would provide that, at any time during the Commission's review of an application for exemption from registration as a DCO, the Commission may request that the applicant submit supplemental information in order for the Commission to process the application, and would require that the applicant file such supplemental information in the format and manner specified by the Commission. A similar provision is contained in Regulation 39.3(a)(3), which applies to applications for DCO registration.

    Proposed Regulation 39.6(e)(4) would state that an applicant for exemption from registration as a DCO must promptly amend its application if it discovers a material omission or error, or if there is a material change in the information provided to the Commission in the application or other information provided in connection with the application. This provision is virtually identical to Regulation 39.3(a)(4), which addresses amendments to applications for DCO registration.

    Proposed Regulation 39.6(e)(5) would identify those sections of an application for exemption from registration that will be made public, including the cover letter required in proposed Regulation 39.6(e)(2)(i); documents demonstrating that the applicant is organized in a jurisdiction in which its home country regulator applies to the applicant statutes, rules, regulations, and/or policies that are consistent with the PFMIs; disclosures necessary to observe the PFMIs; 37 rules that meet the requirements of proposed Regulation 39.6(b)(2) and (d), as applicable; and any other part of the application not covered by a request for confidential treatment, subject to Regulation 145.9. This provision is similar to Regulation 39.3(a)(5), which identifies those portions of an application for registration as a DCO that are made public.

    37 The Disclosure Framework contemplates that central counterparties will make public disclosures pursuant to the Disclosure Framework. See CPMI-IOSCO, Principles for financial market infrastructures: Disclosure framework and Assessment methodology (Dec. 2012), at 1, available at http://www.iosco.org/library/pubdocs/pdf/IOSCOPD396.pdf.

    5. Modification of an Exemption

    Proposed Regulation 39.6(f) would provide that the Commission may modify the terms and conditions of an order of exemption, either at the request of the exempt DCO or on the Commission's own initiative, based on changes to or omissions in material facts or circumstances pursuant to which the order of exemption was issued, or for any reason in the Commission's discretion. This is a further expression of the Commission's discretionary authority under section 5b(h) of the CEA to exempt a clearing organization from registration “conditionally or unconditionally,” and it reflects the Commission's authority to act with flexibility in responding to changed circumstances affecting an exempt DCO.

    6. Termination of Exemption Upon Request by an Exempt DCO

    Proposed Regulation 39.6(g) would set forth the framework under which an exempt DCO may petition the Commission to terminate its exemption and the applicable procedures. Specifically, pursuant to proposed Regulation 39.6(g)(1), an exempt DCO may request that the Commission terminate its exemption if the exempt DCO: (i) No longer qualifies for an exemption as a result of changed circumstances; (ii) intends to cease clearing swaps for U.S. persons; or (iii) submits a completed Form DCO in order to become a registered DCO in conjunction with its petition. Proposed Regulation 39.6(g)(2) would provide that the petition for termination must include an explanation for the request and describe the exempt DCO's plans for liquidation or transfer of the positions and related collateral of U.S. persons, if applicable. Pursuant to proposed Regulation 39.6(g)(3), the Commission would issue an order of termination within a reasonable time appropriate to the circumstances or in conjunction with the issuance of an order of registration, if applicable.

    D. Regulation 39.9—Scope

    The Commission is proposing to revise Regulation 39.9 to make it clear that the provisions of subpart B apply to any DCO, as defined under section 1a(15) of the CEA and Regulation 1.3, that is registered with the Commission as a DCO pursuant to section 5b of the CEA, but do not apply to any exempt DCO. This revision would clarify that the subpart B regulations that address compliance with the DCO Core Principles applicable to registered DCOs do not impose any obligations upon exempt DCOs.

    III. Proposed Amendments to Part 140—Delegations of Authority

    The proposed amendments to Regulation 140.94(c)(4) would delegate to the Director of DCR all functions reserved to the Commission under proposed Regulation 39.6 except for the following: (i) Granting an exemption under paragraph (a); (ii) prescribing any conditions to an exemption under paragraph (b); (iii) modifying an exemption under paragraph (f); and (iv) terminating an exemption under paragraph (g)(3). Such delegation would expedite consideration of exemption requests by permitting DCR to more efficiently carry out tasks associated with the processing of an exemption application. Certain technical amendments have also been proposed to Regulation 140.94 in order to adjust the paragraph numbering to accommodate the proposed amendments to Regulation 140.94(c)(4).

    IV. Request for Comments

    The Commission generally requests comments on all aspects of the proposed rules. Additionally, the Commission requests comments on the following specific issues:

    • Exempt DCOs are permitted to clear only proprietary positions of U.S. persons and FCMs. The proposed regulations would codify this approach. Should the Commission consider permitting an exempt DCO to clear swaps for FCM customers?

    • Should the Commission impose any additional conditions on an exempt DCO or modify any of the existing conditions?

    • Should any of the conditions imposed on an exempt DCO lead to an automatic termination of the exemption if the condition is not met?

    V. Consideration of Costs and Benefits A. Introduction

    Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders.38 Section 15(a) further specifies that the costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission considers the costs and benefits resulting from its discretionary determinations with respect to the Section 15(a) factors.

    38 7 U.S.C. 19(a).

    B. Proposed Regulation 39.6 1. Summary

    Section 5b(a) of the CEA requires a clearing organization that clears swaps to be registered with the Commission as a DCO. Section 5b(h) of the CEA, however, permits the Commission to exempt a clearing organization from DCO registration for the clearing of swaps to the extent that the Commission determines that such clearing organization is subject to comparable, comprehensive supervision by appropriate government authorities in the clearing organization's home country. Pursuant to this authority, the Commission has exempted four non-U.S. clearing organizations from DCO registration to clear proprietary swap positions of U.S. persons and FCMs. The proposed regulation would codify the policies and procedures that the Commission is currently following with respect to granting exemptions from DCO registration. Accordingly, the baseline for this consideration of costs and benefits is the current status, where the Commission has implemented a set of conditions and procedures for granting exemptions from DCO registration, but has not codified those conditions and procedures under Commission regulations.

    Specifically, the proposed regulation would set forth the process by which a non-U.S. clearing organization could obtain an exemption from DCO registration for the clearing of swaps provided that it meets the specified eligibility standards and can meet the conditions of an exemption. The eligibility standards require, among other things, that a clearing organization applying for exemption must be organized in a jurisdiction in which a home country regulator applies to the clearing organization, on an ongoing basis, statutes, rules, regulations, policies, or a combination thereof that, taken together, are consistent with the PFMIs, and the clearing organization must observe the PFMIs in all material respects. The conditions of exemption describe, among other things, the circumstances in which an exempt DCO would be permitted to clear swaps for U.S. persons. An exempt DCO is and would be permitted to clear only “proprietary” positions as defined in Regulation 1.3, and it is not and would not be permitted to clear “customer” positions subject to section 4d(f) of the CEA.

    2. Benefits

    Proposed Regulation 39.6 would provide several benefits. First, an exempt DCO may clear proprietary swap positions for U.S. persons without having to prepare and submit an application for DCO registration, which involves the submission of extensive documentation to the Commission. Similarly, an exempt DCO is not required to comply with Commission regulations applicable to registered DCOs, except as required under Regulation 39.6 or the exempt DCO's order of exemption. Thus, the significantly reduced application and ongoing compliance requirements for exempt DCOs may encourage clearing organizations to seek an exemption from registration. This mitigation of registration-related requirements may also benefit market participants and the public more generally. That is, non-U.S. clearing organizations that are exempt from registration may incur lower compliance costs, which may, in turn, result in lower costs to their clearing members. In addition, U.S. persons (as clearing members or affiliates of clearing members) would likely have access to more clearing organizations in order to clear their proprietary swaps. Access to more clearing organizations may also encourage voluntary clearing of swaps that are not required to be cleared, as certain swaps may not be cleared by any registered DCOs. This may, in turn, serve to diversify the potential risk of cleared swaps, because any such risk would become less concentrated if a larger number of registered and exempt DCOs were clearing swaps for U.S. persons, and the volume of those swaps could become more evenly distributed among those registered and exempt DCOs.

    Finally, the proposed regulation may also promote competition among registered and exempt DCOs by encouraging more clearing organizations to seek an exemption, and it would permit exempt DCOs to clear the same types of swap transactions for the proprietary accounts of U.S. persons that may be cleared by registered DCOs.

    The Commission requests comment on the potential benefits of proposed Regulation 39.6, including, where possible, quantitative data. More specifically, the Commission requests comment on the potential benefits to clearing organizations that are eligible to become exempt DCOs and thereby clear swaps for U.S. persons and their affiliates, and the potential benefits to other market participants or the financial system as a whole. The Commission further requests comment on any alternative proposals that might achieve the objectives of the proposed regulation, and the benefits associated with any such alternatives.

    3. Costs

    A clearing organization seeking an exemption incurs some costs in preparing an application for exemption. If a clearing organization were not able to seek an exemption, however, it would be required to register with the Commission and to submit a Form DCO.39 While the Form DCO and the FMI disclosure template set forth in Annex A to the Disclosure Framework require certain similar types of information to be provided to the Commission, the Form DCO would require the clearing organization to provide additional documentation that is not required pursuant to the Disclosure Framework. Moreover, a clearing organization is likely to have already prepared the FMI disclosure template in order to comply with the requirements of its home country regulator, which must be consistent with the PFMIs, and to achieve QCCP status.40 Therefore, the costs involved in applying for an exemption are less than the costs involved in applying for registration, and the proposed regulation would not change this. Based on the Commission's Paperwork Reduction Act estimates, the cost burden to submit Form DCO is approximately $100,000 per entity,41 while that for submitting an application for exemption is approximately $10,500 per entity.42 Thus, there is an estimated cost savings associated with submitting an application for exemption rather than Form DCO of approximately $89,500 per entity, and the proposed regulation would codify the procedures for submitting an application for exemption. The Commission seeks comment about whether these cost estimates are reasonable.

    39 For purposes of this analysis, it is assumed that any clearing organization that is not granted an exemption will be required to register as a DCO if it clears swaps for any U.S. person. This assumption, however, is not intended to be a legal conclusion that, with respect to the particular facts and circumstances of any particular clearing organization, the CEA would require registration with the Commission as a DCO.

    40See supra section II.C.4 for more detail.

    41See Derivatives Clearing Organization General Provisions and Core Principles, 76 FR 69334, 69410 (Nov. 8, 2011).

    42See infra section VI.B for more detail.

    Other potential administrative costs associated with maintaining an exemption from DCO registration are minimal. For example, an exempt DCO would be required to make its books and records relating to its operation as an exempt DCO available for inspection by Commission staff upon request. This condition of exemption is consistent with section 5b(h) of the CEA, which provides that the Commission may exempt a DCO from registration with conditions that may include requiring that the DCO be available for inspection by the Commission and make available all information requested by the Commission. In addition, this requirement is imposed on registered DCOs; as a result, an exempt DCO would be held to this requirement even if it were to choose to register as a DCO. The Commission notes that there would be no costs imposed on an exempt DCO in connection with this condition unless and until the Commission requests to inspect its books and records. Furthermore, an exempt DCO's home country regulator is and would be required to provide to the Commission an annual written representation that the exempt DCO is in good regulatory standing. The Commission believes that the costs associated with this requirement are minimal, as home country regulators typically provide a standard letter and are required to provide it only once a year.

    Lastly, exempt DCOs would be held to certain reporting requirements, the costs of which are limited to providing them to the Commission on either a regular or event-specific basis. The Commission has previously considered the costs of regular and event-specific reporting requirements when adopting Regulation 39.19(c) for registered DCOs.43 The reporting requirements for exempt DCOs are substantially less extensive than those specified in Regulation 39.19(c). The Commission believes the costs of the exempt DCO reporting requirements are not significant but welcomes comment on such costs, particularly from existing exempt DCOs.

    43 Derivatives Clearing Organization General Provisions and Core Principles, 76 FR at 69426.

    An exempt DCO may incur costs related to establishing and maintaining connections to an SDR in order to report the swap data that would be required by proposed Regulation 39.6(d). In connection with the analysis required by the Paperwork Reduction Act, the Commission has estimated an initial cost of $85,478 per exempt DCO to establish an SDR connection, and an annual cost of $93,750 to maintain this connection.

    As discussed in section VI.B below, an exempt DCO would likely realize some administrative cost savings with respect to its ongoing compliance obligations with the Commission. The Commission acknowledges that it is difficult to differentiate the ongoing costs of complying with a home country's regulatory requirements from those of complying with the CEA and Commission regulations given that there may be costs common to both. Furthermore, the Commission lacks reliable data upon which to base many of these cost estimates, which it acknowledges could vary greatly among clearing organizations. Thus, the Commission seeks comment about such costs.

    C. Section 15(a) Factors 1. Protection of Market Participants and the Public

    The proposed amendments to Part 39 would protect market participants and the public by requiring, among other things, that an exempt DCO: (i) May only clear swaps for U.S. persons for their proprietary accounts, and not for “swaps customers” within the meaning of the CEA and Commission regulations; (ii) must be organized in a jurisdiction in which it is subject to supervision and regulation by a government authority that applies to the clearing organization statutes, rules, regulations, policies, or a combination thereof that, taken together, are consistent with the PFMIs; (iii) must submit to the Commission the FMI disclosure template set forth in Annex A to the Disclosure Framework required to observe the PFMIs establishing that it does observe the PFMIs, and must provide information to the Commission, upon request, that the Commission deems necessary to evaluate its continued eligibility for exemption or to review its compliance with any conditions of exemption; and (iv) must be licensed, registered, or otherwise authorized to act as a clearing organization in its home country, and its home country regulator must not have made any findings of material non-observance of the PFMIs or other relevant home country legal requirements that have not resulted in corrective action. Furthermore, the proposed amendments to part 39 would provide additional market safeguards through requiring an MOU or other similar arrangement with the home country regulator that would enable the Commission to obtain any information that the Commission deems necessary to evaluate the initial and continued eligibility of the DCO for exemption from registration or to review its compliance with any conditions of such exemption.

    These requirements would protect market participants and the public by ensuring that U.S. “swaps customers” would remain subject to the customer protection regime established in the CEA and Commission regulations, and that exempt DCOs would be subject to the internationally recognized PFMI standards.

    2. Efficiency, Competitiveness, and Financial Integrity

    Proposed Regulation 39.6 would promote efficiency in the design of an exempt DCO's settlement and clearing arrangements, operating structure and procedures, scope of products cleared, and use of technology because it would permit an exempt DCO to clear proprietary transactions for U.S. persons through observance of the PFMIs, subject to supervision and regulation by a home country regulator. Moreover, the use of a single set of standards to determine eligibility, namely the internationally recognized PFMIs, would promote operational efficiency because it would (i) permit a non-U.S. clearing organization to obtain an exemption from registration that would mitigate duplicative compliance requirements and (ii) facilitate uniformity in supervision and regulation of both registered and exempt DCOs.

    Proposed Regulation 39.6 may also promote competition among registered and exempt DCOs because it would permit exempt DCOs to clear the same types of swap transactions for the proprietary accounts of U.S. persons that may be cleared by registered DCOs. Unlike their foreign counterparts, U.S.-based DCOs would still be required to register with the Commission in order to clear proprietary swap positions for U.S. persons and would not be eligible for an exemption under the proposed regulation (or under section 5b(h) of the CEA). Potentially, this different treatment may create a competitive disadvantage for U.S.-based DCOs, which would be subject to the requirements of the CEA and Commission regulations. However, exempt DCOs would be subject to a foreign supervisory and regulatory framework that is consistent with the internationally recognized standards set forth in the PFMIs.

    Proposed Regulation 39.6 would be expected to maintain the financial integrity of clearing organizations that clear proprietary transactions for U.S. persons because exempt clearing organizations would be subject to supervision and regulation by a home country regulator within a legal framework that is consistent with the PFMIs. Such supervision and regulation is comparable to that applicable to DCOs under the CEA and Commission regulations, and is sufficiently comprehensive. In addition, the proposed regulation may contribute to the financial integrity of the broader financial system by spreading the potential risk of particular cleared swaps among a greater number of registered and exempt DCOs.

    3. Price Discovery

    Price discovery is the process by which prices for underlying instruments may be determined by, or inferred from, prices of derivative contracts. The Commission has not identified any impact that proposed Regulation 39.6 would have on price discovery.

    4. Sound Risk Management Practices

    Proposed Regulation 39.6 would contribute to the sound risk management practices of clearing organizations that provide clearing services to U.S. persons for their proprietary transactions because exempt DCOs would be subject to the risk management standards that are included in the PFMIs. Although the risk management requirements of the CEA and the Commission regulations applicable to registered DCOs would not be binding upon exempt DCOs, the risk management standards in the PFMIs are substantially similar.

    5. Other Public Interest Considerations

    The Commission notes the public interest in access to clearing organizations outside the United States in light of the international nature of many swap transactions. The proposed amendments to part 39 would codify the exemption process for non-U.S. clearing organizations that would permit them to clear proprietary swap transactions for certain U.S. persons, when such clearing organizations meet the eligibility requirements and conditions of the proposed rule. Having a more open and transparent process for obtaining an exemption from registration may encourage more non-U.S. clearing organizations to seek an exemption, providing greater harmonization of the U.S. and global financial markets.

    VI. Related Matters A. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) requires that agencies consider whether the regulations they propose will have a significant economic impact on a substantial number of small entities and, if so, provide a regulatory flexibility analysis on the impact.44 The regulations proposed by the Commission will affect only clearing organizations. The Commission has previously established certain definitions of “small entities” to be used by the Commission in evaluating the impact of its regulations on small entities in accordance with the RFA.45 The Commission has previously determined that clearing organizations are not small entities for the purpose of the RFA.46 Accordingly, the Chairman, on behalf of the Commission, hereby certifies pursuant to 5 U.S.C. 605(b) that the proposed regulations will not have a significant economic impact on a substantial number of small entities.

    44 5 U.S.C. 601 et seq.

    45 47 FR 18618 (Apr. 30, 1982).

    46See 66 FR 45604, 45609 (Aug. 29, 2001).

    B. Paperwork Reduction Act

    The Paperwork Reduction Act (PRA) 47 provides that Federal agencies, including the Commission, may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number from the Office of Management and Budget (OMB). This proposed rulemaking contains reporting requirements that are collections of information within the meaning of the PRA. Although the Commission anticipates that fewer than ten persons will be subject to these requirements, which is below the “ten or more persons” threshold for PRA compliance, the PRA applies to any recordkeeping, reporting, or disclosure requirement contained in a rule of general applicability.48 The Commission is proposing to revise Information Collection 3038-0076, which contains the requirements for applications for registration as a DCO, and Information Collection 3038-0096, which contains swap data reporting requirements, to include the collection of information in proposed Regulation 39.6. The responses to the collection of information would be necessary to obtain the requested exemption from DCO registration.

    47 44 U.S.C. 3501 et seq.

    48 5 CFR 1320.3(c)(4)(i).

    1. Application for Exemption and Ongoing Reporting Obligations Under Proposed Regulation 39.6

    The number of potential respondents was estimated based on the number of non-U.S. clearing organizations that have already applied for, or been granted, an exemption from DCO registration by the Commission. Based on its experience in addressing petitions for exemption, the Commission anticipates receiving one or two applications for exemption per year. Burden hours and costs were estimated based on existing information collections for DCO registration and reporting, adjusted to reflect the significantly lower burden of the proposed regulations. The number of respondents for the daily and quarterly reporting and annual certification requirements is conservatively estimated at a maximum of seven, based on the number of existing exempt DCOs and the number of pending petitions. Reporting of specific events and termination of an exemption are expected to occur infrequently. The burden is estimated conservatively at two per year for event-specific reporting and at one per year for reporting of an exemption termination. The Commission has estimated the burden hours for this proposed collection of information as follows:

    Application for exemption Estimated number of respondents: 2 Estimated number of reports per respondent: 1 Average number of hours per report: 32 Estimated gross annual reporting burden: 64 Information requested by the Commission Estimated number of respondents: 2 Estimated number of reports per respondent: 1 Average number of hours per report: 3 Estimated gross annual reporting burden: 6 Daily reporting Estimated number of respondents: 7 Estimated number of reports per respondent: 250 Average number of hours per report: 0.1 Estimated gross annual reporting burden: 175 Quarterly reporting Estimated number of respondents: 7 Estimated number of reports per respondent: 4 Average number of hours per report: 2 Estimated gross annual reporting burden: 56 Event-specific reporting Estimated number of respondents: 2 Estimated number of reports per respondent: 1 Average number of hours per report: 0.5 Estimated gross annual reporting burden: 1 Annual certification Estimated number of respondents: 7 Estimated number of reports per respondent: 1 Average number of hours per report: 1.5 Estimated gross annual reporting burden: 21 Termination of exemption by request of clearing organization Estimated number of respondents: 1 Estimated number of reports per respondent: 1 Average number of hours per report: 2 Estimated gross annual reporting burden: 2 Notice to clearing members of termination of exemption Estimated number of respondents: 1 Estimated number of reports per respondent: 22 Average number of hours per report: 0.1 Estimated gross annual reporting burden: 2.2 2. Reporting by Exempt DCOs in Accordance With Part 45

    Proposed Regulation 39.6(d) would require an exempt DCO to report data regarding the two swaps resulting from the novation of an original swap to a registered SDR, if the original swap had been reported to a registered SDR pursuant to part 45 of the Commission's regulations. The Commission is proposing to revise the information collection for part 45 to add exempt DCOs as an additional category of reporting entity. The burden for exempt DCOs reporting in accordance with part 45 is estimated to be approximately one-quarter of the burden for registered DCOs with respect to both non-recurring and recurring costs because exempt DCOs will not be required to report all swaps, only those that result from the novation of original swaps that have been reported to an SDR.49 Consequently, the burden hours for the proposed collection of information in this rulemaking have been estimated as follows:

    49 Details of the estimated burden related to non-recurring and recurring costs under part 45 are discussed in the part 45 adopting release. See Swap Data Recordkeeping and Reporting Requirements, 77 FR at 2171-2176.

    Reporting in accordance with part 45 Estimated number of respondents: 7 Estimated number of reports per respondent: 1,987 Average number of hours per report: 0.1 Estimated gross annual reporting burden: 1,393 List of Subjects 17 CFR Part 39

    Commodity futures, Default rules and procedures, Exemption, Risk management, Settlement procedures, System safeguards.

    17 CFR Part 140

    Authority delegations (Government agencies), Organization and functions (Government agencies).

    For the reasons stated in the preamble, the Commodity Futures Trading Commission proposes to amend 17 CFR chapter I as follows:

    PART 39—DERIVATIVES CLEARING ORGANIZATIONS 1. The authority citation for part 39 continues to read as follows: Authority:

    7 U.S.C. 2, 7a-1, and 12a; 12 U.S.C. 5464; 15 U.S.C. 8325.

    2. Revise § 39.1 to read as follows:
    § 39.1 Scope.

    The provisions of this subpart A apply to any derivatives clearing organization, as defined under section 1a(15) of the Act and § 1.3 of this chapter, that is registered or is required to register with the Commission as a derivatives clearing organization pursuant to section 5b(a) of the Act, or that is applying for an exemption from registration pursuant to section 5b(h) of the Act.

    3. In § 39.2, add the following definitions in alphabetical order to read as follows:
    § 39.2 Definitions.

    Exempt derivatives clearing organization means a derivatives clearing organization that the Commission has exempted from registration under section 5b(a) of the Act, pursuant to section 5b(h) of the Act and § 39.6.

    Good regulatory standing means, with respect to a derivatives clearing organization that is organized outside of the United States, and is licensed, registered, or otherwise authorized to act as a clearing organization in its home country, that either:

    (1) There has been no finding by the home country regulator of material non-observance of the Principles for Financial Market Infrastructures or other relevant home country legal requirements, or

    (2) There has been a finding by the home country regulator of material non-observance of the Principles for Financial Market Infrastructures or other relevant home country legal requirements but any such finding has been or is being resolved to the satisfaction of the home country regulator by means of corrective action taken by the derivatives clearing organization.

    Home country means, with respect to a derivatives clearing organization that is organized outside of the United States, the jurisdiction in which the derivatives clearing organization is organized.

    Home country regulator means, with respect to a derivatives clearing organization that is organized outside of the United States, an appropriate government authority which licenses, regulates, supervises, or oversees the derivatives clearing organization's clearing activities in the home country.

    Principles for Financial Market Infrastructures means the Principles for Financial Market Infrastructures jointly published by the Committee on Payments and Market Infrastructures and the Technical Committee of the International Organization of Securities Commissions in April 2012, as updated, revised, or otherwise amended.

    4. Add § 39.6 to read as follows:
    § 39.6 Exemption from derivatives clearing organization registration.

    (a) Eligibility for exemption. The Commission may exempt, conditionally or unconditionally, a derivatives clearing organization that is organized outside of the United States, from registration as a derivatives clearing organization for the clearing of swaps for U.S. persons, and thereby exempt such derivatives clearing organization from compliance with provisions of the Act and Commission regulations applicable to derivatives clearing organizations, if:

    (1) The derivatives clearing organization is subject to comparable, comprehensive supervision and regulation by a home country regulator as demonstrated by the following:

    (i) The derivatives clearing organization is organized in a jurisdiction in which a home country regulator applies to the derivatives clearing organization, on an ongoing basis, statutes, rules, regulations, policies, or a combination thereof that, taken together, are consistent with the Principles for Financial Market Infrastructures;

    (ii) The derivatives clearing organization observes the Principles for Financial Market Infrastructures in all material respects; and

    (iii) The derivatives clearing organization is in good regulatory standing in its home country; and

    (2) A memorandum of understanding or similar arrangement satisfactory to the Commission is in effect between the Commission and the derivatives clearing organization's home country regulator, pursuant to which, among other things, the home country regulator agrees to provide to the Commission any information that the Commission deems necessary to evaluate the initial and continued eligibility of the derivatives clearing organization for exemption from registration or to review its compliance with any conditions of such exemption.

    (b) Conditions of exemption. An exemption from registration as a derivatives clearing organization shall be subject to any conditions the Commission may prescribe including, but not limited to:

    (1) Clearing by or for U.S. persons and futures commission merchants. The exempt derivatives clearing organization shall maintain rules that limit swaps clearing services for U.S. persons and futures commission merchants to the following circumstances:

    (i) A U.S. person that is a clearing member of the exempt derivatives clearing organization may clear swaps for itself and those persons identified in the definition of “proprietary account” set forth in § 1.3 of this chapter;

    (ii) A non-U.S. person that is a clearing member of the exempt derivatives clearing organization may clear swaps for any affiliated U.S. person identified in the definition of “proprietary account” set forth in § 1.3 of this chapter; and

    (iii) An entity that is registered with the Commission as a futures commission merchant may be a clearing member of the exempt derivatives clearing organization, or otherwise maintain an account with an affiliated broker that is a clearing member, for the purpose of clearing swaps for itself and those persons identified in the definition of “proprietary account” set forth in § 1.3 of this chapter.

    (2) Open access. The exempt derivatives clearing organization shall maintain rules with respect to swaps to which one or more of the counterparties is a U.S. person. Such rules shall:

    (i) Provide that all swaps with the same terms and conditions, as defined by product specifications established under the exempt derivatives clearing organization's rules, submitted to the exempt derivatives clearing organization for clearing are economically equivalent within the exempt derivatives clearing organization and may be offset with each other within the exempt derivatives clearing organization, to the extent offsetting is permitted by the exempt derivatives clearing organization's rules; and

    (ii) Provide that there shall be non-discriminatory clearing of a swap executed bilaterally or on or subject to the rules of an unaffiliated electronic matching platform or trade execution facility.

    (3) Consent to jurisdiction; designation of agent for service of process. The exempt derivatives clearing organization shall:

    (i) Consent to jurisdiction in the United States;

    (ii) Designate, authorize, and identify to the Commission, an agent in the United States who shall accept any notice or service of process, pleadings, or other documents, including any summons, complaint, order, subpoena, request for information, or any other written or electronic documentation or correspondence issued by or on behalf of the Commission or the United States Department of Justice to the exempt derivatives clearing organization, in connection with any actions or proceedings brought against, or investigations relating to, the exempt derivatives clearing organization or any U.S. person or futures commission merchant that is a clearing member, or that clears swaps through an affiliated clearing member, of the exempt derivatives clearing organization; and

    (iii) Promptly inform the Commission of any change in its designated and authorized agent.

    (4) Compliance. The exempt derivatives clearing organization shall comply, and shall demonstrate compliance as requested by the Commission, with any condition of its exemption.

    (5) Inspection of books and records. The exempt derivatives clearing organization shall make all documents, books, records, reports, and other information related to its operation as an exempt derivatives clearing organization open to inspection and copying by any representative of the Commission; and in response to a request by any representative of the Commission, the exempt derivatives clearing organization shall, promptly and in the form specified, make the requested books and records available and provide them directly to Commission representatives.

    (6) Observance of the Principles for Financial Market Infrastructures. On an annual basis, within 60 days following the end of its fiscal year, the exempt derivatives clearing organization shall provide to the Commission a certification that it continues to observe the Principles for Financial Market Infrastructures in all material respects.

    (7) Representation of good regulatory standing. On an annual basis, within 60 days following the end of its fiscal year, the Commission shall receive from a home country regulator, at the request of the exempt derivatives clearing organization, a written representation that the exempt derivatives clearing organization is in good regulatory standing.

    (c) General reporting requirements. (1) An exempt derivatives clearing organization shall provide to the Commission the information specified in this paragraph and any other information that the Commission deems necessary, including, but not limited to, information for the purpose of the Commission evaluating the continued eligibility of the exempt derivatives clearing organization for exemption from registration, reviewing compliance by the exempt derivatives clearing organization with any conditions of the exemption, or conducting oversight of U.S. persons and their affiliates, and the swaps that are cleared by such persons through the exempt derivatives clearing organization. Information provided to the Commission under this paragraph shall be submitted in accordance with § 39.19(b).

    (2) Each exempt derivatives clearing organization shall provide to the Commission the following information:

    (i) A report compiled as of the end of each trading day and submitted to the Commission by 10:00 a.m. U.S. Central time on the following business day, containing:

    (A) Initial margin requirements and initial margin on deposit for each U.S. person, with respect to swaps; provided, however, if a clearing member margins on a portfolio basis its own positions and the positions of its affiliates, and either the clearing member or any of its affiliates is a U.S. person, the exempt derivatives clearing organization shall report initial margin requirements and initial margin on deposit for all such positions on a combined basis for each such clearing member; and

    (B) Daily variation margin, separately listing the mark-to-market amount collected from or paid to each U.S. person, with respect to swaps; provided, however, if a clearing member margins on a portfolio basis its own positions and the positions of its affiliates, and either the clearing member or any of its affiliates is a U.S. person, the exempt derivatives clearing organization shall separately list the mark-to-market amount collected from or paid to each such clearing member, on a combined basis.

    (ii) A report compiled as of the last day of each fiscal quarter of the exempt derivatives clearing organization and submitted to the Commission no later than 17 business days after the end of the exempt derivatives clearing organization's fiscal quarter, containing the following information:

    (A) The aggregate clearing volume of U.S. persons during the fiscal quarter, with respect to swaps. If a clearing member is a U.S. person, the volume figure shall include the transactions of the clearing member and all affiliates. If a clearing member is not a U.S. person, the volume figure shall include only transactions of affiliates that are U.S. persons.

    (B) The average open interest of U.S. persons during the fiscal quarter, with respect to swaps. If a clearing member is a U.S. person, the open interest figure shall include the positions of the clearing member and all affiliates. If a clearing member is not a U.S. person, the open interest figure shall include only positions of affiliates that are U.S. persons.

    (C) A list of U.S. persons and futures commission merchants that are either clearing members or affiliates of any clearing member, with respect to the clearing of swaps, as of the last day of the fiscal quarter.

    (iii) Prompt notice regarding any change in the home country regulatory regime that is material to the exempt derivatives clearing organization's continuing observance of the Principles for Financial Market Infrastructures or with any of the requirements set forth in this section or in the order of exemption issued by the Commission;

    (iv) As available to the exempt derivatives clearing organization, any assessment of the exempt derivatives clearing organization's or the home country regulator's observance of the Principles for Financial Market Infrastructures, or any portion thereof, by a home country regulator or other national authority, or an international financial institution or international organization;

    (v) As available to the exempt derivatives clearing organization, any examination report, examination findings, or notification of the commencement of any enforcement or disciplinary action by a home country regulator;

    (vi) Immediate notice of any change with respect to the exempt derivatives clearing organization's licensure, registration, or other authorization to act as a derivatives clearing organization in its home country;

    (vii) In the event of a default by a U.S. person or futures commission merchant clearing swaps, with such event of default determined in accordance with the rules of the exempt derivatives clearing organization, immediate notice of the default including the name of the U.S. person or futures commission merchant, a list of the positions held by the U.S. person or futures commission merchant, and the amount of the U.S. person's or futures commission merchant's financial obligation; and

    (viii) Notice of action taken against a U.S. person or futures commission merchant by an exempt derivatives clearing organization, no later than two business days after the exempt derivatives clearing organization takes such action against a U.S. person or futures commission merchant.

    (d) Swap data reporting requirements. If a clearing member clears through an exempt derivatives clearing organization a swap that has been reported to a registered swap data repository pursuant to part 45 of this chapter, the exempt derivatives clearing organization shall report to a registered swap data repository data regarding the two swaps resulting from the novation of the original swap that had been submitted to the exempt derivatives clearing organization for clearing. The exempt derivatives clearing organization shall also report the termination of the original swap accepted for clearing by the exempt derivatives clearing organization, to the swap data repository to which the original swap was reported. In order to avoid duplicative reporting for such transactions, the exempt derivatives clearing organization shall have rules that prohibit the reporting, pursuant to part 45 of this chapter, of the two new swaps by the original counterparties to the original swap.

    (e) Application procedures. (1) An entity seeking to be exempt from registration as a derivatives clearing organization shall file an application for exemption with the Secretary of the Commission in the format and manner specified by the Commission. The Commission will review the application for exemption and may approve or deny the application or, if deemed appropriate, exempt the applicant from registration as a derivatives clearing organization subject to conditions in addition to those set forth in paragraph (b) of this section.

    (2) Application. An applicant for exemption from registration as a derivatives clearing organization shall submit to the Commission the information and documentation described in this section. Such information and documentation shall be clearly labeled as outlined in this section. The Commission will not commence processing an application unless the applicant has filed a complete application. Upon its own initiative, an applicant may file with its completed application for exemption additional information that may be necessary or helpful to the Commission in processing the application. The application shall include:

    (i) A cover letter containing the following information:

    (A) Exact name of applicant as specified in its charter, and the name under which business will be conducted (including acronyms);

    (B) Address of applicant's principal office;

    (C) List of principal office(s) and address(es) where clearing activities are/will be conducted;

    (D) A list of all regulatory licenses or registrations of the applicant (or exemptions from any licensing requirement) and the regulator granting such license or registration;

    (E) Date of the applicant's fiscal year end;

    (F) Contact information for the person or persons to whom the Commission should address questions and correspondence regarding the application; and

    (G) A signature and date by a duly authorized representative of the applicant.

    (ii) A description of the applicant's business plan for providing clearing services as an exempt derivatives clearing organization, including information as to the classes of swaps that will be cleared and whether the swaps are subject to a clearing requirement issued by the Commission or the applicant's home country regulator;

    (iii) Documents that demonstrate that applicant is organized in a jurisdiction in which its home country regulator applies to the applicant, on an ongoing basis, statutes, rules, regulations, policies, or a combination thereof that, taken together, are consistent with the Principles for Financial Market Infrastructures;

    (iv) A written representation from the applicant's home country regulator that the applicant is in good regulatory standing;

    (v) Copies of the applicant's most recent disclosures that are necessary to observe the Principles for Financial Market Infrastructures, including the financial market infrastructure disclosure template set forth in Annex A to the Disclosure Framework and Assessment Methodology for the Principles for Financial Market Infrastructures, any other such disclosure framework issued under the authority of the International Organization of Securities Commissions that is required for observance of the Principles for Financial Market Infrastructures, and the URL to the specific page(s) on the applicant's website where such disclosures may be found;

    (vi) A representation that the applicant will comply with each of the requirements and conditions of exemption set forth in paragraphs (b), (c), and (d) of this section, and the terms and conditions of its order of exemption as issued by the Commission;

    (vii) A copy of the applicant's rules that meet the requirements of paragraphs (b)(2) and (d) of this section, as applicable; and

    (viii) The applicant's consent to jurisdiction in the United States, and the name and address of the applicant's designated agent in the United States, pursuant to paragraph (b)(3) of this section.

    (3) Submission of supplemental information. At any time during its review of the application for exemption from registration as a derivatives clearing organization, the Commission may request that the applicant submit supplemental information in order for the Commission to process the application, and the applicant shall file such supplemental information in the format and manner specified by the Commission.

    (4) Amendments to pending application. An applicant for exemption from registration as a derivatives clearing organization shall promptly amend its application if it discovers a material omission or error, or if there is a material change in the information provided to the Commission in the application or other information provided in connection with the application.

    (5) Public information. The following sections of an application for exemption from registration as a derivatives clearing organization will be public: The cover letter set forth in paragraph (e)(2)(i) of this section; the documentation required in paragraphs (e)(2)(iii) and (e)(2)(v) of this section; rules that meet the requirements of paragraphs (b)(2) and (d) of this section, as applicable; and any other part of the application not covered by a request for confidential treatment, subject to § 145.9 of this chapter.

    (f) Modification of an exemption. The Commission may, either at the request of the exempt derivatives clearing organization or on its own initiative, modify the terms and conditions of an order of exemption, based on changes to or omissions in material facts or circumstances pursuant to which the order of exemption was issued, or for any reason in its discretion.

    (g) Termination of exemption upon request by an exempt derivatives clearing organization. (1) An exempt derivatives clearing organization may petition the Commission to terminate its exemption if:

    (i) Changed circumstances result in the exempt derivatives clearing organization no longer qualifying for an exemption;

    (ii) The exempt derivatives clearing organization intends to cease clearing swaps for U.S. persons; or

    (iii) In conjunction with the petition, the exempt derivatives clearing organization submits a completed Form DCO to become a registered derivatives clearing organization pursuant to section 5b(a) of the Act.

    (2) The petition for termination of exemption shall include a detailed explanation of the facts and circumstances supporting the request and the exempt derivatives clearing organization's plans for, as may be applicable, the liquidation or transfer of the swaps positions and related collateral of U.S. persons.

    (3) The Commission shall issue an order of termination within a reasonable time appropriate to the circumstances or, as applicable, in conjunction with the issuance of an order of registration.

    (h) Notice to clearing members of termination of exemption. Following the Commission's issuance of an order of termination (unless issued in conjunction with the issuance of an order of registration), the exempt derivatives clearing organization shall provide immediate notice of such termination to its clearing members. Such notice shall include:

    (1) A copy of the Commission's order of termination;

    (2) A description of the procedures for orderly disposition of any open swaps positions that were cleared for U.S. persons; and

    (3) An instruction to clearing members, requiring that they provide the exempt derivatives clearing organization's notice of such termination to all U.S. persons clearing swaps through such clearing members.

    5. Revise § 39.9 to read as follows:
    § 39.9 Scope.

    The provisions of this subpart B apply to any derivatives clearing organization, as defined under section 1a(15) of the Act and § 1.3 of this chapter, that is registered with the Commission as a derivatives clearing organization pursuant to section 5b of the Act. The provisions of this subpart B do not apply to any exempt derivatives clearing organization, as defined under § 39.2.

    PART 140—ORGANIZATION, FUNCTIONS, AND PROCEDURES OF THE COMMISSION 6. The authority citation for part 140 continues to read as follows: Authority:

    7 U.S.C. 2(a)(12), 12a, 13(c), 13(d), 13(e), and 16(b).

    7. Amend § 140.94 as follows: a. Revise the introductory text of paragraph (c); b. Redesignate paragraphs (c)(4) through (c)(13) as paragraphs (c)(5) through (c)(14); and c. Add new paragraph (c)(4).

    The revisions and additions read as follows:

    § 140.94 Delegation of authority to the Director of the Division of Swap Dealer and Intermediary Oversight and the Director of the Division of Clearing and Risk.

    (c) The Commission hereby delegates, until such time as the Commission orders otherwise, the following functions to the Director of the Division of Clearing and Risk and to such members of the Commission's staff acting under his or her direction as he or she may designate from time to time:

    (4) All functions reserved to the Commission in § 39.6 of this chapter, except for the authority to:

    (i) Grant an exemption under § 39.6(a) of this chapter;

    (ii) Prescribe conditions to an exemption under § 39.6(b) of this chapter;

    (iii) Modify an exemption under § 39.6(f) of this chapter; and

    (iv) Terminate an exemption under § 39.6(g)(3) of this chapter.

    Issued in Washington, DC, on August 8, 2018, by the Commission. Christopher Kirkpatrick, Secretary of the Commission. Note:

    The following appendices will not appear in the Code of Federal Regulations.

    Appendices to Exemption From Derivatives Clearing Organization Registration—Commission Voting Summary and Chairman's Statement Appendix 1—Commission Voting Summary

    On this matter, Chairman Giancarlo and Commissioners Quintenz and Behnam voted in the affirmative. No Commissioner voted in the negative.

    Appendix 2—Statement of Chairman J. Christopher Giancarlo

    This proposal is part of Project KISS's simple and straightforward efforts to make what has been an internal process public and transparent. Under the Commodity Exchange Act (CEA), the Commission may conditionally or unconditionally exempt a derivatives clearing organization (DCO) from registration for the clearing of swaps if the Commission determines that the clearing organization is subject to “comparable, comprehensive supervision and regulation” by appropriate government authorities in the clearing organization's home country. Pursuant to this authority, the Commission has exempted four non-U.S. clearing organizations from DCO registration.

    The Commission is proposing to adopt regulations that would codify the policies and procedures that the Commission is currently following with respect to granting exemptions from DCO registration. The proposed regulations are consistent with the policies and procedures that the Commission is currently following, and with the terms and conditions that the Commission has imposed on each of the clearing organizations to which it has previously issued orders of exemption.

    The exempt DCO process applies a comparable, outcomes-based approach to reflect the Commission's recognition that a foreign jurisdiction may have different regulations for its central counterparties (CCP) but share the same regulatory goals. Under the proposal, for CCPs in foreign jurisdictions, a framework that conforms to the Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) Principles for Financial Market Infrastructures (PFMI) would be deemed comparable to the CFTC's requirements for domestic CCPs.

    The proposal is part of the Commission's continued efforts to foster cross-border cooperation and show deference to home country regulation that is deemed comparable to the Commission's regulations. As our regulatory counterparts continue to implement swaps reforms in their markets, it is critical that the Commission endeavor to ensure that its rules do not unnecessarily conflict and fragment the global marketplace. For this reason, the Commission should operate on the basis of comity, not uniformity, with non-U.S. regulators. This avoids the untenable state of overlapping and duplicative regulations. The current proposal reflects this vision.

    I support this proposed rule from the Division of Clearing and Risk (DCR). I look forward to hearing comments on the proposal.

    [FR Doc. 2018-17335 Filed 8-10-18; 8:45 am] BILLING CODE 6351-01-P
    DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [Docket Number USCG-2018-0723] RIN 1625-AA00 Safety Zone; Delaware River; Penn's Landing; Philadelphia, PA; Fireworks Display AGENCY:

    Coast Guard, DHS.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Coast Guard proposes to establish a temporary safety zone on a portion of the Delaware River in Philadelphia, PA. This action is necessary to protect the surrounding public and vessels on these navigable waters adjacent to Penn's Landing, Philadelphia, PA, during a fireworks display on September 16, 2018. This proposed rulemaking would prohibit persons and vessels from entering, transiting, or remaining within the safety zone unless authorized by the Captain of the Port Delaware Bay or a designated representative. We invite your comments on this proposed rulemaking.

    DATES:

    Comments and related material must be received by the Coast Guard on or before August 28, 2018.

    ADDRESSES:

    You may submit comments identified by docket number USCG-2018-0723 using the Federal eRulemaking Portal at http://www.regulations.gov. See the “Public Participation and Request for Comments” portion of the SUPPLEMENTARY INFORMATION section for further instructions on submitting comments.

    FOR FURTHER INFORMATION CONTACT:

    If you have questions about this proposed rulemaking, call or email Petty Officer Thomas Welker, U.S. Coast Guard, Sector Delaware Bay, Waterways Management Division; telephone 215-271-4814, email [email protected].

    SUPPLEMENTARY INFORMATION:

    I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background, Purpose, and Legal Basis

    On July 18, 2018, the Mexican Cultural Society notified the Coast Guard that it will be conducting a fireworks display from 8 to 8:30 p.m. on September 16, 2018, to commemorate Mexican Independence Day. The fireworks are to be launched from a barge in the Delaware River adjacent to Penn's Landing in Philadelphia, PA. Hazards from firework displays include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris. The Captain of the Port Delaware Bay (COTP) has determined that potential hazards associated with the fireworks to be used in this display would be a safety concern for anyone within a 500-yard radius of the barge.

    The purpose of this rulemaking is to ensure the safety of vessels and the navigable waters within a 500-yard radius of the fireworks barge before, during, and after the scheduled event. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1231.

    III. Discussion of Proposed Rule

    The COTP proposes to establish a safety zone from 7:30 p.m. through 8:45 p.m. on September 16, 2018. The safety zone would cover all navigable waters within 500 yards of a barge in the Delaware River adjacent to Penn's Landing in Philadelphia, PA. The barge will be anchored in approximate position 39°56′50.35″ N Latitude 075°08′18.27″ W Longitude. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled 8 p.m. to 8:30 p.m. fireworks display. No vessel or person would be permitted to enter, transit, or remain within the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

    IV. Regulatory Analyses

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

    A. Regulatory Planning and Review

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

    This regulatory action determination is based on the size, location, duration, and time-of-day of the safety zone. Vessel traffic would be able to safely transit around this safety zone which would impact a small designated area of the Delaware River for 1 hour and 15 minutes during the evening when vessel traffic is normally low. Moreover, the Coast Guard would issue a Broadcast Notice to Mariners via VHF-FM marine channel 16 about the zone, and the rule would allow vessels to seek permission to enter the zone.

    B. Impact on Small Entities

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

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

    If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

    Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

    C. Collection of Information

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

    D. Federalism and Indian Tribal Governments

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

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

    E. Unfunded Mandates Reform Act

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

    F. Environment

    We have analyzed this proposed rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a safety zone lasting 1 hour 15 minutes that would prohibit entry within 500 yards of a fireworks barge. Normally such actions are categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

    G. Protest Activities

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

    V. Public Participation and Request for Comments

    We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

    We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

    We accept anonymous comments. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, visit http://www.regulations.gov/privacyNotice.

    Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at http://www.regulations.gov and can be viewed by following that website's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

    List of Subjects in 33 CFR Part 165

    Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.

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

    PART 165—REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS 1. The authority citation for part 165 continues to read as follows: Authority:

    33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.

    2. Add § 165.T05-0723 to read as follows:
    § 165.T05-0723 Safety Zone; Safety Zone; Delaware River; Penn's Landing; Philadelphia, PA; Fireworks Display.

    (a) Location. The following area is a safety zone: All waters of the Delaware River within a 500-yard radius of the fireworks barge, which will be anchored in approximate position 39°56′50.35″ N Latitude 075°08′18.27″ W Longitude. All coordinates are based on Datum NAD 1983.

    (b) Definitions. As used in this section, designated representative means a Coast Guard Patrol Commander, including a Coast Guard petty officer, warrant or commissioned officer on board a Coast Guard vessel or on board a federal, state, or local law enforcement vessel assisting the Captain of the Port, Delaware Bay in the enforcement of the safety zone.

    (c) Regulations. (1) Under the general safety zone regulations in subpart C of this part—(a) you may not enter the safety zone described in paragraph (a) of this section unless authorized by the COTP or the COTP's designated representative; and (b) all persons and vessels in the safety zone must comply with all lawful orders or directions given to them by the COTP or the COTP's designated representative.

    (2) To request permission to enter the safety zone, contact the COTP or the COTP's representative on marine band radio VHF-FM channel 16 (156.8 MHz) or 215-271-4807.

    (3) No vessel may take on bunkers or conduct lightering operations within the safety zone during its enforcement period(s).

    (4) This section applies to all vessels except those engaged in law enforcement, aids to navigation servicing, and emergency response operations.

    (d) Enforcement. The U.S. Coast Guard may be assisted in the patrol and enforcement of the safety zone by federal, state, and local agencies.

    (e) Enforcement period. This zone will be enforced from 7:30 p.m. through 8:45 p.m. on September 16, 2018.

    Dated: August 8, 2018. S.E. Anderson, Captain, U.S. Coast Guard, Captain of the Port Delaware Bay.
    [FR Doc. 2018-17333 Filed 8-10-18; 8:45 am] BILLING CODE 9110-04-P
    POSTAL REGULATORY COMMISSION 39 CFR Part 3015 [Docket No. RM2017-1; Order No. 4742] Competitive Postal Products AGENCY:

    Postal Regulatory Commission.

    ACTION:

    Proposed rulemaking.

    SUMMARY:

    The Commission is revising its previously proposed rules related to the minimum amount that competitive products as a whole are required to contribute to institutional costs annually, based on comments received. The Commission invites public comment on the revised proposed rules.

    DATES:

    Comments are due: September 12, 2018.

    ADDRESSES:

    Submit comments electronically via the Commission's Filing Online system at http://www.prc.gov. Those who cannot submit comments electronically should contact the person identified in the FOR FURTHER INFORMATION CONTACT section by telephone for advice on filing alternatives.

    FOR FURTHER INFORMATION CONTACT:

    David A. Trissell, General Counsel, at 202-789-6820.

    SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction II. Organization of Discussion III. Background IV. Proposed Modified Formula and Commission Analysis V. Section 703(d) of the PAEA VI. Administrative Actions VII. Ordering Paragraphs I. Introduction

    On February 8, 2018, the Commission issued a Notice of Proposed Rulemaking (Order No. 4402) proposing that a formula be used to calculate the minimum amount that competitive products as a whole are required to annually contribute to institutional costs (i.e., the appropriate share).1 Order No. 4402 was the result of the Commission's second review of the appropriate share, conducted pursuant to 39 U.S.C. 3633(b) in order to determine whether the existing appropriate share requirement of 5.5 percent should be retained, modified, or eliminated. See 39 U.S.C. 3633(b); see also 39 CFR 3015.7(c). For the reasons discussed below, the Commission proposes modifications to its formula-based approach and related revisions to the proposed rules.

    1 Notice of Proposed Rulemaking to Evaluate the Institutional Cost Contribution Requirement for Competitive Products, February 8, 2018 (Order No. 4402). The Notice of Proposed Rulemaking to Evaluate the Institutional Cost Contribution Requirement for Competitive Products was published in the Federal Register on February 14, 2018. See 83 FR 6758 (February 14, 2018).

    II. Organization of Discussion

    Section III of this Revised Notice of Proposed Rulemaking provides an overview of 39 U.S.C. 3633 and a recap of the Commission's two previous decisions concerning competitive products' appropriate share. In addition, section III provides a synopsis of Order No. 4402, including a brief summary of the formula-based approach previously proposed by the Commission and that approach's compliance with the elements set forth in 39 U.S.C. 3633(b). Section III also provides a list of comments received in response to Order No. 4402.

    In section IV, the Commission proposes modifications to Order No. 4402's formula-based approach. In conjunction with the proposed modifications, the Commission discusses comments received in response to Order No. 4402 that directly relate to a modification proposed in this Order as well as several comments applicable to aspects of the formula's calculation.2 As it did in Order No. 4402, the Commission also analyzes its modified proposed formula pursuant to the requirements of 39 U.S.C. 3633(b).

    2 The Commission received a range of comments related to its proposed formula-based approach and its analysis pursuant to the elements of 39 U.S.C. 3633(b). The Commission has reviewed and considered all comments received in response to Order No. 4402. For the purposes of this Revised Notice of Proposed Rulemaking, the Commission addresses those comments that relate to the formula modifications the Commission is proposing in this Order. Comments received in response to Order No. 4402 but not addressed in this Order will be addressed in a subsequent order in this proceeding.

    In section V, the Commission affirms its finding in Order No. 4402 pursuant to section 703(d) of the Postal Accountability and Enhancement Act (PAEA).3

    3 Uncodified section 703 of the PAEA, Public Law 109-435, 120 Stat. 3198 (2006), directs the Commission, when revising regulations under 39 U.S.C. 3633, to consider subsequent events that affect the continuing validity of a Federal Trade Commission (FTC) report that analyzed the Postal Service's economic advantages and disadvantages in the competitive product market when compared to private competitors. See PAEA, 120 Stat. 3244; see also Federal Trade Commission, Accounting for Laws that Apply Differently to the United States Postal Service and its Private Competitors, December 2007 (FTC Report), available at: https://www.ftc.gov/sites/default/files/documents/reports/accounting-laws-apply-differently-united-states-postal-service-and-its-private-competitors-report/080116postal.pdf.

    Section VI takes administrative steps to allow for comments on the modifications to the proposed formula and related revisions to the proposed rules by interested persons.

    III. Background A. Relevant Statutory Requirements

    The PAEA requires that competitive products collectively cover what the Commission determines to be an appropriate share of the Postal Service's institutional costs. 39 U.S.C. 3633(a)(3).

    The Commission is required to review the appropriate share regulation at least every 5 years to determine if the contribution requirement should be “retained in its current form, modified, or eliminated.” See 39 U.S.C. 3633(b). In making such a determination, the Commission is required to consider “all relevant circumstances, including the prevailing competitive conditions in the market, and the degree to which any costs are uniquely or disproportionately associated with any competitive products.” 39 U.S.C. 3633(b). Thus, by its terms, section 3633(b) establishes three separate elements that the Commission must consider during each review: (1) The prevailing competitive conditions in the market; (2) the degree to which any costs are uniquely or disproportionately associated with competitive products; and (3) all other relevant circumstances. See Order No. 4402 at 6.

    B. Previous Commission Decisions

    In promulgating its initial competitive product rules in Docket No. RM2007-1, the Commission determined that basing competitive products' minimum contribution on a percentage of total institutional costs was easily understood and, in tying it to historic contribution at the time, set the appropriate share at 5.5 percent.4

    4See Docket No. RM2007-1, Order Proposing Regulations to Establish a System of Ratemaking, August 15, 2007, at 70 (Order No. 26); Docket No. RM2007-1, Order Establishing Ratemaking Regulations for Market Dominant and Competitive Products, October 29, 2007, at 91, 138 (Order No. 43); see also Order No. 4402 at 6-7.

    The Commission completed its first review of the appropriate share, pursuant to 39 U.S.C. 3633(b), in Docket No. RM2012-3.5 After considering the elements established by section 3633(b), the Commission determined that the appropriate share should be retained at 5.5 percent. See generally Order No. 1449.

    5See Docket No. RM2012-3, Order Reviewing Competitive Products' Appropriate Share Contribution to Institutional Costs, August 23, 2012 (Order No. 1449); see also Order No. 4402 at 7-11.

    C. Current Commission Review: Docket No. RM2017-1 1. Procedural History

    On November 22, 2016, the Commission issued an Advance Notice of Proposed Rulemaking, which established this docket as its second review of the appropriate share pursuant to 39 U.S.C. 3633(b), appointed a Public Representative, and provided interested persons with an opportunity to comment.6 On February 8, 2018, after considering initial and reply comments received, the Commission issued Order No. 4402, which responded to comments, presented a new formula-based approach to setting the appropriate share, and provided another opportunity for interested persons to submit comments. See generally Order No. 4402.

    6 Advance Notice of Proposed Rulemaking to Evaluate the Institutional Cost Contribution Requirement for Competitive Products, November 22, 2016 (Order No. 3624). The Advance Notice of Proposed Rulemaking to Evaluate the Institutional Cost Contribution Requirement for Competitive Products was published in the Federal Register on November 29, 2016. See 81 FR 229 (November 29, 2016).

    2. Order No. 4402

    In Order No. 4402, the new formula-based approach proposed to set the appropriate share through a dynamic formula, which would annually update the appropriate share percentage based on market conditions. Id. at 11-33.

    a. Formula-Based Approach

    The proposed formula-based approach used two components to annually capture changes in the Postal Service's market power and in the overall size of the competitive market: The Postal Service Lerner Index and the Competitive Market Output. Id. at 15.

    The purpose of the Postal Service Lerner Index was to measure the Postal Service's market power within the competitive market. Id. at 16. In Order No. 4402, the Commission noted that market power is a competitor's ability to profitably set prices well above costs with little chance that entry or expansion by other competitors would erode such profits. Id. The Commission determined that evaluating the Postal Service's market power allowed it to assess whether competition was being preserved and whether the Postal Service possessed any competitive advantage. Id.

    The purpose of the second component of the proposed formula, the Competitive Market Output, was to measure the overall size of the competitive market. Id. at 22. The Commission proposed evaluating the overall size of the market because doing so enabled the Postal Service's market power to be placed into context relative to the market as a whole. Id.

    With the two components discussed above, the Commission proposed calculating the appropriate share using the following formula: 7

    7Id. at 29.

    AS t +1 = AS t * (1 + %ΔLI t −1 + %ΔCMO t −1) Iƒ t = 0 = FY 2007, AS = 5.5% The Commission proposed measuring the year-over-year percentage change in the Postal Service Lerner Index and Competitive Market Output, weighting both components equally. Id. at 29-31. As proposed in Order No. 4402, the formula's calculation was recursive with the Commission proposing to begin the calculation in FY 2007, using an initial appropriate share value of 5.5 percent. Id. at 31-32. The Commission proposed adjusting the appropriate share annually by using the formula to calculate the appropriate share for the upcoming fiscal year. Id. at 30. The appropriate share for each upcoming fiscal year would be reported in the Commission's Annual Compliance Determination (ACD). Id. b. Compliance With Statutory Requirements

    As part of Order No. 4402, the Commission examined how its proposed formula-based approach complied with section 3633(b) and accounted for the requirements of that section: (1) The prevailing competitive conditions in the market; (2) whether any costs are uniquely or disproportionately associated with any competitive products; and (3) other relevant circumstances. 39 U.S.C. 3633(b); Order No. 4402 at 34-53. For prevailing competitive conditions and other relevant circumstances, the Commission addressed the ways the proposed formula captured the prevailing competitive conditions and other relevant circumstances described in previous Commission decisions concerning the appropriate share. Id. at 34-40, 45-51. In addition, the Commission found that all costs uniquely or disproportionately associated with competitive products were already attributed to those products under the Commission's costing methodology.8

    8 Order No. 4402 at 43-45. The Commission's analysis of “the degree to which any costs are uniquely or disproportionately associated with any competitive products” relied on current costing methodologies approved in Docket No. RM2016-2. Id. at 40-45; see Docket No. RM2016-2, Order Concerning United Parcel Service, Inc.'s Proposed Changes to Postal Service Costing Methodologies (UPS Proposals One, Two, and Three), September 9, 2016 (Order No. 3506). UPS challenged the Commission's costing methodologies approved in Order No. 3506 in the United States Court of Appeals for the District of Columbia Circuit. See Petition for Review, United Parcel Serv., Inc. v. Postal Reg. Comm'n, No. 16-1354 (D.C. Cir. filed Oct. 7, 2016). The Court issued its opinion on May 22, 2018. See United Parcel Serv., Inc. v. Postal Reg. Comm'n, 890 F.3d 1053 (D.C. Cir. 2018) (UPS). In its opinion, the Court denied UPS's Petition for Review and found that the Commission exercised reasonable judgment in “settling on a cost-attribution methodology that implements its statutory mandate and falls well within the scope of its considerable discretion.” Id. at 1069. UPS petitioned for rehearing en banc, which was denied by the United States Court of Appeals for the District of Columbia Circuit. See Petition for Rehearing En Banc, United Parcel Serv., Inc. v. Postal Reg, Comm'n, No. 16-1354 (D.C. Cir. filed July 6, 2018), denied per curiam, No. 16-1354 (D.C. Cir. filed July 27, 2018).

    c. Comments in Response to Order No. 4402

    The Postal Service, the Public Representative, Amazon.com Services, Inc. (Amazon), the Greeting Card Association (GCA), the Parcel Shippers Association, Pitney Bowes Inc., United Parcel Service, Inc. (UPS), Robert J. Shapiro, and the American Consumer Institute Center for Citizen Research filed comments in response to Order No. 4402.9 In addition, representatives for the Public Representative and UPS filed declarations supporting comments on Order No. 4402.10

    9 Comments of the United States Postal Service in Response to Order No. 4402, April 16, 2018 (Postal Service Comments); Public Representative Comments in Response to Notice of Proposed Rulemaking, April 16, 2018 (PR Comments); Comments of Amazon.com Services, Inc. on Order No. 4402, April 16, 2018 (Amazon Comments); Comments of the Greeting Card Association, April 16, 2018 (GCA Comments); Comments of the Parcel Shippers Association, April 16, 2018; Comments of Pitney Bowes Inc., April 16, 2018; Initial Comments of United Parcel Service, Inc. on Notice of Proposed Rulemaking to Evaluate the Institutional Cost Contribution Requirement for Competitive Products, April 16, 2018 (UPS Comments); Declaration of Robert J. Shapiro, April 16, 2018; Comments of American Consumer Institute Center for Citizen Research Regarding Docket No. RM2017-1 Submitted to the Postal Regulatory Commission, April 16, 2018.

    10 Declaration of Soiliou Daw Namoro for the Public Representative, April 16, 2018 (Namoro Decl.); Declaration of J. Gregory Sidak on Behalf of United Parcel Service, April 16, 2018 (Sidak Decl.). Soiliou Daw Namoro filed in support of the Public Representative, and J. Gregory Sidak filed in support of UPS.

    IV. Proposed Modified Formula and Commission Analysis

    As noted above, in this Revised Notice of Proposed Rulemaking, the Commission is proposing modifications to both the Postal Service Lerner Index and the Competitive Market Output previously presented in Order No. 4402. As discussed in more detail below, these proposed modifications are made in response to comments received in response to Order No. 4402. The Commission proposes modifications to the Postal Service Lerner Index in order to address concerns related to the aggregation of data used in its calculation, provide a better measure of Postal Service market power, and more clearly distinguish the Commission's component from a traditional Lerner index. The Commission proposes modifications to the Competitive Market Output in order to more explicitly incorporate Postal Service market share.

    A. Modified Formula-Based Approach

    In this section, the Commission reviews pertinent portions of Order No. 4402, examines relevant comments, describes its proposed modifications to both components, and discusses the resulting formula.

    1. Modification to Postal Service Lerner Index a. Order No. 4402

    The Postal Service Lerner Index component was designed to gauge the Postal Service's market power in the competitive market. Order No. 4402 at 15-16. The Commission determined that evaluating the Postal Service's market power enables it to assess whether competition is being preserved and whether the Postal Service possesses a competitive advantage in the competitive market. Id. at 16. A Lerner index quantitatively assesses market power for a given firm by measuring the difference between the price charged by the firm for a particular product and the marginal cost incurred by the firm in producing that product. Id. at 17. In general, the further a firm is able to price its product above marginal cost, the more market power the firm possesses. Id.

    In Order No. 4402, the Commission used a traditional Lerner index as a starting point and proposed to develop a measure of market power specific to the Postal Service using Postal Service data. The Commission noted that the Postal Service is a multi-product firm, with each product having its own unique marginal cost and associated set of prices. Id. Therefore, in order to develop a measure that would be applicable to competitive products as a whole, the Commission proposed using average competitive product marginal cost and average competitive product price to calculate what it referred to as the Postal Service Lerner Index. Id.

    The Commission determined that marginal cost data for the Postal Service's competitive products could be obtained from the Postal Service's Cost and Revenue Analysis (CRA) report, which is submitted to the Commission annually as part of the Postal Service's Annual Compliance Report (ACR).11 The Commission uses the CRA report as an input to the Postal Service Product Finances analysis (PFA), which is produced each year as part of the Commission's ACD.12 Order No. 4402 at 18. The CRA report calculates marginal costs using volume-variable costs, which are the costs of specific Postal Service operations that vary with respect to relevant cost drivers. Id. The volume-variable costs are then distributed to individual Postal Service products. Id. Dividing the total volume-variable costs of a product by the product's total volume results in unit volume-variable costs, which are equivalent to marginal costs. Id. The Commission, therefore, proposed to divide the sum of all competitive product volume-variable costs in the PFA by the sum of all competitive product volume in order to calculate the aggregate competitive product unit volume-variable cost. Id. This number is equivalent to the average marginal cost for all competitive products.

    11 Order No. 4402 at 18; see 39 U.S.C. 3652.

    12See 39 U.S.C. 3653.

    The Commission determined that the price variable could be obtained using average revenue-per-piece, which incorporates all of the prices for all of the Postal Service's competitive products. Id. The PFA presents revenue data by product. Id. at 18-19. The Commission proposed dividing the sum of all competitive product revenue by the sum of all competitive product volume in order to calculate competitive product average revenue-per-piece. Id. at 19. This number is equivalent to the average price for all competitive products.

    Using the two variables described above, the Commission developed its proposed Postal Service Lerner Index, which consisted of the following formula: 13

    13Id.

    EP13AU18.034 b. Comments

    Multiple commenters address the proposed Postal Service Lerner Index. Some of these commenters allege that the Postal Service Lerner Index suffers from a number of defects resulting from the aggregation of data. Specifically, UPS and Sidak assert that it is improper to calculate the Postal Service Lerner Index using an average of the marginal costs for each of the Postal Service's competitive products. UPS Comments at 32; Sidak Decl. at 24-26. They contend that because the Postal Service is a multi-product firm with different cost characteristics for each of its products, averaging costs across different products is misleading. Id. Sidak maintains that even if the aggregate Postal Service Lerner Index is positive, the Lerner index for an individual product could still be negative, which could enable the Postal Service to engage in below-cost pricing for individual products. Sidak Decl. at 24. Sidak states that, for a multi-product firm, economists typically develop separate Lerner indices for each product. Id.

    UPS asserts that averaging product costs together could result in distortions and instability in the Postal Service Lerner Index following any future reclassifications of market dominant products as competitive or any future changes within the competitive product mail mix. UPS Comments at 32-33. UPS maintains that such changes would result in the composition of products within the Postal Service Lerner Index shifting for reasons unrelated to changes in market conditions. Id. For example, if a market dominant product had its own Lerner index with a value lower than the Postal Service Lerner Index (which is the aggregate of all competitive products), and that market dominant product were to be reclassified as a competitive product, then its addition to the Postal Service Lerner Index would reduce the Postal Service Lerner Index's overall value.

    With regard to the Commission's proposed use of average revenue, UPS and Sidak argue that it is improper to calculate the Postal Service Lerner Index using average revenue as a measure of price. UPS Comments at 33; Sidak Decl. at 28-31. Sidak asserts that average revenue is an inaccurate measure of price for a firm that engages in price discrimination, as he states the Postal Service does through its offering of negotiated service agreements (NSAs).14 Under these circumstances, he notes that as the quantity of a good that is sold increases, the price of a marginal unit of that good will decrease more quickly than average revenue will decrease.15 Sidak concludes that average revenue can overstate price, and a Lerner index built on such data can overstate the difference between price and marginal costs, thereby serving as an inaccurate measure of market power.16

    14 Sidak Decl. at 30. Price discrimination is a form of nonlinear pricing where the same good is sold at different prices. See Jeffrey Church & Roger Ware, Industrial Organization: A Strategic Approach 157 (2000) (Church & Ware), available at: https://works.bepress.com/jeffrey_church/23/. The Postal Service regularly enters into NSAs, which are contractual agreements between the Postal Service and specific mailers providing for customized prices and classifications in exchange for volume commitments by the mailer.

    15Id. The Commission provides a simple example to explain Sidak's concern. If the Postal Service were to sell 100 parcel deliveries at $5 each to retail consumers, and then sell 200 parcel deliveries at $3 each to a particular mailer pursuant to an NSA, then the price of a marginal unit of parcel delivery would be $3 (because marginal price is defined as the price of the last unit sold), but the average revenue for all 300 units sold would be $3.67.

    16Id. Sidak does not argue that revenue in general is inappropriate as a measure of price—only that average revenue is an inappropriate measure of price because the Postal Service offers NSAs. Id. at 28-31. Sidak does not suggest an alternative measure of price to be used in this case.

    c. Commission Analysis and Proposed Modification

    After considering the comments received, the Commission proposes to replace the Postal Service Lerner Index with an alternate measurement the Commission labels as the Competitive Contribution Margin. The Competitive Contribution Margin has two primary differences when compared to the Postal Service Lerner Index: (1) It uses total competitive product values rather than average competitive product values; and (2) it uses competitive product attributable costs instead of competitive product volume-variable costs. The formula for calculating the Competitive Contribution Margin is as follows:

    EP13AU18.035

    This modification presents several benefits. First, it addresses an apparent misunderstanding with the mathematical functioning of the Postal Service Lerner Index as initially proposed by the Commission. With regard to UPS's and Sidak's assertions that the Postal Service Lerner Index inappropriately uses average revenue in place of price, Namoro's declaration demonstrates that the use of averages has no actual effect on the calculation. See Namoro Decl. at 6-7.

    The Postal Service Lerner Index, as initially proposed by the Commission, used revenue-per-piece (i.e., average revenue) and unit volume-variable cost (i.e., average cost). Revenue-per-piece is calculated by dividing total competitive product revenue by total competitive product volume, and unit volume-variable cost is calculated by dividing total competitive product volume-variable cost by total competitive product volume.

    Because every term is divided by volume, the volume terms cancel each other out, which is mathematically demonstrated as follows:

    EP13AU18.036

    The final construction of the Postal Service Lerner Index shown above is mathematically equivalent to the Postal Service Lerner Index as originally proposed in Order No. 4402, but does not use averaging. See id.; see also Order No. 4402 at 19. As demonstrated above, averaging is immaterial to the calculation of this component. For that reason, the Commission proposes to omit averaging and to use total revenue for all competitive products in its modified component. Because this modification does not affect what the component measures, the modified component will continue to measure the market power of the Postal Service's competitive products as a whole. At the same time, the Commission recognizes that using total amounts departs somewhat from a traditional calculation of a Lerner index, which is typically calculated using unit cost and unit price.17 Therefore, the Commission proposes to refer to the modified component as the Competitive Contribution Margin to distinguish it from a traditional Lerner index.

    17 A traditional Lerner index is defined by the ratio of price minus marginal cost to price. See Church & Ware at 31-36.

    The second major benefit of this modification is that by using total attributable costs, it more accurately reflects competitive product costs than the Postal Service Lerner Index. The Postal Service Lerner Index only included volume-variable costs, whereas the Competitive Contribution Margin uses attributable costs, which include volume-variable costs, product-specific costs, and inframarginal costs calculated as part of each competitive product's incremental costs.18 In addition, by incorporating the inframarginal costs of competitive products collectively, the Competitive Contribution Margin also reflects costs which are not caused by any one competitive product, but by competitive products as a whole. Reflecting all costs caused by competitive products mitigates the risk of overstating the Postal Service's market power in the competitive market because the modification allows the component to more accurately measure the relationship between cost and price.

    18See Order No. 3506 at 60 (directing Postal Service to begin basing attributable costs for competitive products on incremental costs, which include a portion of inframarginal costs).

    The third benefit of this proposed modification is that it better reflects modern economic literature on the subject of measuring market power. As Sidak notes, “[e]conomists routinely use the ratio of `operating profits net of depreciation, provisions and an estimated financial cost of capital [to] sales' as a proxy for a firm's Lerner [i]ndex.” 19 Sidak estimates UPS's and FedEx's Lerner index values for FY 2017 using each firm's operating profit-to-revenue ratio. Sidak Decl. at 47. The Competitive Contribution Margin follows the same calculation outlined in the economic literature cited to by Sidak, determining the ratio of operating profit to revenue.20 This measure is frequently referred to in economic literature as the price-cost margin.

    19 Sidak Decl. at 47, Figure 4 (citing Philippe Aghion et al., Competition and Innovation: An Inverted-U Relationship, 120 Q.J. Econ. 701, 704 (2005); Frederick H. deB. Harris, Structure and Price-Cost Performance Under Endogenous Profit Risk, 35 J. Indus. Econ. 35, 43 (1986)).

    20 The difference between total competitive product revenue and total competitive product attributable costs constitutes the profit derived from competitive products. Dividing this difference by total competitive product revenue results in the profit-to-revenue ratio that Sidak uses.

    With regard to UPS's and Sidak's concerns that an index which aggregates total costs across multiple competitive products could be used to mask below-cost pricing for individual competitive products, the Commission finds that such a situation is, as a practical matter, highly unlikely to occur. First, because the PAEA allows the Postal Service to retain earnings, the Postal Service is incentivized to maximize profits on competitive products. To price below-cost for individual competitive products would be economically disadvantageous for the Postal Service. As the Commission noted in Order No. 4402, a firm pricing below marginal cost should suspend production in the short run, and if cost or market characteristics do not change, exit the industry in the long run. Order No. 4402 at 36 n.63. Second, an individual competitive product that was priced below cost would violate 39 U.S.C. 3633(a)(2), which requires each competitive product to recover its attributable costs. See 39 U.S.C. 3633(a)(2). Such violations are addressed annually in the ACD, with the Commission having authority to order appropriate remedies.21

    21See, e.g., Docket No. ACR2007, Annual Compliance Determination, March 27, 2008, at 112-13; Docket No. ACR2008, Annual Compliance Determination, March 30, 2009, at 86-89; Docket No. ACR2009, Annual Compliance Determination, March 29, 2010, at 117; Docket No. ACR2010, Annual Compliance Determination, March 29, 2011, at 139-40; Docket No. ACR2011, Annual Compliance Determination, March 28, 2012, at 156-63; Docket No. ACR2012, Annual Compliance Determination, March 28, 2013, at 162-72; Docket No. ACR2013, Annual Compliance Determination, March 27, 2014, at 79-91; Docket No. ACR2014, Annual Compliance Determination, March 27, 2015, at 72-82; Docket No. ACR2015, Annual Compliance Determination, March 28, 2016, at 79-92; Docket No. ACR2016, Annual Compliance Determination, March 28, 2017, at 80-88; Docket No. ACR2017, Annual Compliance Determination, March 29, 2018, at 82-92 (FY 2017 ACD).

    With respect to UPS's concern that the effects of future product reclassifications or competitive product mail mix changes could result in distortions, the Commission finds that although such a change would alter the inputs to the calculation, the Competitive Contribution Margin would accurately reflect the Postal Service's market power in the expanded (or contracted) market that resulted from the change. For example, if a market dominant product were to be re-classified as competitive, the addition of that product to the competitive mail mix would change both competitive products' total attributable costs and total revenue. However, because the Competitive Contribution Margin is calculated by subtracting total attributable costs from total revenue, and dividing that number by total revenue, the result would continue to indicate how much market power the Postal Service possessed after the transfer.

    Table IV-1 provides a comparison of annual changes in the Competitive Contribution Margin and the Postal Service Lerner Index.

    Table IV-1—Comparison of Competitive Contribution Margin and Postal Service Lerner Index Fiscal year Competitive
  • Contribution
  • Margin
  • Percentage
  • change in
  • Competitive
  • Contribution
  • Margin
  • Postal Service
  • Lerner Index
  • Percentage
  • change in
  • Postal Service
  • Lerner Index
  • FY 2007 0.226 N/A 0.228 N/A FY 2008 0.213 −5.9 0.217 −5.1 FY 2009 0.241 13.4 0.251 15.9 FY 2010 0.279 15.7 0.298 18.6 FY 2011 0.257 −7.9 0.276 −7.3 FY 2012 0.266 3.7 0.275 −0.3 FY 2013 0.281 5.5 0.290 5.4 FY 2014 0.282 0.4 0.292 0.8 FY 2015 0.275 −2.6 0.284 −2.7 FY 2016 0.325 18.1 0.332 16.6 FY 2017 0.329 1.3 0.356 7.5

    As shown in Table IV-1, the growth and decline in the two measures is generally consistent. Two divergences warrant discussion: FY 2012, when the Postal Service Lerner Index declined while Competitive Contribution Margin grew; and FY 2017, when the difference between the Postal Service Lerner Index and Competitive Contribution Margin was more than 6 percentage points.

    As noted above, the Competitive Contribution Margin uses attributable costs while the Postal Service Lerner Index uses only volume-variable costs.22 In a given fiscal year, if the percentage growth in attributable costs was greater than the percentage growth in volume-variable costs, the Competitive Contribution Margin would grow less than the Postal Service Lerner Index. If the percentage growth in attributable costs was less than the percentage growth in volume-variable costs, the Competitive Contribution Margin would grow more than the Postal Service Lerner Index. Between FY 2011 and FY 2012, volume-variable costs increased by 27 percent, while attributable costs increased by 25 percent.23 Thus, the Competitive Contribution Margin grew in FY 2012, while the Postal Service Lerner Index decreased.

    22 For FY 2007 through FY 2016, attributable costs were calculated as the sum of volume-variable costs and product-specific fixed costs.

    23 The smaller increase in attributable costs was caused by a decrease in product-specific fixed costs of 42 percent. This decrease in product-specific fixed costs was primarily driven by a decrease in competitive product advertising costs.

    In FY 2017, the Commission included a portion of inframarginal costs in the calculation of attributable costs for the first time, which increased the overall level of cost attribution.24 This resulted in attributable costs growing 11 percent from FY 2016 to FY 2017, while volume-variable costs (which were not affected by this methodological change) grew only 8 percent during the same period. This produced an inverse situation to that which occurred in FY 2012—because the growth in attributable costs was greater than volume-variable costs, the Competitive Contribution Margin grew less than the Postal Service Lerner Index.

    24See Order No. 3506 at 60.

    These differences reflect how the Competitive Contribution Margin more accurately measures the Postal Service's market power for competitive products. Because the Competitive Contribution Margin measures all costs caused by competitive products, including those that cannot be attributed to any one competitive product specifically, the Competitive Contribution Margin provides a more complete view of the Postal Service's market power. For that reason, the Commission proposes to replace the Postal Service Lerner Index with the Competitive Contribution Margin in its revised formula.

    2. Modification to Competitive Market Output a. Order No. 4402

    The second component of the formula initially proposed by the Commission was the Competitive Market Output, which was designed to measure the overall size of the competitive market. Order No. 4402 at 22. The Commission proposed that evaluating the overall size of the market provided context for assessing the prevailing competitive conditions in the market and the Postal Service's market power. Id. The Commission stated that the appropriate share requirement should balance encouraging the Postal Service to increase competitive products' contribution to institutional costs when the market is growing with the need to adjust competitive products' pricing in the event of a market decline. Id.

    The Commission determined that the relevant market consisted of two groups: The Postal Service's competitive products and “similar products” offered by the Postal Service's competitors. Id. The Commission proposed using revenue, rather than volume, to measure the size of the overall market. Id. at 23. This was because revenue data for all competitors were available and directly comparable, whereas volume data were not uniformly available and would require frequent adjustments. Id.

    The Commission proposed obtaining the necessary revenue data for the Postal Service's competitive products from the PFA, which the Commission produces every year as part of its ACD. Id. The Commission proposed obtaining the necessary revenue data for the Postal Service's competitors from two surveys conducted by the United States Census Bureau: The Quarterly Services Survey (QSS) and the Services Annual Survey (SAS). Id. The methodology for collecting and aggregating these data was described in Order No. 4402. Id. at 22-29.

    Using the foregoing information, the Commission developed its proposed Competitive Market Output measure, which consisted of the following formula: 25

    25See Order No. 4402 at 23.

    Competitive Market Output = Revenue USPS + Revenue C&M26

    26 “C&M” stands for “Couriers and Messengers,” the name of the relevant dataset for the Postal Service's competitors within the Census Bureau data. See id. at 24.

    b. Comments

    Multiple commenters address the proposed Competitive Market Output component. These comments can be broadly grouped into six different areas.

    First, the Public Representative and his declarant, Namoro, both express concern that the Competitive Market Output component, as proposed, disproportionately incorporates competitor revenue. Namoro Decl. at 10-11; PR Comments at 5-6. Namoro explains that this is due to the fact that not all competitor revenue within Competitive Market Output is weighted by market share. Namoro Decl. at 10-11. As a result, the Public Representative and Namoro assert that coordinated price increases by the Postal Service's competitors could cause the required appropriate share to increase, regardless of other market conditions. Id. at 11; PR Comments at 5-6.

    Second, several commenters note that the Competitive Market Output as proposed does not incorporate the Postal Service's market share. Sidak observes that the Competitive Market Output will not reflect changes in market share; it will simply show the size of the overall market. Sidak Decl. at 49-51. Namoro likewise posits that the Competitive Market Output as proposed implicitly and incorrectly assumes that “the Postal Service's specific gains or losses from total market expansion or market contraction are irrelevant to the computation of the appropriate share[ ] . . . .” Namoro Decl. at 3. UPS argues that the appropriate share should take into account how much the Postal Service's competitive products are growing within the context of the overall market. UPS Comments at 35. The Postal Service asserts that under the formula as proposed, the appropriate share would not decrease if the Postal Service were to lose market share but the measured Competitive Market Output did not also decrease. Postal Service Comments at 20. The Postal Service states that a circumstance where it loses market share without the Competitive Market Output similarly decreasing is not merely theoretical. Id. If the Postal Service's competitors were to begin competing more aggressively or shippers and non-traditional competitors were to expand their delivery operations, then the Competitive Market Output (which measures the total size of the package delivery market) might remain the same even as the Postal Service's individual share of the market decreased. Id. at 20-21.

    Third, UPS asserts that there is no economic basis for linking the size of the overall competitive market (measured by revenue) with the question of what the appropriate share should be. UPS Comments at 34. UPS states this is because “[n]either the Commission nor the Postal Service ha[s] the ability to control what prices are charged by other participants in the market,” and considering market size alone “does not account for the possibility of customers making in-house deliveries, which would not impact overall market volume but would decrease [the Competitive Market Output] nonetheless.” Id. at 34-35. The Postal Service also notes this issue. It states that both the Competitive Market Output and the appropriate share could increase without necessarily reflecting additional market opportunities, for the Postal Service or any other package delivery company, if there were to be a market change towards greater self-delivery of packages by shippers themselves. Postal Service Comments at 21.

    Fourth, UPS and Sidak both criticize the Competitive Market Output for measuring output in terms of revenue, as opposed to volume. UPS Comments at 35; Sidak Decl. at 36-38. Sidak asserts that “a firm's costs are more directly a function of its unit volume than of its revenue.” Sidak Decl. at 36. Furthermore, Sidak maintains that “[m]easuring output on the basis of revenue can fail to capture market growth if competitive pressure decreases prices more rapidly than unit volume increases, or if growth in volume is driven by below-cost pricing.” Id. Sidak notes that measuring industry output by unit volume would be consistent with the approach taken by other regulatory agencies. Id. at 36-38.

    Fifth, the Postal Service criticizes the Competitive Market Output for failing to take into account inflation, considering that the Competitive Market Output constitutes an absolute measure of market size by revenue, denominated in current dollars. Postal Service Comments at 21. By presenting growth rates in the Competitive Market Output based on revenues expressed in nominal dollars, rather than constant dollars adjusted for inflation, the Postal Service maintains that the Competitive Market Output includes purely inflationary increases in revenue, demand, and market power. Id. The Postal Service also asserts that if the Competitive Market Output were to grow more slowly than inflation, the Competitive Market Output growth may not accurately reflect growth in the Postal Service's ability to increase competitive products' contribution to institutional costs because, in such a situation, institutional costs (which are also subject to inflation) would be increasing faster in real terms than the Postal Service's competitive revenue. Id. at 21-22.

    Sixth, the Postal Service asserts that the Competitive Market Output fails to take into account differentiation between the Postal Service's and its competitors' respective product offerings, which can impact the ability of competitive products to contribute to institutional costs.27

    27 Postal Service Comments at 16. Although the Postal Service does not explain this particular argument in detail, it appears to suggest that to the extent the Postal Service's and its competitors' products are not perfect substitutes for each other, those products will not be in direct competition, and arguably should not be considered part of the same market. Therefore, to the extent that the Competitive Market Output includes such products in the same market, it could be said to overstate the size of the market.

    c. Commission Analysis and Proposed Modification

    After considering the comments received, the Commission proposes to replace the Competitive Market Output with an alternate measurement the Commission labels the Competitive Growth Differential. Unlike the Competitive Market Output, which sought to determine overall market size, the Competitive Growth Differential assesses the growth or decline of the Postal Service's market position from year-to-year. It explicitly incorporates the Postal Service's market share and accounts for inflation and whether market growth is structural or caused by coordinated pricing by competitors. It is calculated using the following equation:

    Competitive Growth Differential = Market Share USPS * (%ΔRevenue USPS − %ΔRevenue C&M)

    The Competitive Growth Differential is calculated by subtracting the year-over-year percentage change in competitors' revenue from the year-over-year percentage change in the Postal Service's competitive product revenue to determine the Postal Service's growth relative to that of its competitors, and multiplying the result by the Postal Service's market share. The Postal Service's market share is determined by dividing the Postal Service's total competitive product revenue by the sum of the Postal Service's total competitive product revenue and total competitor revenue, as depicted in the following formula:

    EP13AU18.037

    As with the Competitive Market Output, the Competitive Growth Differential is measured using revenue, rather than volume. As explained in Order No. 4402, the Commission selects revenue data because volume data would need to be adjusted for intra-industry transactions, while revenue data can be used directly, without adjustment.28 Additionally, revenue data are also available for all firms in the relevant market through publicly available sources, whereas volume data for the Postal Service's competitors are not publicly available. Id.

    28See Order No. 4402 at 23. An example of an intra-industry transaction is a Postal Service competitor transporting a package from a sender in California to a recipient's destination delivery unit (i.e., the Postal Service facility where mail carriers depart for local mail delivery) in New York. The Postal Service would then deliver the package to the recipient (i.e., last-mile delivery).

    As with the Competitive Market Output, revenue data for the Postal Service are obtained from the PFA, and revenue data for the Postal Service's competitors are obtained from Census Bureau data—specifically the QSS and SAS survey data. Unlike the Competitive Market Output, revenue data under the Competitive Growth Differential are adjusted for inflation, using the Consumer Price Index for All Urban Consumers (CPI-U) as the deflator.29 CPI-U data are obtained from the Bureau of Labor Statistics (BLS).30 The Commission indexes the CPI-U data to FY 2007; that is, FY 2007 constitutes the base year for any inflation adjustment. This aligns the CPI-U data with the beginning year for the Commission's proposed formula.31

    29 The CPI-U is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. See Bureau of Labor Statistics, Consumer Price Index, Frequently Asked Questions, available at: https://www.bls.gov/cpi/questions-and-answers.htm.

    30 Bureau of Labor Statistics, Consumer Price Index—All Urban Consumers (Series ID CUUR0000SA0),” available at: https://data.bls.gov/timeseries/CUUR0000SA0.

    31See Order No. 4402 at 32. For additional discussion of the beginning year of the Commission's formula, see section IV.A.3.c, infra.

    The Competitive Growth Differential better reflects the Postal Service's position in the overall competitive market and addresses the concerns raised by commenters discussed above. First, the change to the Competitive Growth Differential eliminates the disproportionate inclusion of competitor revenue from the component's underlying equation. To illustrate this, the Commission starts with the formula for calculating the year-over-year percentage change in Competitive Market Output (which was an input into the formula as initially proposed in Order No. 4402): 32

    32 This equation and all equations in this section are calculated for t for simplicity of demonstration, while the input (i.e., when using the formula to determine the appropriate share) is calculated for t−1.

    EP13AU18.038

    Although not explicitly depicted in the formula, both the change in Postal Service revenue and the change in competitor revenue are weighted by their respective market shares. This is because an aggregate rate of growth is not equivalent to the sum of individual rates of growth.33 The formula is therefore mathematically equivalent to the following:

    33 A simple example can be used to demonstrate why this is the case. Consider an entity with two products, one generating revenue of $100,000 in FY 2017 and $105,000 in FY 2018 (a 5-percent year-over-year increase) and the other generating revenue of $50,000 in FY 2017 and $55,000 in FY 2018 (a 10-percent year-over-year increase). If the entity were trying to calculate the aggregate rate of revenue growth, it would be incorrect to add the individual rates of growth (i.e., 5 percent for the first product and 10 percent for the second product = 15 percent total). Instead, the entity would calculate each product's share of total revenue (i.e., $100,000/$150,000 = 66 percent for the first product and $50,000/$150,000 = 34 percent for the second product), and then multiply each product's share of total revenue by the percentage revenue change (i.e., 66 percent * 5 percent = 3.3 percent for the first product, and 34 percent * 10 percent = 3.4 percent for the second product). The final step would be to add the two numbers to calculate the aggregate rate of revenue growth for the entity (i.e., 3.3 percent + 3.4 percent = 6.7 percent).

    Competitive Market Output  = (Market Share USPS * %ΔRevenue USPS + ((1 − Market Share USPS)  * (%ΔRevenue)C&M) 34

    34 For a rigorous demonstration of this transformation, see Namoro Decl. at 11-13, reproduced in Library Reference PRC-LR-RM2017-1/2.

    Weighting by market share is necessary in order to incorporate the relative contribution of each source of revenue growth to the overall growth. As Library Reference PRC-LR-RM2017-1/2 illustrates, the year-over-year percentage change in the Competitive Market Output is equivalent to the year-over-year percentage change in the Postal Service's revenue, weighted by the Postal Service's market share, plus the year-over-year percentage change in competitors' revenue, weighted by competitors' market share.35 In order to demonstrate how this equation over-incorporates competitor revenue, it is helpful to state its terms differently. The terms of the equation can be mathematically rewritten as follows:

    35 Competitors' market share is determined by calculating 1 − Market Share USPS. This constitutes the residual left over after the Postal Service's market share has been determined.

    Competitive Market Output  = ((Market Share USPS) * (%ΔRevenue USPS − %ΔRevenue C&M))  + (%ΔRevenue C&M) 36

    36 This formula is the result of a three-step transformation from the formula directly above it. The three-step transformation is demonstrated in detail in Library Reference PRC-LR-RM2017-1/2.

    This construction of the Competitive Market Output growth rate equation is mathematically equivalent to the previous construction and demonstrates that growth in Competitive Market Output constitutes the sum of two terms: The market share weighted difference in revenue growth between the Postal Service and its competitors; and the unweighted growth in competitor revenue. It is this second term (+ (%ΔRevenue C&M)) that results in the disproportionate incorporation of competitor revenue because the growth in competitor revenue is not weighted by market share. The Competitive Growth Differential removes the second term, thereby resolving the problem of disproportionate incorporation of competitor revenue.37 Eliminating the disproportionate incorporation of competitor revenue by adopting the Competitive Growth Differential addresses the concerns raised by the Public Representative and Namoro that competitors' pricing decisions alone could influence the appropriate share.

    37 The Commission notes that this adjustment was identified as a possible solution by Namoro in his declaration. See Namoro Decl. at 17 n. 12.

    This modification also changes the nature of the component from a measure of overall market size to a measure of the Postal Service's market position because the modification captures the change in the size of the Postal Service's competitive business relative to that of the Postal Service's competitors.

    Additionally, the Competitive Growth Differential directly incorporates the Postal Service's market share into the appropriate share calculation, which addresses comments that the Competitive Market Output failed to consider the Postal Service's market share.38 The Competitive Growth Differential directly incorporates the Postal Service's market share as a weight. This ensures that any change in the appropriate share due to changes in the Competitive Growth Differential are not solely driven by growth in the overall market but are also reflective of whether those changes give the Postal Service greater (or reduced) market share. This is important because if both the Postal Service's and its competitors' respective revenues increase but the Postal Service's market share remains the same, the Postal Service's relative position in the market may not have changed. With the Competitive Growth Differential, the Commission's proposed formula will now reflect this. Similarly, the change from the Competitive Market Output to the Competitive Growth Differential will prevent the scenario identified by the Postal Service in which, despite the Postal Service having lost market share, the appropriate share requirement may not decrease due to the size of the overall market remaining unchanged.

    38 The Commission found in Order No. 4402 that market share was indirectly incorporated into the Competitive Market Output because any large shift in revenue share between the Postal Service and its competitors would be reflected in the Competitive Market Output. Order No. 4402 at 38-39. Market share is also indirectly incorporated into the Competitive Market Output because determining growth rates for the Competitive Market Output implicitly requires a determination of the Postal Service's market share, as demonstrated in Library Reference PRC-LR-RM2017-1/2.

    With regard to UPS's assertion that there is no economic basis for linking the size of the overall competitive market to the appropriate share, the Commission reiterates its explanation in Order No. 4402 that evaluating the overall size of the market provides context for assessing prevailing competitive conditions. See id. at 22. The size of the market serves as an indicator of how healthy the market is, both when the market is considered in isolation and when the market is considered relative to the broader economy. Evaluating the overall size of the market is also necessary to determine the relative shares of the competitors in it. For these reasons, it remains appropriate to consider the overall size of the competitive market, as well as the Postal Service's position in the market, as relevant to the appropriate share.

    As discussed above, the Competitive Growth Differential tracks changes in the market more accurately than the Competitive Market Output. It accomplishes this by using real revenue growth instead of nominal revenue growth. The Commission agrees with the Postal Service's suggestion that taking into account inflation will improve this component of the formula. Without such an adjustment, the formula could interpret inflationary changes in the market as market growth. Relatedly, with regard to UPS's and Sidak's criticisms of this component for measuring output in terms of revenue, it is true that there are circumstances in which using revenue as a measure of output could be misleading, such as when a firm is attempting to strategically price its products at a low level in order to gain market share. However, because the Competitive Growth Differential accounts for inflation, those circumstances do not apply here. Even if the Postal Service or its competitors were to engage in strategic pricing in order to gain market share, causing revenue to diverge from volume, as long as revenue is measured in real terms, the Competitive Growth Differential would accurately reflect the Postal Service's relative position in the market.39

    39 With regard to Sidak's assertion that measuring industry output by volume would be more consistent with practice in other agencies, the Commission notes that the use of revenue to determine output is consistent with the methodology employed by agencies such as the United States Department of Commerce, which uses revenue as an initial measure of output when calculating Gross Domestic Product (GDP). GDP is the total expenditure on the economy's output of goods and services. See N. Gregory Mankiw, Macroeconomics 18, 27 (7th ed. 2010). For information on the use of revenue in calculating GDP, see Bureau of Economic Analysis, Concepts and Methods of the U.S. National Income and Product Accounts, November 2017, at 4-9, 5-30, available at: https://www.bea.gov/national/pdf/all-chapters.pdf.

    The Postal Service's concern that this component fails to directly consider product differentiation is mitigated by the overarching similarities between the Postal Service's and its competitors' products. Furthermore, product differentiation would be reflected in the Competitive Growth Differential because changes in product differentiation will affect the relative growth in revenue for the Postal Service compared to its competitors. This is because if the Postal Service's and its competitors' products became less and less interchangeable to the point that they were occupying different markets with different characteristics, those products' growth rates would be likely to diverge, resulting in greater changes in the Competitive Growth Differential. In addition, such differentiation would be reflected by larger increases in the Competitive Contribution Margin because that index measures the market power of the Postal Service; and to the extent that the Postal Service has fewer competitors, it will have greater market power. Further, if differentiation between the Postal Service's and its competitors' products were to occur such that the products were no longer considered to constitute the same market, the 5-year review of the appropriate share mandated by 39 U.S.C. 3633(b) would allow the Commission to examine whether the data obtained from Census Bureau continues to be an appropriate measure of competitors' revenue.40

    40 Should a change be necessary in advance of the 5-year review, the Commission is also permitted to revise its regulations when circumstances warrant. See 39 U.S.C. 3633(a); Order No. 1449 at 13.

    The Competitive Market Output and Competitive Growth Differential results for each fiscal year since the PAEA was enacted are reported in Table IV-2 below.

    Table IV-2—Comparison of Annual Changes in Competitive Market Output Growth and Competitive Growth Differential 41 Fiscal year Competitive
  • market
  • output growth
  • (%)
  • Competitive
  • growth
  • differential
  • (%)
  • FY 2007 N/A N/A FY 2008 −1.5 0.7 FY 2009 −13.9 1.2 FY 2010 −0.8 0.9 FY 2011 5.3 −0.2 FY 2012 6.4 2.7 FY 2013 5.0 2.5 FY 2014 4.7 1.2 FY 2015 6.5 0.2 FY 2016 5.1 1.4 FY 2017 6.3 1.1

    The Competitive Growth Differential values differ substantially from the Competitive Market Output values because they measure different things: The Competitive Market Output measures absolute growth in the market, whereas the Competitive Growth Differential measures the Postal Service's growth relative to that of its competitors.

    41 Because the Competitive Growth Differential evaluates relative growth rather than absolute growth, it is inappropriate to include the absolute Competitive Market Output values in this table. No corresponding absolute Competitive Growth Differential values exist.

    For example, in FY 2008, FY 2009, and FY 2010, the Competitive Market Output decreased and the Competitive Growth Differential increased. This occurred because the Postal Service maintained (and in some years, increased) its competitive product output despite a global financial crisis, both through NSAs and the reclassification of certain market dominant products as competitive. As such, the Postal Service was able to improve its market position relative to its competitors, even as the overall market declined. In FY 2011, the Competitive Growth Differential was negative because the Postal Service's competitive revenue displayed no material growth, while competitor revenue, and hence the overall market, grew. This demonstrates that the Competitive Growth Differential reflects the source of the growth in the market in ways that the Competitive Market Output did not. Subsequent fiscal years reflect similar differences, with the Competitive Growth Differential better reflecting the Postal Service's market position in the overall competitive market than the Competitive Market Output would.

    In the next section, the Commission discusses the formula proposed in Order No. 4402, as well as specific comments received related to the operation of the formula. The Commission then describes how the two modified components, the Competitive Contribution Margin and the Competitive Growth Differential, are incorporated into the Commission's proposed formula to calculate the appropriate share.

    3. Resulting Formula a. Order No. 4402

    In Order No. 4402, the Commission proposed calculating the appropriate share using the following formula: 42

    42 Order No. 4402 at 29.

    AT t +1 = AS t * (1 + %ΔLI t −1 + %ΔCMO t −1) If t = 0 = FY 2007, AS = 5.5% Where, AS = Appropriate Share 43

    43 This figure would be expressed as a percentage and rounded to one decimal place for simplicity and consistency with the Commission's past practice of expressing an appropriate share using one decimal place. Id. at 29 n.52.

    LI = Postal Service Lerner Index CMO = Competitive Market Output t = Fiscal Year

    As noted above, under the previously proposed formula, the Commission would have calculated the year-over-year percentage changes for both the Postal Service Lerner Index and Competitive Market Output components. Id. at 31; see section III.C.2.a, supra. In order to calculate an upcoming fiscal year's appropriate share percentage (AS t +1), the formula multiplied the sum of the percentage changes in the Postal Service Lerner Index and the Competitive Market Output from the previous fiscal year 44 (1 + %ΔLI t −1 + %ΔCMO t −1) by the current fiscal year's appropriate share (AS t). Order No. 4402 at 30. In addition, both components were given equal weight in the calculation in order to balance changes in the competitive market with changes in the Postal Service's market power. Id. at 29-30.

    44 As noted in Order No. 4402, the “1 +” is a necessary mathematical concept for any percentage change formula in order to incorporate the pre-existing value being changed. Id. at 30 n.54; see Jagdish Arya & Robin Lardner, Mathematical Analysis for Business and Economics 202-03 (2d ed. 1985).

    In order to calculate the appropriate share for the current fiscal year, the Commission needed to determine the beginning appropriate share percentage (AS) and the beginning fiscal year (t). The Commission proposed to begin the calculation in FY 2007, when the PAEA was enacted, and set the initial appropriate share value at 5.5 percent, which was the appropriate share initially set by the Commission. Id. at 32. Both beginning values were chosen to allow for incorporation of the changes in the competitive market in the years since the PAEA's enactment. Id. Using FY 2007 and the 5.5-percent appropriate share as the beginning point of the formula's calculation, the Commission used the cumulative formula results from FY 2008 through FY 2018 in order to reach FY 2019's proposed appropriate share (10.8 percent). Id. at 33.

    In Order No. 4402, the Commission proposed adjusting the appropriate share annually by using the formula to calculate the appropriate share for the upcoming fiscal year. Id. at 30. Due to the timing of when all necessary data were available, the Commission proposed that the appropriate share would be reported as part of the Commission's ACD issued each year in March and would take effect at the beginning of the following fiscal year on October 1. Id.

    b. Comments Concerning Beginning Appropriate Share, Beginning Fiscal Year, and the Weighting of Components

    In response to Order No. 4402, the Commission received comments from several parties concerning the beginning appropriate share, beginning fiscal year, and the weighting of the two components of the formula. As these comments relate directly to the modified formula as well as the previously proposed formula, the Commission discusses the comments received on those three topics in this section.

    i. Beginning Appropriate Share

    UPS contends that using 5.5 percent as the beginning appropriate share percentage is “irrational” because the initial 5.5 percent appropriate share was an “intentionally low” figure and was based on different analysis. UPS Comments at 36. UPS states that the initial 5.5 percent was set based on factors, such as small Postal Service market share and the risk of setting appropriate share too high, and was intended to provide flexibility to the Postal Service. Id. UPS maintains “[t]hese concerns have no bearing today.” Id.

    In the Order No. 4402, the Commission proposed that the appropriate share be modified to better reflect the modern competitive market that had exhibited changes since the Commission's last appropriate share review and the PAEA's enactment. Order No. 4402 at 12. UPS interprets this as Commission recognition that the 5.5-percent appropriate share level is “too low given current market conditions” and thus questions its use as the beginning value for the Commission's calculation of the appropriate share. UPS Comments at 37. UPS contends that if the Commission is increasing the appropriate share from 5.5 percent to better reflect current market conditions, the beginning value of the appropriate share calculation should not be 5.5 percent and instead should reflect current market conditions. Id. For these reasons, UPS recommends the Commission use the average revenue share of Postal Service competitive products over the last 3 fiscal years (26.6 percent) as the beginning value of the appropriate share (AS). Id. at 39-40.

    ii. Beginning Fiscal Year

    UPS and the Postal Service address the beginning fiscal year used in the proposed formula in their comments. In recommending the Commission use 26.6 percent as the beginning value of the appropriate share, UPS notes that percentage should be considered “in the Commission's formula for 2018 and onwards,” which implies that UPS is recommending the Commission change the beginning fiscal year (t) to FY 2018. Id. at 40.

    The Postal Service recommends that the Commission eliminate or reduce the appropriate share. Postal Service Comments at 3-8. However, if the Commission retains the formula, the Postal Service alternatively recommends that the Commission change the formula's beginning fiscal year (t)to FY 2017. Id. at 23-24. The Postal Service contends there is “no basis for applying the new formula beginning in FY 2007 and continuing forward on a cumulative basis.” Id. at 23.

    In Order No. 4402, the Commission stated that the formula's calculation, beginning in FY 2007, would be recursive in order to capture the cumulative effects of changes in prevailing competitive conditions in the market on the appropriate share. Order No. 4402 at 31-32. The Postal Service states that the current prevailing competitive conditions are already captured by the proposed formula's two components and do not need to be captured by beginning the formula's calculation in FY 2007. Postal Service Comments at 23-24. In addition, the Postal Service notes that the formula produces a hypothetical appropriate share for each fiscal year between FY 2007 and FY 2017, and that the use of those figures is “inappropriate” and “arbitrary” because the actual appropriate share for those same fiscal years are known.45 For these reasons, the Postal Service maintains that the beginning fiscal year (t)“should be FY 2017, the most recent year in which the appropriate share requirement was a fixed 5.5 percent,” or in the alternative, FY 2012, the most recent time the Commission reviewed the appropriate share. Postal Service Comments at 23.

    45Id. at 24. The “hypothetical” appropriate shares the Postal Service references can be found in Order No. 4402 at 33, Table IV-6, column “Appropriate Share for the Following Year (AS t +1).”

    iii. Weighting of the Components

    Related to the Commission's equal weighting of both components, Sidak asserts that the Commission's decision is an arbitrary one. Sidak Decl. at 39. He maintains the Commission provides no reasonable explanation for the equal weighting of the components. Id. Sidak contends that the Commission failed to evaluate whether the two components are endogenous, whether a correlation exists between the two components and attributable costs, or how the formula would evolve under alternative weights. Id. He suggests the Commission should have “conduct[ed] some research and analysis to find the correct ratio” of the two components. Id.

    c. Commission Analysis and Modified Formula

    After consideration of the comments received, the Commission elects to maintain Order No. 4402's approach to the beginning appropriate share, the beginning fiscal year, and the weighting of components. In this section, the Commission initially discusses the modified formula's configuration and then provides its analysis of the commenters' recommendations.

    Based on the proposed modifications to both components discussed in sections III.A.1 and III.A.2, supra, the Commission proposes to calculate the appropriate share using the following modified formula:

    AS t +1 = AS * (1 + %ΔCCM t −1) If t = 0 = FY 2007, AS = 5.5% Where: AS = Appropriate Share 46

    46 This figure continues to be expressed as a percentage and rounded to one decimal place for simplicity and consistency with the Commission's past practice of expressing an appropriate share using one decimal place.

    CCM = Competitive Contribution Margin CGD = Competitive Growth Differential t = Fiscal Year

    Procedurally, the Commission proposes that the appropriate share be adjusted annually through the same process as proposed in Order No. 4402. Under that process, the appropriate share would be adjusted annually by using the formula to calculate the minimum appropriate share for the upcoming fiscal year.47 The Commission also retains that the new appropriate share level for the upcoming fiscal year would be reported as part of the Commission's ACD.48

    47 In response to Order No. 4402, GCA requested the Commission confirm that, despite the use of its formula-based approach, the appropriate share continues to act as a minimum contribution level or floor, to be exceeded, if possible. GCA Comments at 1-2. As noted in Order No. 4402, “the Commission has and continues to view the appropriate share as a minimum requirement.” Order No. 4402 at 81; see id. at 6 (citing Order No. 26 at 72). The Commission continues to view the appropriate share as a minimum requirement. The minimum requirement nature of the appropriate share is embodied in the proposed rule itself, which states “. . . the appropriate share of institutional costs to be recovered from competitive products collectively, at a minimum, will be calculated using the following formula. . . .” See Order No. 4402, Attachment A at 1.

    48See Order No. 4402 at 30. It is important to note that, as recently as its FY 2017 ACD, the Commission has stated the appropriate share requirement of 39 U.S.C. 3633(a)(3) applies to the Postal Service annually. See FY 2017 ACD at 92-93. Thus, to comply with 39 U.S.C. 3633(a)(3), the Postal Service's competitive products must collectively cover the Commission-determined appropriate share of institutional costs as set forth in 39 CFR 3015.7(c) in each fiscal year. See id. Although the Postal Service may exceed this minimum contribution level, any contribution that exceeds the minimum level cannot be used as a form of “prepayment” for future fiscal years. See id.

    In order to calculate an upcoming fiscal year's appropriate share percentage (AS t +1), the modified formula multiplies the sum of the Competitive Growth Differential and the percentage change in the Competitive Contribution Margin, (1 + %ΔCCM t −1 + CGD t −1),49 by the current fiscal year's appropriate share (AS t). The modified formula continues to be recursive in nature in order to incorporate year-over-year changes in the competitive market. See Order No. 4402 at 31.

    49 See n.44, supra.

    Thus, as an example of how the modified formula functions, if the following conditions hold:

    • Current year appropriate share is 5.5 percent (AS t +1) • Competitive Contribution Margin grew by 6 percent in the prior year (%ΔCCM t−1) • Competitive Growth Differential 50 was 0.4 percent when:

    50 As discussed above, the Competitive Growth Differential is calculated as follows: Market Share USPS * (%ΔRevenues USPS −%ΔRevenues C&M). See section IV.2.c, supra.

    —Postal Service revenue grew 5 percent in the prior year (%ΔRevenue USPS) —Competitor revenue grew 3 percent in the prior year (%ΔRevenue C&M) —Postal Service market share was 20 percent (Share USPS)
    Then the appropriate share for the next year is calculated as follows: Appropriate Share = 0.055* (1 + 0.06 + (0.2 *(0.05 − 0.03))) = 0.059 or 5.9% Under this scenario, the next year's appropriate share would be 5.9 percent. As noted above, this result will be the starting point for calculating the appropriate share for the following year.

    Using 5.9 percent as the starting point for calculating the appropriate share for the following year (AS t=1), if the following conditions hold:

    • Competitive Contribution Margin declined by 1 percent in the prior year (%ΔCCM t−1) • Competitive Growth Differential was 2.2 percent, when: —Postal Service revenue grew 6 percent in the prior year (%ΔRevenue USPS) —Competitor revenue declined 4 percent in the prior year (%ΔRevenue C&M) —Postal Service market share was 22 percent (Share USPS) Then the appropriate share for the next year is calculated as follows: Appropriate Share = 0.059 * (1 − 0.01 + (0.22 * (0.06 − (−0.04)))) = 0.06 or 6.0% Under this scenario, the next year's appropriate share would be 6.0 percent and would become the starting point for calculating the appropriate share for the next year.

    As it relates to comments received concerning the beginning appropriate share and beginning fiscal year, the Commission finds that it is appropriate to use 5.5 percent as the beginning appropriate share and FY 2007 as the beginning fiscal year when calculating the modified formula. Those beginning values allow the resulting appropriate share to capture the impact of market fluctuations on the appropriate share over time and moving forward.

    The Commission's selection of 5.5 percent as the beginning appropriate share does not imply that the Commission believes the initial 5.5 percent set in Docket No. RM2007-1 was “too low” or “inadequate” as UPS suggests. See UPS Comments at 37. To the contrary, the initial 5.5 percent appropriate share was reasonably based on historical contribution. Order No. 4402 at 7. However, since the PAEA's enactment, the Postal Service, competitors, and market conditions have changed, and the goal of the formula-based approach is to better capture these changes both historically and moving forward. As a result, UPS's proposed use of Postal Service competitive products' revenue share would be inappropriate because it does not appropriately reflect market conditions in FY 2007 and subsequent years. In addition, the use of revenue share to begin the calculation of the formula is improper for the reasons discussed by the Commission in Order No. 4402 when it rejected using Postal Service competitive products' revenue share to set the appropriate share. See Order No. 4402 at 82. Postal Service competitive products' share of revenue is not reflective of market conditions, the elements of 39 U.S.C. 3633(b), and Commission precedent. Id. As discussed in Order No. 4402, competitive products' share of revenue is driven in large part by market dominant revenue, which has been declining due to a decline in demand for market dominant products. Id. As a result of declining market dominant demand and revenue, the competitive revenue share has increased and is likely to continue to increase. However, this increase in revenue share has little do with the criteria of 39 U.S.C. 3633(b) that drive the determination of the appropriate share. As a result, use of revenue share would be inappropriate because such use would allow the appropriate share to be substantially impacted by factors unrelated to the prevailing market conditions and other relevant circumstances required pursuant to 39 U.S.C. 3633(b).

    Additionally, it would be inappropriate to begin the formula's calculation in FYs 2012, 2017, or 2018, as the Postal Service and UPS respectively suggest. Calculating the appropriate share beginning in any fiscal year other than FY 2007 would result in the Commission disregarding the cumulative impact that changes in market have had on the initial 5.5 percent appropriate share in the years since the PAEA's enactment. The proposed formula's calculation incorporates the changes from those fiscal years, a necessary action to better capture the impact that changes in market conditions have had on the appropriate share.

    As noted above, the Postal Service makes two specific critiques regarding the use of FY 2007 as the beginning fiscal year. The Postal Service contends that the two components themselves reflect current prevailing competitive conditions, leaving no reason to begin the formula's calculation in FY 2007 in order to capture historical market changes. Although it is true both components capture changes in prevailing competitive conditions in the market,51 the beginning fiscal year serves a different purpose. The components, as applied through the formula, capture market changes, including prevailing competitive conditions, over a single fiscal year. However, they do not capture the prevailing competitive conditions in the market as they have evolved since the PAEA's enactment. As the Commission explained in Order No. 4402, it is appropriate to set FY 2007 as the beginning year for the formula because the prevailing competitive conditions in the market, as well as other relevant circumstances, have changed since FY 2007. Order No. 4402 at 32. By using FY 2007 as the beginning year, the proposed formula allows the appropriate share to reflect the cumulative effect of developments in competitive market conditions since the PAEA's enactment.

    51 The components, as applied through the formula, also capture other relevant circumstances. See section IV.B, infra.

    Additionally, the Postal Service maintains that it is inappropriate and arbitrary to assign “hypothetical” values that represent the appropriate share dating back to FY 2007 when the actual appropriate share for those fiscal years are known. Postal Service Comments at 24. The Commission acknowledges that the actual appropriate share 52 is known for prior fiscal years and clarifies that its approach does not purport to change the actual values for any prior fiscal year. However, as explained above, the Commission finds that the formula should ensure the appropriate share reflects the market conditions as they have evolved since the PAEA's enactment. As a result, it is neither inappropriate nor arbitrary for the Commission to use these values to determine the impact that market changes have had on the appropriate share. The formula's calculation is purposefully and appropriately cumulative in order to determine this impact.

    52 In using the term “actual appropriate share” the Commission is referring to the fact that, since its regulations in Docket No. RM2007-1 became final, as required by the PAEA, the appropriate share has remained at 5.5 percent. See supra at 4 n.4.

    As it relates to comments received concerning the weighting of the two components of the formula, the Commission finds that it is appropriate from both a legal and economic perspective to weight the components equally. First, from a legal perspective, the Commission's decision to weight both components equally is appropriate because it is based on the required consideration of the statutory criteria set forth in 39 U.S.C. 3633(b). The Commission notes that the modified components measure two discrete concepts. As described in sections IV.A.1 and IV.A.2, supra, the Competitive Contribution Margin measures the Postal Service's absolute market power; that is, its own ability to raise prices above costs, whereas the Competitive Growth Differential measures the Postal Service's market position relative to its competitors. These concepts measure different aspects of the competitive market, as the Competitive Contribution Margin considers the Postal Service's market power with respect to consumers and the Competitive Growth Differential measures the Postal Service's market position with respect to competitors. Both modified components play critical and equal roles in supporting the formula's ability to capture the criteria set forth in 39 U.S.C. 3633(b). For example—as it relates to capturing prevailing competitive conditions in the market—the Competitive Contribution Margin provides insight into potential Postal Service competitive advantage; the Competitive Growth Differential reflects any changes in Postal Service market share; and both are equally necessary in order to capture various changes to the market and competitors. See section IV.B.1, infra. Additionally, both modified components play a role in capturing each of the other relevant circumstances the Commission considers. See section IV.B.3, infra. Given that neither component is more significant than the other in capturing the criteria set forth in 39 U.S.C. 3633(b), the Commission finds it is appropriate to weight the components equally.

    Second, from an economic perspective, the Commission's decision to weight both components equally is appropriate. Although Sidak maintains that “from an economic perspective” the Commission failed to offer a reasonable explanation for the formula's configuration and suggests that weights be assigned at the component level, Sidak's criticism is problematic for two reasons. See Sidak Decl. at 39. First, the assignment of weights at the component level, without unique economic justification, is inconsistent with economic practice. Typically, weighting is applied in survey analyses to correct imperfections in surveys or in regression analyses to normalize errors.53 In those instances, a unique weight is applied to each variable, for each observation, using a function or a formula.54 Sidak seems to suggest weights be assigned as follows:

    53See Jeffrey M. Wooldridge, Introductory Econometrics: A Modern Approach 280-94 (5th ed. 2013) (Wooldridge); see also Sharon L. Lohr, Sampling: Design and Analysis 225-29 (1999).

    54 Wooldridge at 280-94.

    Weighted Competitive Contribution Margin = Weight * %ΔCCM Weighted Competitive Growth Differential = Weight * (Market Share USPS,t−1 * (%ΔRevenue USPS%ΔRevenue C&M)) However, statistically, a more accurate assignment of weights would be as follows: EP13AU18.039 The Commission finds that assigning unique weights to each variable in the context of the proposed formula would be inappropriate without an economic rationale for each weight (e.g., to correct imperfections (survey analysis) or to normalize errors (regression analysis)).55 Sidak does not propose an economic rationale for assigning any particular set of weights, and the Commission has not separately identified any. Without an economic rationale or justification, the application of unique weights to each variable would be artificial and thus inappropriate. Id.

    55Id. at 280-94.

    Second, it would be problematic to assign weights at the component level because both the Competitive Contribution Margin and the Competitive Growth Differential rely in part on a shared input, the Postal Service's competitive product revenue. See Order No. 4402 at 18-19, 23; see also sections IV.A.1.c and IV.A.2.c, supra. For this reason, the components are not independent and are considered economically related.56 Due to the relatedness of variables (i.e., (Revenue) from the Competitive Contribution Margin and (%ΔRevenue USPS) from the Competitive Growth Differential), if unique weights are assigned to the two components, the effect on those components and the formula's calculation would be disproportionate. To weight the components in a formula of this type would be inconsistent with statistical practice and would diminish the accuracy of the formula by changing how the components interact with each other.57

    56 Related terms are commonly used in econometric models. See Wooldridge at 198-200.

    57See id. at 280-94.

    Table IV-3 below illustrates the calculation using the Commission's revised proposed formula starting with an appropriate share of 5.5 percent in FY 2007.

    58 Source: Library Reference PRC-LR-RM2017-1/2.

    Table IV-3—Calculation of Appropriate Share, FY 2007-FY 2019 58 Fiscal year Appropriate
  • share for the
  • current year
  • (AS t)
  • (%)
  • Percentage
  • change in
  • Competitive
  • Contribution
  • Margin for
  • the prior year
  • (%ΔCCM t−1)
  • (%)
  • Competitive
  • Growth
  • Differential for the prior year
  • (CGD t −1)
  • (%)
  • Appropriate
  • share for the
  • following year
  • (AS t + 1)
  • (%)
  • FY 2007 5.5 N/A N/A 5.5 FY 2008 5.5 0.0 0.0 5.5 FY 2009 5.5 −5.9 0.7 5.2 FY 2010 5.2 13.4 1.2 6.0 FY 2011 6.0 15.7 0.9 7.0 FY 2012 7.0 −7.9 −0.2 6.4 FY 2013 6.4 3.7 2.7 6.8 FY 2014 6.8 5.5 2.5 7.3 FY 2015 7.3 0.4 1.2 7.4 FY 2016 7.4 −2.6 0.2 7.2 FY 2017 7.2 18.1 1.4 8.6 FY 2018 8.6 1.3 1.1 8.8

    The proposed revised formula and each resulting appropriate share percentage reflect trends in the market. For example, Table IV-3 shows that the appropriate share would have decreased from FY 2009 to FY 2010 under the proposed modified formula (comparing the second column with the last column of the FY 2009 row). This decrease would have occurred in response to a decline in the Postal Service's market power in FY 2008 (as measured by the Competitive Contribution Margin shown in the third column of the FY 2009 row) largely due to the global financial crisis. Although there was an increase in the Competitive Growth Differential in FY 2008 (as shown in the fourth column of the FY 2009 row), it would not have offset the decline in the Competitive Contribution Margin. The appropriate share would have also decreased from FY 2012 to FY 2013 (comparing the second column with the last column of the FY 2012 row), again in response to a decline in the Postal Service's market power (as measured by the Competitive Contribution Margin shown in the third column of the FY 2012 row). In this case, the decline was due to changes in the mail mix that caused competitive products' revenue to increase less than attributable costs. Beginning with FY 2014's appropriate share, the appropriate share would have steadily increased as the Postal Service expanded its market power and market position. As a result, the appropriate share for FY 2019 (as indicated in the bottom-right cell in Table IV-3) would be 8.8 percent under the Commission's modified formula.

    B. Analysis Pursuant to 39 U.S.C. 3633(b)

    As it did in Order No. 4402, in this section, the Commission explains how its modified formula captures the prevailing competitive conditions in the market and other relevant circumstances as required by 39 U.S.C. 3633(b). Additionally, the Commission addresses the remaining element of section 3633(b)—whether any costs are uniquely or disproportionately associated with Postal Service competitive products.

    1. Prevailing Competitive Conditions in the Market a. Order No. 4402

    In Order No. 4402, to assess the prevailing competitive conditions in the market, the Commission considered whether there was any evidence of Postal Service competitive advantage; whether there had been any changes in Postal Service market share; and whether there had been any changes in the package delivery market or to competitors since the Commission's last appropriate share review.59

    59 Order No. 4402 at 34-40. The Commission also mentioned a purely qualitative factor previously considered as a market condition—whether there was any evidence of antitrust actions filed against the Postal Service. Id. at 34 n.60. The Commission found that that factor could not be explicitly captured through the proposed quantitative formula. Id. However, the Commission did determine antitrust actions were implicitly captured by the previously proposed formula because changes in the Postal Service's market power could offer insight into whether the Postal Service was engaging in the kinds of anticompetitive behavior that would underlie an antitrust action. See id. Because the Competitive Contribution Margin continues to measure the Postal Service's market power, the Commission finds that the modified formula implicitly captures antitrust actions for the same reasons described in Order No. 4402.

    The Commission identified and discussed changes in market conditions that had occurred since its last appropriate share review and determined that its formula-based approach captured these considerations. Order No. 4402 at 34-40. For example, the Commission found that the Postal Service Lerner Index would reflect any Postal Service competitive advantage because the more market power the Postal Service possesses, the larger the Postal Service Lerner Index would be. Id. at 35. The Commission also determined that the formula would capture any evidence of predatory pricing because, should the Postal Service ever engage in predatory pricing, the Postal Service Lerner Index value would be negative. Id. at 36-37. In addition, the Commission found that the formula captured Postal Service and competitor market share by revenue mainly through the Competitive Market Output. Id. at 38-39. Finally, the Commission found that changes in the market including overall growth, entry and exit of firms, and innovation would be observed in both the Postal Service Lerner Index and Competitive Market Output. Id. at 39-40.

    b. Modified Formula's Compliance With Section 3633(b)

    Despite modifications to the previously proposed components, the modified formula captures the prevailing competitive conditions in the market. First, similar to the Postal Service Lerner Index, the Competitive Contribution Margin provides insight into whether the Postal Service possesses a competitive advantage.60 The higher the Competitive Contribution Margin, the more market power the Postal Service possesses. Any large increases in the Competitive Contribution Margin may indicate a competitive advantage under certain circumstances. Just as with the Postal Service Lerner Index, the Competitive Contribution Margin also indicates whether the Postal Service is engaging in predatory pricing because the resulting Competitive Contribution Margin would be negative. If the Postal Service were engaging in predatory pricing, its attributable costs would be greater than its revenue, and, as calculated in the Competitive Contribution Margin, the difference between them would be less than zero, resulting in a negative value. Figure IV-1 below displays the Competitive Contribution Margin from FY 2007 to FY 2017.

    60 As discussed in Order No. 4402, the Commission also uses its analysis required by section 703(d) to assess whether Postal Service competitive products have a competitive advantage. See Order No. 4402 at 35, 54-68. The Commission clarifies that a section 703(d) analysis is the primary way the Commission assesses whether Postal Service competitive products have a competitive advantage due to differences in the application of federal and state laws to the Postal Service compared to competitors. The Commission notes that it also uses other factors (e.g., large increases in market power or evidence of Postal Service predatory pricing) to assess whether the Postal Service has a competitive advantage.

    EP13AU18.040

    As shown in Figure IV-1, the Competitive Contribution Margin has never been negative. As a result, the Commission continues to find no evidence of Postal Service predatory pricing. The Commission maintains that the use of the Competitive Contribution Margin in its modified formula will provide an ongoing indication of whether the Postal Service is engaging in predatory pricing.

    61 Source: Library Reference PRC-LR-RM2017-1/2.

    Second, the change in the Postal Service's market share by revenue would be reflected in the Competitive Growth Differential even more so than the Competitive Market Output component of the previously proposed formula. Unlike the Competitive Market Output, which reflected market share in its composition, the Competitive Growth Differential directly incorporates Postal Service market share into the calculation of the appropriate share, as discussed in section IV.A.2.c, supra. If the Postal Service's market share were to grow from an increase in revenue, the Competitive Growth Differential would increase, thereby increasing the appropriate share if all other factors were to remain constant. If the Postal Service's market share were to decline from a decrease in revenue, the Competitive Growth Differential would decrease, thereby decreasing the appropriate share if all other factors were to remain constant. Additionally, similar to the Postal Service Lerner Index, any growth or decline in the Postal Service's market share caused by shifts in demand or pricing strategies would be reflected in the Competitive Contribution Margin because such shifts would affect the Postal Service's ability to price above costs and therefore its market power. See Order No. 4402 at 39.

    Finally, changes in the market and to competitors, such as overall market growth, firm entry or exit from the market and innovation, are reflected by both of the modified components. For example,62 if a firm enters the market and generates new business, competitor revenue relative to the Postal Service's revenue would increase, thereby decreasing the Competitive Growth Differential. Alternatively, if a firm enters the market and takes business from the Postal Service—whether through pricing or innovation—the Postal Service would have to price closer to marginal cost to remain competitive, thereby reducing the Competitive Contribution Margin. However, if a firm exits the market and the business it used to generate is lost, it could cause a decrease in competitor revenue and an increase the Postal Service's market share, thereby increasing the Competitive Growth Differential. These various examples illustrate the modified formula's ability to capture overall changes, including expansion or retraction in the competitive market.

    62 Each example assumes all other factors remain constant.

    2. Unique or Disproportionate Costs

    As previously noted, the second element of section 3633(b) is that the Commission must consider “the degree to which any costs are uniquely or disproportionately associated with any competitive products.” See 39 U.S.C. 3633(b); see section III.A, supra. The analysis of this second element differs from the other elements in section 3633(b) because the Commission's consideration of the second element is unrelated to the Commission's formula-based approach.

    For that reason, in Order No. 4402, the Commission's discussion of whether any costs are uniquely or disproportionately associated with any competitive product relied on its current costing methodologies. See Order No. 4402 at 43-45. The Commission's current costing methodology attributes all reliably identifiable, causally related costs that can be traced to individual products to those products and was recently upheld by the D.C. Circuit.63 The requirement that cost attribution must be based on reliably identified causal relationships comes from the PAEA. Order No. 4402 at 43 (citing 39 U.S.C. 3622(c)(2)). The Commission noted that “[b]y definition, costs identified as institutional are those that cannot be causally linked to any specific product” and found that there were no costs uniquely associated or disproportionately associated with any competitive products that were not already attributed to competitive products under the Commission's methodology. Id. at 43-44.

    63Id.; see generally UPS, 890 F.3d 1053.

    The Commission's discussion on whether any costs were uniquely associated or disproportionately associated with any competitive products elicited multiple comments.64 However, as this Revised Notice of Proposed Rulemaking is concentrated on modifications to its proposed formula-based approach, the Commission will address the comments related to “the degree to which any costs are uniquely or disproportionately associated with any competitive products” in a subsequent order.

    64See, e.g., Amazon Comments at 8-11; Postal Service Comments at 4-5, 13, 16, 26-28; Sidak Decl. at 53-55.

    3. Other Relevant Circumstances a. Order No. 4402

    In its assessment of other relevant circumstances in Order No. 4402, the Commission considered the effects of: (1) Products which have been transferred from the market dominant product list to the competitive product list since the Commission's last review of the appropriate share; (2) changes to the mail mix (i.e., the relative proportions of individual mail products' volumes within the overall postal system) since the last review of the appropriate share; (3) uncertainties in the marketplace; and (4) the risks associated with setting the appropriate share either too high or too low. Order No. 4402 at 45-53. The Commission identified and discussed changes in these relevant circumstances and determined that all were reflected in its proposed formula-based approach. Id.

    First, the Commission identified product transfers since its last review of the appropriate share and determined that they were reflected in the previously proposed formula because the transferred products' revenue was automatically included in the Postal Service's portion of the Competitive Market Output, and the transferred products' revenue-per-piece and unit volume-variable cost were incorporated into the composition of the Postal Service Lerner Index. Id. at 46.

    Second, the Commission noted that the Postal Service has experienced mail mix changes since the Commission's last review of the appropriate share, as market dominant volumes have continued to decline and competitive volumes have continued to increase. Id. at 46-49. The Commission determined that the formula's Competitive Market Output component incorporated changes in the Postal Service's mail mix by including revenue that the Postal Service received from any increase in competitive product volume. Id. at 48-49. Likewise, the Postal Service Lerner Index would reflect the growth or decline of competitive products with varying degrees of profitability. Id.

    Third, with regard to market uncertainties, the Commission explained that “shifts in market demand or macroeconomic conditions would be reflected in the appropriate share determination through changes in the Postal Service Lerner Index and Competitive Market Output.” Id. at 49. The Commission also noted that the last 5 years have been a time of significant innovation and development in the delivery industry, and that it is important for the Commission's proposed formula-based approach to be able to incorporate such changes. Id. For potential competitor innovation or changes in e-commerce, the Commission explained that both would be reflected in the Competitive Market Output because competitor revenue would change as their innovations succeeded or failed. Id. The Commission also noted it was possible for competitor innovation to affect the Postal Service Lerner Index should it cause the Postal Service to alter its pricing of competitive products. Id. at 49-50.

    Finally, the Commission has consistently recognized that there are risks inherent in setting the appropriate share either too high or too low. Id. at 50-51; see also Order No. 1449 at 12. If the appropriate share were set too high, the Postal Service would be forced to raise its prices to non-competitive levels. Order No. 4402 at 50. If the appropriate share were set too low, the Postal Service might be incentivized to discount its prices in order to gain market share. Id. at 50. The Commission found that its proposed formula should limit increases in the appropriate share to no higher than appropriate to account for the Postal Service's growth in market power and the growth of the market as a whole. Id. With regard to the risk of the appropriate share being set too low, the Commission noted that price discounting on the scale necessary to gain market share would come at the expense of the Postal Service's overall profitability. Id. at 50-51. The Commission therefore concluded that the Postal Service possesses little incentive to engage in such behavior. Id. at 51.

    b. Modified Formula's Compliance With Section 3633(b)

    Despite changes to the previously proposed components, with the Competitive Contribution Margin and the Competitive Growth Differential, the modified formula captures other relevant circumstances. First, the modified formula continues to capture changes caused by Postal Service product transfers to the competitive product list. When a product is transferred from the market dominant to the competitive product list, the modified formula continues to incorporate it directly through the Competitive Growth Differential because the modified component continues to include the transferred product's revenue as part of the Postal Service's revenue. The effect of product transfers would also be reflected in changes in Postal Service market share because market share is calculated using, in part, Postal Service revenue, which would include the revenue of any transferred product. In addition, the transferred product's attributable costs and revenue are incorporated into the Competitive Contribution Margin. Any change in the Competitive Contribution Margin resulting from a transfer reflects the Postal Service's market power in the expanded competitive market, as discussed above. See section IV.A.1.c, supra.

    Second, as it relates to changes in the mail mix, the Commission noted in Order No. 4402 that mail mix changes occur as demand for postal products shifts. Order No. 4402 at 46. Most recently, Postal Service market dominant product demand has decreased, while demand for its competitive products has increased. Id. at 46-48. The modified formula captures these mail mix changes as the Competitive Growth Differential reflects the revenue the Postal Service receives from any increase in competitive product volume. The Competitive Contribution Margin, similar to the Postal Service Lerner Index, would reflect the growth or decline of very profitable or less profitable competitive products. See id. at 48-49.

    Third, regarding market uncertainties, the modified formula captures changes in market demand or other macroeconomic conditions through changes in either of the modified components. For example, if demand in the market declines, because of a recession or other conditions, there may be downward pressure on prices in the market. This occurrence may cause the Postal Service to reduce its prices in order to preserve volume, reducing the Completive Contribution Margin. Other competitors may reduce prices as well, resulting in changes to the market overall; an occurrence that would be reflected in the Competitive Growth Differential.

    The Commission also finds that its modified formula should capture efforts to innovate or changes in e-commerce, accomplishing the same objective as the previously proposed formula. The Competitive Growth Differential captures these changes as they affect the Postal Service's position in the market. For example, if competitors in the aggregate were to successfully innovate and generate more revenue relative to the Postal Service, the Competitive Growth Differential would decrease if all other factors were to remain constant. If the Postal Service were to successfully innovate and generate more revenue relative to its competitors, the Competitive Growth Differential would increase if all other factors were to remain constant.

    Finally, in terms of the risk involved with setting the appropriate share too high, the Commission finds that this risk is addressed by the modified formula, just as it was by the previously proposed formula. The modified formula continues to limit increases in the appropriate share to no higher than appropriate to account for the Postal Service's growth in market power and for growth in the Postal Service's market position. In terms of the risks involved in setting the appropriate share too low and allowing the Postal Service to gain market share by discounting prices, the Commission continues to find that this risk is minimal. As noted in Order No. 4402, the Postal Service has little incentive to discount prices in order to gain market share because discounting prices to gain market share would decrease the Postal Service's profitability at a time when it continues to face financial challenges.65

    65See Order No. 4402 at 50-51. The modified formula continues to be calculated with a time lag that further discourages price discounting by the Postal Service because the negative consequences would appear before the benefits. See id. at 51.

    V. Section 703(d) of the PAEA

    As discussed in Order No. 4402,66 in order to determine whether Postal Service competitive products enjoyed advantages over private carriers, Congress directed the FTC to prepare a report identifying federal and state laws that apply differently to the Postal Service's competitive products than similar products offered by private competitors and to account for the net economic effect resulting from such differences.67 Additionally, section 703(d) directs the Commission, when revising regulations under 39 U.S.C. 3633, to consider subsequent events that may affect the continuing validity of the FTC's net economic effect finding.68

    66See id. at 54-58.

    67See PAEA, 120 Stat. 3244; see also S. Rep. No. 108-318 at 29 (2004); PAEA section 703(a) and (b). Section 703 was not codified and is reproduced in the notes of 39 U.S.C.A. 3633. See also FTC Report.

    68 PAEA section 703(d).

    Order No. 4402 presented the first proposed revision to a regulation issued under 39 U.S.C. 3633 since the PAEA's enactment. The Commission provided its analysis pursuant to section 703(d) in Order No. 4402. Order No. 4402 at 54-68. In that analysis, the Commission discussed the FTC Report and its findings, defined the scope of its review pursuant to section 703(d), and performed the required analysis based on the statute. Id. The comments received in response to Order No. 4402 have not identified any subsequent events pursuant to the Commission's interpretation of section 703(d) that were not addressed in Order No. 4402 or that have subsequently occurred.69 The Commission also has not identified any subsequent events that would affect its section 703(d) analysis in Order No. 4402. As such, the Commission affirms its finding in Order No. 4402 that the FTC's conclusion that the Postal Service operates at a net economic disadvantage continues to be valid.

    69 The Commission's discussion on the FTC Report and section 703 elicited multiple comments. See, e.g., UPS Comments at 22-26; Sidak Decl. at 6, 9-15, 52-53. However, as this Revised Notice of Proposed Rulemaking is concentrated on modifications to the proposed formula-based approach, the Commission will address the comments received on the FTC Report and section 703(d) in a subsequent order.

    VI. Administrative Actions

    Additional information concerning this rulemaking may be accessed via the Commission's website at http://www.prc.gov. Interested persons may submit comments on the modified formula-based approach and related revisions to proposed rules 70 no later than 30 days after the date of publication of this Revised Notice of Proposed Rulemaking in the Federal Register. Pursuant to 39 U.S.C. 505, Kenneth R. Moeller continues to be designated as an officer of the Commission (Public Representative) to represent the interests of the general public in this proceeding.

    70 The Commission makes one revision to proposed § 3015.7(c)(1). The Commission replaces the formula proposed in Order No. 4402 with the formula proposed in this Revised Notice of Proposed Rulemaking. The proposed rules are set forth below the signature of this Order.

    The Regulatory Flexibility Act requires federal agencies, in promulgating rules, to consider the impact of those rules on small entities. See 5 U.S.C. 601, et seq. (1980). If the proposed or final rules will not, if promulgated, have a significant economic impact on a substantial number of small entities, the head of the agency may certify that the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604 do not apply. See 5 U.S.C. 605(b). In the context of this rulemaking, the Commission's primary responsibility is in the regulatory oversight of the United States Postal Service. The rules that are the subject of this rulemaking have a regulatory impact on the Postal Service, but do not impose any regulatory obligation upon any other entity. Based on these findings, the Chairman of the Commission certifies that the rules that are the subject of this rulemaking will not have a significant economic impact on a substantial number of 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.

    VII. Ordering Paragraphs

    It is ordered:

    1. Interested persons may submit comments no later than 30 days from the date of the publication of this notice in the Federal Register.

    2. Pursuant to 39 U.S.C. 505, Kenneth R. Moeller continues to be appointed to serve as the Public Representative in this proceeding.

    3. The Secretary shall arrange for publication of this Order in the Federal Register.

    By the Commission.

    Stacy L. Ruble, Secretary.
    List of Subjects for 39 CFR Part 3015

    Administrative practice and procedure.

    For the reasons stated in the preamble, the Commission proposes to amend chapter III of title 39 of the Code of Federal Regulations as follows:

    PART 3015—REGULATION OF RATES FOR COMPETITIVE PRODUCTS 1. The authority citation for part 3015 continues to read as follows: Authority:

    39 U.S.C. 503; 3633.

    2. Amend § 3015.7 by revising paragraph (c) to read as follows:
    § 3015.7 Standard for compliance.

    (c)(1) Annually, on a fiscal year basis, the appropriate share of institutional costs to be recovered from competitive products collectively, at a minimum, will be calculated using the following formula:

    ASt+1 = ASt * (1 + %ΔCCMt−1 + CGDt−1) Where, AS = Appropriate Share, expressed as a percentage and rounded to one decimal place CCM = Competitive Contribution Margin CGD = Competitive Growth Differential t = Fiscal Year If t = 0 = FY 2007, AS = 5.5 percent

    (2) The Commission shall, as part of each Annual Compliance Determination, calculate and report competitive products' appropriate share for the upcoming fiscal year using the formula set forth in paragraph (c)(1) of this section.

    [FR Doc. 2018-17221 Filed 8-10-18; 8:45 am] BILLING CODE 7710-FW-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R01-OAR-2018-0138; FRL-9981-85-Region 1] Air Plan Approval; Maine; Infrastructure State Implementation Plan Requirements for the 2012 PM2.5 NAAQS AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is proposing to approve elements of a State Implementation Plan (SIP) submission from Maine that addresses the infrastructure requirements of the Clean Air Act (CAA or Act) for the 2012 fine particle (PM2.5) National Ambient Air Quality Standard (NAAQS). EPA is also proposing to conditionally approve one sub-element of Maine's infrastructure SIP. The infrastructure requirements are designed to ensure that the structural components of each state's air quality management program are adequate to meet the state's responsibilities with respect to this NAAQS under the CAA.

    DATES:

    Comments must be received on or before September 12, 2018.

    ADDRESSES:

    Submit your comments, identified by Docket ID No. EPA-R01-OAR-2018-0138 at https://www.regulations.gov, or via email to [email protected] For comments submitted at Regulations.gov, follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. For either manner of submission, the 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. The 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, please contact the person identified in the For Further Information Contact section. For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit www.epa.gov/dockets/commenting-epa-dockets. Publicly available docket materials are available at https://www.regulations.gov or at the U.S. Environmental Protection Agency, EPA New England Regional Office, Office of Ecosystem Protection, Air Quality Planning Unit, 5 Post Office Square—Suite 100, Boston, MA. EPA requests that if at all possible, you contact the contact listed in the FOR FURTHER INFORMATION CONTACT section to schedule your inspection. The Regional Office's official hours of business are Monday through Friday, 8:30 a.m. to 4:30 p.m., excluding legal holidays.

    FOR FURTHER INFORMATION CONTACT:

    Alison C. Simcox, Air Quality Planning Unit, Air Programs Branch, U.S. Environmental Protection Agency, Region 1, 5 Post Office Square, Suite 100 (Mail code OEP05-2), Boston, MA 02109—3912, tel. (617) 918-1684; [email protected]

    SUPPLEMENTARY INFORMATION:

    Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

    Table of Contents I. Background and Purpose A. What Maine SIP submission does this rulemaking address? B. What is the scope of this rulemaking? II. What guidance is EPA using to evaluate this SIP submission? III. EPA's Review A. Section 110(a)(2)(A)—Emission Limits and Other Control Measures B. Section 110(a)(2)(B)—Ambient Air Quality Monitoring/Data System C. Section 110(a)(2)(C)—Program for Enforcement of Control Measures and for Construction or Modification of Stationary Sources D. Section 110(a)(2)(D)—Interstate Transport E. Section 110(a)(2)(E)—Adequate Resources F. Section 110(a)(2)(F)—Stationary Source Monitoring System G. Section 110(a)(2)(G)—Emergency Powers H. Section 110(a)(2)(H)—Future SIP Revisions I. Section 110(a)(2)(I)—Nonattainment Area Plan or Plan Revisions Under Part D J. Section 110(a)(2)(J)—Consultation With Government Officials; Public Notifications; Prevention of Significant Deterioration; Visibility Protection K. Section 110(a)(2)(K)—Air Quality Modeling/Data L. Section 110(a)(2)(L)—Permitting Fees M. Section 110(a)(2)(M)—Consultation/Participation by Affected Local Entities IV. Proposed Action V. Statutory and Executive Order Reviews I. Background and Purpose A. What Maine SIP submission does this rulemaking address?

    This rulemaking addresses a July 6, 2016 submission from the Maine Department of Environmental Protection (Maine DEP) regarding the infrastructure SIP requirements of the CAA for the 2012 fine particle (PM2.5 1 ) National Ambient Air Quality Standard (NAAQS). The primary, health-based annual standard is set at 12.0 micrograms per cubic meter (µg/m3) and the 24-hour standard is set at 35 µg/m3. See 78 FR 3086. Under sections 110(a)(1) and (2) of the CAA, states are required to provide infrastructure SIP submissions to ensure that state SIPs provide for implementation, maintenance, and enforcement of the NAAQS, including the 2012 PM2.5 NAAQS. On March 1, 2018, Maine DEP submitted a letter providing clarifying information for several of its infrastructure SIP submittals. In a July 17, 2018 email, Maine DEP asked EPA to apply this letter to the infrastructure SIP submittal for the 2012 PM2.5 NAAQS, as well. The information in the letter and email (both included in the docket for this rulemaking) is mainly applicable to Elements E, F, G, and K.

    1 PM2.5 refers to particulate matter of 2.5 microns or less in diameter, often referred to as “fine” particles.

    B. What is the scope of this rulemaking?

    EPA is acting on a SIP submission from Maine DEP that addresses the infrastructure requirements of CAA sections 110(a)(1) and 110(a)(2) for the 2012 PM2.5 NAAQS.

    The requirement for states to make a SIP submission of this type arises out of CAA sections 110(a)(1) and 110(a)(2). Pursuant to these sections, each state must submit a SIP that provides for the implementation, maintenance, and enforcement of each primary or secondary NAAQS. States must make such SIP submission “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a new or revised NAAQS.” This requirement is triggered by the promulgation of a new or revised NAAQS and is not conditioned upon EPA's taking any other action. Section 110(a)(2) includes the specific elements that “each such plan” must address.

    EPA commonly refers to such SIP submissions made for the purpose of satisfying the requirements of CAA sections 110(a)(1) and 110(a)(2) as “infrastructure SIP” submissions. Although the term “infrastructure SIP” does not appear in the CAA, EPA uses the term to distinguish this particular type of SIP submission from submissions that are intended to satisfy other SIP requirements under the CAA, such as “nonattainment SIP” or “attainment plan SIP” submissions to address the nonattainment planning requirements of part D of title I of the CAA.

    This rulemaking will not cover three substantive areas that are not integral to acting on a state's infrastructure SIP submission: (i) Existing provisions related to excess emissions during periods of start-up, shutdown, or malfunction at sources (“SSM” emissions) that may be contrary to the CAA and EPA's policies addressing such excess emissions; (ii) existing provisions related to “director's variance” or “director's discretion” that purport to permit revisions to SIP-approved emissions limits with limited public process or without requiring further approval by EPA, that may be contrary to the CAA (“director's discretion”); and, (iii) existing provisions for Prevention of Significant Deterioration (PSD) programs that may be inconsistent with current requirements of EPA's “Final New Source Review (NSR) Improvement Rule,” 67 FR 80186 (December 31, 2002), as amended by 72 FR 32526 (June 13, 2007) (“NSR Reform”). Instead, EPA has the authority to address each one of these substantive areas separately. A detailed history, interpretation, and rationale for EPA's approach to infrastructure SIP requirements can be found in EPA's May 13, 2014, proposed rule entitled, “Infrastructure SIP Requirements for the 2008 Lead NAAQS” in the section, “What is the scope of this rulemaking?” See 79 FR 27241 at 27242-45.

    II. What guidance is EPA using to evaluate this SIP submission?

    EPA highlighted the statutory requirement to submit infrastructure SIPs within 3 years of promulgation of a new NAAQS in an October 2, 2007, guidance document entitled “Guidance on SIP Elements Required Under Sections 110(a)(1) and (2) for the 1997 8-hour Ozone and PM2.5 National Ambient Air Quality Standards” (2007 guidance). EPA has issued additional guidance documents and memoranda, including a September 13, 2013, memorandum entitled “Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and 110(a)(2)” (2013 memorandum).2

    2 This memorandum and other referenced guidance documents and memoranda are included in the docket for this action.

    With respect to the “Good Neighbor” or interstate transport requirements for infrastructure SIPs, the most recent relevant EPA guidance is a memorandum published on March 17, 2016, entitled “Information on the Interstate Transport “Good Neighbor” Provision for the 2012 Fine Particulate Matter National Ambient Air Quality Standards under Clean Air Act Section 110(a)(2)(D)(i)(I)” (2016 memorandum). The 2016 memorandum describes EPA's past approach to addressing interstate transport, and provides EPA's general review of relevant modeling data and air quality projections as they relate to the 2012 annual PM2.5 NAAQS. The 2016 memorandum provides information relevant to EPA Regional office review of the CAA section 110(a)(2)(D)(i)(I) “Good Neighbor” provision requirements in infrastructure SIPs with respect to the 2012 annual PM2.5 NAAQS. This rulemaking considers information provided in that memorandum.

    III. EPA's review

    EPA is soliciting comment on our evaluation of Maine's infrastructure SIP submission in this notice of proposed rulemaking. In Maine's submission, a detailed list of Maine Laws and previously SIP-approved Air Quality Regulations show precisely how the various components of its EPA-approved SIP meet each of the requirements of section 110(a)(2) of the CAA for the 2012 PM2.5 NAAQS. The following review evaluates the state's submissions in light of section 110(a)(2) requirements and relevant EPA guidance.

    A. Section 110(a)(2)(A)—Emission Limits and Other Control Measures

    This section (also referred to in this action as an element) of the Act requires SIPs to include enforceable emission limits and other control measures, means or techniques, schedules for compliance, and other related matters. However, EPA has long interpreted emission limits and control measures for attaining the standards as being due when nonattainment planning requirements are due.3 In the context of an infrastructure SIP, EPA is not evaluating the existing SIP provisions for this purpose. Instead, EPA is only evaluating whether the state's SIP has basic structural provisions for the implementation of the NAAQS.

    3See, e.g., EPA's final rule on “National Ambient Air Quality Standards for Lead.” 73 FR 66964, 67034 (November 12, 2008).

    Maine's infrastructure submittal for this element cites Maine laws and regulations that include enforceable emission limitations and other control measures, means or techniques, as well as schedules and timetables for compliance to meet the applicable requirements of the CAA. Maine DEP statutory authority with respect to air quality is set out in Title 38 of the Maine Revised Statutes Annotated (“MRSA”), Chapter 4, “Protection and Improvement of Air.” Maine DEP's general authority to promulgate regulations is codified at 38 MRSA Chapter 2, Subchapter 1, “Organization and Powers,” 4 and the authority to establish emission standards and regulations implementing ambient air quality standards is contained in 38 MRSA Chapter 4, sections 585 and 585-A.

    4 Maine DEP consists of the Board of Environmental Protection (“Board”) and a Commissioner. 38 MRSA § 341-A(2). In general, the Board is authorized to promulgate “major substantive rules” and the Commissioner has rulemaking authority with respect to rules that are “not designated as major substantive rules.” Id. § 341-H.

    The Maine submittal cites two dozen specific rules that the state has adopted to control the emissions of criteria pollutants and precursors, including PM2.5. A few of these rules, with their EPA-approval citation, are listed here: 06-096 Code of Maine Regulations (“CMR”) Chapter 102, “Open Burning” (73 FR 9459, February 21, 2008); Chapter 103, “Fuel Burning Equipment Particulate Emission Standard” (50 FR 7770, February 26, 1985); Chapter 104, “Incinerator Particulate Emission Standard” (37 FR 10842, May 31, 1972); and Chapter 150, “Control of Emissions from Outdoor Wood Boilers” (April 24, 2012). The Maine regulations listed above were previously approved into the Maine SIP by EPA. See 40 CFR 52.1020.

    EPA proposes that Maine meets the infrastructure SIP requirements of section 110(a)(2)(A) with respect to the 2012 PM2.5 NAAQS. As previously noted, EPA is not proposing to approve or disapprove any existing state provisions or rules related to SSM or director's discretion in the context of section 110(a)(2)(A).

    B. Section 110(a)(2)(B)—Ambient Air Quality Monitoring/Data System

    This section requires SIPs to provide for establishment and operation of appropriate devices, methods, systems, and procedures necessary to monitor, compile, and analyze ambient air quality data, and make such data available to EPA upon request. Each year, states submit annual air monitoring network plans to EPA for review and approval. EPA's review of these annual monitoring plans includes our evaluation of whether the state: (i) Monitors air quality at appropriate locations throughout the state using EPA-approved Federal Reference Methods or Federal Equivalent Method monitors; (ii) submits data to EPA's Air Quality System (AQS) in a timely manner; and (iii) provides EPA Regional Offices with prior notification of any planned changes to monitoring sites or the network plan.

    Pursuant to authority granted to it by 38 MRSA §§ 341-A(1) and 584-A, Maine DEP operates an air quality monitoring network, and EPA approved the state's most recent Annual Air Monitoring Network Plan for PM2.5 on August 23, 2017.5 Furthermore, Maine DEP populates AQS with air quality monitoring data in a timely manner, and provides EPA with prior notification when considering a change to its monitoring network or plan. EPA proposes that Maine DEP meets the infrastructure SIP requirements of section 110(a)(2)(B) with respect to the 2012 PM2.5 NAAQS.

    5See EPA approval letter located in the docket for this action.

    C. Section 110(a)(2)(C)—Program for Enforcement of Control Measures and for Construction or Modification of Stationary Sources

    States are required to include a program providing for enforcement of all SIP measures and the regulation of construction of new or modified stationary sources to meet NSR requirements under PSD and nonattainment new source review (NNSR) programs. Part C of the CAA (sections 160-169B) addresses PSD, while part D of the CAA (sections 171-193) addresses NNSR requirements.

    The evaluation of each state's submission addressing the infrastructure SIP requirements of section 110(a)(2)(C) covers the following: (i) Enforcement of SIP measures; (ii) PSD program for major sources and major modifications; and (iii) a permit program for minor sources and minor modifications.

    Sub-Element 1: Enforcement of SIP Measures

    Maine DEP identifies the sources of its authority to enforce the measures it cites to satisfy Element A (Emission limits and other control measures) as 38 MRSA Section 347-A, “Violations,” 38 MRSA Section 347-C, “Right of inspection and entry,” 38 MRSA Section 348, “Judicial Enforcement,” 38 MRSA Section 349, “Penalties,” and 06-096 CMR Chapter 115, “Major and Minor Source Air Emission License Regulations,” which include processes for both civil and criminal enforcement actions. Construction of new or modified stationary sources in Maine is regulated by 06-096 CMR Chapter 115, “Major and Minor Source Air Emission License Regulations,” which requires best available control technology (BACT) controls for PSD sources, including for PM2.5. EPA proposes that Maine has met the enforcement requirement of section 110(a)(2)(C) with respect to the 2012 PM2.5 NAAQS.

    Sub-Element 2: PSD Program for Major Sources and Major Modifications.

    Prevention of significant deterioration (PSD) applies to new major sources or modifications made to major sources for pollutants where the area in which the source is located is in attainment of, or unclassifiable with regard to, the relevant NAAQS. Maine DEP's EPA-approved PSD rules, contained at 06-096 CMR Chapter 115, “Major and Minor Source Air Emission License Regulations,” contain provisions that address applicable requirements for all regulated NSR pollutants, including Greenhouse Gases (GHGs).

    EPA's “Final Rule to Implement the 8-Hour Ozone National Ambient Air Quality Standard—Phase 2; Final Rule to Implement Certain Aspects of the 1990 Amendments Relating to New Source Review and Prevention of Significant Deterioration as They Apply in Carbon Monoxide, Particulate Matter, and Ozone NAAQS; Final Rule for Reformulated Gasoline” (Phase 2 Rule) was published on November 29, 2005 (70 FR 71612). Among other requirements, the Phase 2 Rule obligated states to revise their PSD programs to explicitly identify NOX as a precursor to ozone. See 70 FR 71679. This requirement is codified in 40 CFR 51.166, and requires that states submit SIP revisions incorporating the requirements of the rule, including provisions that would treat NOX as a precursor to ozone provisions. These SIP revisions were to have been submitted to EPA by states by June 15, 2007. See 70 FR 71683.

    Maine has adopted, and EPA has approved, rules addressing the changes to 40 CFR 51.166 required by the Phase 2 Rule, including amending its SIP to include NOX and VOC as precursor pollutants to ozone, in order to define what constitutes a “significant” increase in actual emissions from a source of air contaminants. See 81 FR 50353 (August 1, 2016). Therefore, EPA proposes to approve Maine's infrastructure SIP submission for the 2012 PM2.5 NAAQS with respect to the requirements of the Phase 2 Rule and the PSD sub-element of section 110(a)(2)(C).

    On May 16, 2008 (73 FR 28321), EPA issued the Final Rule on the “Implementation of the New Source Review (NSR) Program for Particulate Matter Less than 2.5 Micrometers (PM2.5)” (2008 NSR Rule). The 2008 NSR Rule finalized several new requirements for SIPs to address sources that emit direct PM2.5 and other pollutants that contribute to secondary PM2.5 formation. One of these requirements is for NSR permits to address pollutants responsible for the secondary formation of PM2.5, otherwise known as precursors. In the 2008 rule, EPA identified precursors to PM2.5 for the PSD program to be SO2 and NOX (unless the state demonstrates to the Administrator's satisfaction or EPA demonstrates that NOX emissions in an area are not a significant contributor to that area's ambient PM2.5 concentrations). The 2008 NSR Rule also specifies that VOCs are not considered to be precursors to PM2.5 in the PSD program unless the state demonstrates to the Administrator's satisfaction or EPA demonstrates that emissions of VOCs in an area are significant contributors to that area's ambient PM2.5 concentrations.

    The explicit references to SO2, NOX, and VOCs as they pertain to secondary PM2.5 formation are codified at 40 CFR 51.166(b)(49)(i)(b) and 40 CFR 52.21(b)(50)(i)(b). As part of identifying pollutants that are precursors to PM2.5, the 2008 NSR Rule also required states to revise the definition of “significant” as it relates to a net emissions increase or the potential of a source to emit pollutants. Specifically, 40 CFR 51.166(b)(23)(i) and 40 CFR 52.21(b)(23)(i) define “significant” for PM2.5 to mean the following emissions rates: 10 tons per year (tpy) of direct PM2.5; 40 tpy of SO2; and 40 tpy of NOX (unless the state demonstrates to the Administrator's satisfaction or EPA demonstrates that NOX emissions in an area are not a significant contributor to that area's ambient PM2.5 concentrations). The deadline for states to submit SIP revisions to their PSD programs incorporating these changes was May 16, 2011. See 73 FR 28321 at 28341.6

    6 EPA notes that on January 4, 2013, the U.S. Court of Appeals for the D.C. Circuit, in Natural Resources Defense Council v. EPA, 706 F.3d 428 (DC Cir.), held that EPA should have issued the 2008 NSR Rule in accordance with the CAA's requirements for PM10 nonattainment areas (Title I, part D, subpart 4), and not the general requirements for nonattainment areas under subpart 1 (Natural Resources Defense Council v. EPA, No. 08-1250). As the subpart 4 provisions apply only to nonattainment areas, EPA does not consider the portions of the 2008 rule that address requirements for PM2.5 attainment and unclassifiable areas to be affected by the court's opinion. Moreover, EPA does not anticipate the need to revise any PSD requirements promulgated by the 2008 NSR rule in order to comply with the court's decision. Accordingly, EPA's approval of Maine's infrastructure SIP as to Elements C, D(i)(II), or J with respect to the PSD requirements promulgated by the 2008 implementation rule does not conflict with the court's opinion.

    The Court's decision with respect to the nonattainment NSR requirements promulgated by the 2008 implementation rule also does not affect EPA's action on the present infrastructure action. EPA interprets the CAA to exclude nonattainment area requirements, including requirements associated with a nonattainment NSR program, from infrastructure SIP submissions due three years after adoption or revisitation of a NAAQS. Instead, these elements are typically referred to as nonattainment SIP or attainment plan elements, which would be due by the dates statutorily prescribed under subpart 2 through 5 under part D, extending as far as 10 years following designations for some elements.

    On August 1, 2016 (81 FR 50353), EPA approved revisions to Maine's PSD program that identify SO2 and NOX as precursors to PM2.5 and revise the state's regulatory definition of “significant” for PM2.5 to mean 10 tons per year (tpy) or more of direct PM2.5 emissions, 40 tpy or more of SO2 emissions, or 40 tpy or more of NOX emissions.

    The 2008 NSR Rule did not require states to immediately account for gases that could condense to form particulate matter, known as condensables, in PM2.5 and PM10 emission limits in NSR permits. Instead, EPA determined that states had to account for PM2.5 and PM10 condensables for applicability determinations and in establishing emissions limitations for PM2.5 and PM10 in PSD permits beginning on or after January 1, 2011. See 73 FR 28321 at 28334. This requirement is codified in 40 CFR 51.166(b)(49)(i)(a) and 40 CFR 52.21(b)(50)(i)(a).

    Maine's SIP-approved PSD program defines PM2.5 and PM10 emissions in such a manner that gaseous emissions which would condense under ambient conditions are treated in an equivalent manner as required by EPA's definition of “regulated air pollutant” in 40 CFR 51.166(b)(49)(i)(a). EPA approved these definitions into the SIP on August 1, 2016 (81 FR 50353). Consequently, we propose that the state's PSD program adequately accounts for the condensable fraction of PM2.5 and PM10.

    Therefore, we propose to approve Maine's infrastructure SIP submittal for the 2012 PM2.5 NAAQS with respect to the requirements of the 2008 NSR Rule and the PSD sub-element of section 110(a)(2)(C).

    On October 20, 2010 (75 FR 64864), EPA issued the final rule on the “Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM2.5)—Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC)” (2010 NSR Rule). This rule established several components for making PSD permitting determinations for PM2.5, including a system of “increments,” which is the mechanism used to estimate significant deterioration of ambient air quality for a pollutant. These increments are codified in 40 CFR 51.166(c) and 40 CFR 52.21(c). On June 24, 2014 (79 FR 35695), EPA approved PM2.5 increments in 06-096 CMR Chapter 110 of Maine's regulations.

    The 2010 NSR Rule also established a new “major source baseline date” for PM2.5 as October 20, 2010, and a new trigger date for PM2.5 of October 20, 2011 in the definition of “minor source baseline date.” These revisions are codified in 40 CFR 51.166(b)(14)(i)(c) and (b)(14)(ii)(c), and 40 CFR 52.21(b)(14)(i)(c) and (b)(14)(ii)(c). Lastly, the 2010 NSR Rule revised the definition of “baseline area” to include a level of significance (SIL) of 0.3 micrograms per cubic meter (µg/m3), annual average, for PM2.5. This change is codified in 40 CFR 51.166(b)(15)(i) and 40 CFR 52.21(b)(15)(i). On August 1, 2016 (81 FR 50353), EPA approved revisions to the Maine SIP that address EPA's 2010 NSR rule. Therefore, with respect to the 2010 NSR Rule and the PSD sub-element of section 110(a)(2)(C), we are proposing to approve Maine's infrastructure SIP submittal for the 2012 PM2.5 NAAQS.

    With respect to Elements C and J, EPA interprets the Clean Air Act to require each state to make an infrastructure SIP submission for a new or revised NAAQS that demonstrates that the air agency has a complete PSD permitting program meeting the current requirements for all regulated NSR pollutants. The requirements of Element D(i)(II) may also be satisfied by demonstrating the air agency has a complete PSD permitting program correctly addressing all regulated NSR pollutants. Maine has shown that it currently has a PSD program in place that covers all regulated NSR pollutants, including GHGs.

    On June 23, 2014, the United States Supreme Court issued a decision addressing the application of PSD permitting requirements to GHG emissions. Utility Air Regulatory Group v. Environmental Protection Agency, 134 S.Ct. 2427. The Supreme Court said that EPA may not treat GHGs as an air pollutant for purposes of determining whether a source is a major source required to obtain a PSD permit. The Court also said that EPA could continue to require that PSD permits, otherwise required based on emissions of pollutants other than GHGs, contain limitations on GHG emissions based on the application of BACT.

    In accordance with the Supreme Court decision, on April 10, 2015, the U.S. Court of Appeals for the District of Columbia Circuit (the D.C. Circuit) issued an amended judgment vacating the regulations that implemented Step 2 of the EPA's PSD and Title V Greenhouse Gas Tailoring Rule, but not the regulations that implement Step 1 of that rule. Step 1 of the Tailoring Rule covers sources that are required to obtain a PSD permit based on emissions of pollutants other than GHGs. Step 2 applied to sources that emitted only GHGs above the thresholds triggering the requirement to obtain a PSD permit. The amended judgment preserves, without the need for additional rulemaking by EPA, the application of the Best Available Control Technology (BACT) requirement to GHG emissions from Step 1 or “anyway” sources. With respect to Step 2 sources, the D.C. Circuit's amended judgment vacated the regulations at issue in the litigation, including 40 CFR 51.166(b)(48)(v), “to the extent they require a stationary source to obtain a PSD permit if greenhouse gases are the only pollutant (i) that the source emits or has the potential to emit above the applicable major source thresholds, or (ii) for which there is a significant emission increase from a modification.”

    On August 19, 2015, EPA amended its PSD and title V regulations to remove from the Code of Federal Regulations portions of those regulations that the D.C. Circuit specifically identified as vacated. EPA intends to further revise the PSD and title V regulations to fully implement the Supreme Court and D.C. Circuit rulings in a separate rulemaking. This future rulemaking will include revisions to additional definitions in the PSD regulations.

    Some states have begun to revise their existing SIP-approved PSD programs in light of these court decisions, and some states may prefer not to initiate this process until they have more information about the additional planned revisions to EPA's PSD regulations. EPA is not expecting states to have revised their PSD programs in anticipation of EPA's additional actions to revise its PSD program rules in response to the court decisions for purposes of infrastructure SIP submissions. Instead, EPA is only evaluating such submissions to assure that the state's program addresses GHGs consistent with both the court decision, and the revisions to PSD regulations that EPA has completed at this time.

    On October 5, 2012 (77 FR 49404), EPA approved revisions to the Maine SIP that modified Maine's PSD program to establish appropriate emission thresholds for determining which new stationary sources and modification projects become subject to Maine's PSD permitting requirements for their GHG emissions. Therefore, EPA has determined that Maine's SIP is sufficient to satisfy Elements C, D(i)(II), and J with respect to GHGs. The Supreme Court decision and subsequent D.C. Circuit judgment do not prevent EPA's approval of Maine's infrastructure SIP as to the requirements of Element C, as well as sub-elements D(i)(II), and J(iii).

    For the purposes of this rulemaking on Maine's infrastructure SIP, EPA reiterates that NSR Reform is not in the scope of these actions.

    In summary, we are proposing to approve Maine's submittal for this sub-element with respect to the 2012 PM2.5 NAAQS.

    Sub-Element 3: Preconstruction Permitting for Minor Sources and Minor Modifications

    To address the pre-construction regulation of the modification and construction of minor stationary sources and minor modifications of major stationary sources, an infrastructure SIP submission should identify the existing EPA-approved SIP provisions and/or include new provisions that govern the minor source pre-construction program that regulate emissions of the relevant NAAQS pollutants. EPA last approved revisions to Maine's minor NSR program on August 1, 2016 (81 FR 50353). Maine and EPA rely on the existing minor NSR program in 06-096 CMR Chapter 115 to ensure that new and modified sources not captured by the major NSR permitting programs do not interfere with attainment and maintenance of the 2012 PM2.5 NAAQS.

    We are proposing to find that Maine has met the requirement to have a SIP-approved minor new source review permit program as required under Section 110(a)(2)(C) for the 2012 PM2.5 NAAQS.

    D. Section 110(a)(2)(D)—Interstate Transport.

    This section contains a comprehensive set of air quality management elements pertaining to the transport of air pollution with which states must comply. It covers the following five topics, categorized as sub-elements: Sub-element 1, Significant contribution to nonattainment, and interference with maintenance of a NAAQS; Sub-element 2, PSD; Sub-element 3, Visibility protection; Sub-element 4, Interstate pollution abatement; and Sub-element 5, International pollution abatement. Sub-elements 1 through 3 above are found under section 110(a)(2)(D)(i) of the Act, and these items are further categorized into the four prongs discussed below, two of which are found within sub-element 1. Sub-elements 4 and 5 are found under section 110(a)(2)(D)(ii) of the Act and include provisions insuring compliance with sections 115 and 126 of the Act relating to interstate and international pollution abatement.

    Sub-Element 1: Section 110(a)(2)(D)(i)(I)—Contribute to Nonattainment (Prong 1) and Interfere With Maintenance of the NAAQS (Prong 2)

    Section 110(a)(2)(D)(i)(I) of the CAA requires a SIP to prohibit any emissions activity in the state that will contribute significantly to nonattainment or interfere with maintenance of the NAAQS in any downwind state. EPA commonly refers to these requirements as prong 1 (significant contribution to nonattainment) and prong 2 (interference with maintenance), or jointly as the “Good Neighbor” or “transport” provisions of the CAA. This rulemaking proposes action on the portions of Maine's July 6, 2016, SIP submission that address the prong 1 and 2 requirements with respect to the 2012 PM2.5 NAAQS.

    EPA has developed a consistent framework for addressing the prong 1 and 2 interstate-transport requirements with respect to the PM2.5 NAAQS in several previous federal rulemakings. The four basic steps of that framework include: (1) Identifying downwind receptors that are expected to have problems attaining or maintaining the NAAQS; (2) identifying which upwind states contribute to these identified problems in amounts sufficient to warrant further review and analysis; (3) for states identified as contributing to downwind air quality problems, identifying upwind emissions reductions necessary to prevent an upwind state from significantly contributing to nonattainment or interfering with maintenance of the NAAQS downwind; and (4) for states that are found to have emissions that significantly contribute to nonattainment or interfere with maintenance of the NAAQS downwind, reducing the identified upwind emissions through adoption of permanent and enforceable measures. This framework was most recently applied with respect to PM2.5 in the Cross-State Air Pollution Rule (CSAPR), which addressed both the 1997 and 2006 PM2.5 standards, as well as the 1997 ozone standard. See 76 FR 48208 (August 8, 2011).

    EPA's analysis for CSAPR, conducted consistent with the four-step framework, included air-quality modeling that evaluated the impacts of 38 eastern states on identified receptors in the eastern United States. EPA indicated that, for step 2 of the framework, states with impacts on downwind receptors that are below the contribution threshold of 1% of the relevant NAAQS would not be considered to significantly contribute to nonattainment or interfere with maintenance of the relevant NAAQS, and would, therefore, not be included in CSAPR. See 76 FR 48220. EPA further indicated that such states could rely on EPA's analysis for CSAPR as technical support in order to demonstrate that their existing or future interstate transport SIP submittals are adequate to address the transport requirements of 110(a)(2)(D)(i)(I) with regard to the relevant NAAQS. Id.

    In addition, as noted above, on March 17, 2016, EPA released the 2016 memorandum to provide information to states as they develop SIPs addressing the Good Neighbor provision as it pertains to the 2012 PM2.5 NAAQS. Consistent with step 1 of the framework, the 2016 memorandum provides projected future-year annual PM2.5 design values for monitors throughout the country based on quality-assured and certified ambient-monitoring data and recent air-quality modeling and explains the methodology used to develop these projected design values. The memorandum also describes how the projected values can be used to help determine which monitors should be further evaluated to potentially address if emissions from other states significantly contribute to nonattainment or interfere with maintenance of the 2012 PM2.5 NAAQS at these monitoring sites. The 2016 memorandum explained that the pertinent year for evaluating air quality for purposes of addressing interstate transport for the 2012 PM2.5 NAAQS is 2021, the attainment deadline for 2012 PM2.5 NAAQS nonattainment areas classified as Moderate. Accordingly, because the available data included 2017 and 2025 projected average and maximum PM2.5 design values calculated through the CAMx photochemical model, the memorandum suggests approaches states might use to interpolate PM2.5 values at sites in 2021.

    For all but one monitor site in the eastern United States, the modeling data provided in the 2016 memorandum showed that monitors were expected to both attain and maintain the 2012 PM2.5 NAAQS in both 2017 and 2025. The modeling results project that this one monitor, the Liberty monitor, (ID number 420030064), located in Allegheny County, Pennsylvania, will be above the 2012 annual PM2.5 NAAQS in 2017, but only under the model's maximum projected conditions, which are used in EPA's interstate transport framework to identify maintenance receptors. The Liberty monitor (along with all the other Allegheny County monitors) is projected to both attain and maintain the NAAQS in 2025. The 2016 memorandum suggests that under such a condition (again, where EPA's photochemical modeling indicates an area will maintain the 2012 annual PM2.5 NAAQS in 2025, but not in 2017), further analysis of the site should be performed to determine if the site may be a nonattainment or maintenance receptor in 2021 (which, again, is the attainment deadline for moderate PM2.5 areas). The memorandum also indicates that for certain states with incomplete ambient monitoring data, additional information including the latest available data, should be analyzed to determine whether there are potential downwind air quality problems that may be impacted by transported emissions. This rulemaking considers these analyses for Maine, as well as additional analysis conducted by EPA during review of Maine's submittal.

    To develop the projected values presented in the memorandum, EPA used the results of nationwide photochemical air-quality modeling that it recently performed to support several rulemakings related to the ozone NAAQS. Base-year modeling was performed for 2011. Future-year modeling was performed for 2017 to support the proposed CSAPR Update for the 2008 Ozone NAAQS. See 80 FR 75705 (December 3, 2015). Future-year modeling was also performed for 2025 to support the Regulatory Impact Assessment of the final 2015 Ozone NAAQS.7 The outputs from these model runs included hourly concentrations of PM2.5 that were used in conjunction with measured data to project annual average PM2.5 design values for 2017 and 2025. Areas that were designated as moderate PM2.5 nonattainment areas for the 2012 annual PM2.5 NAAQS in 2014 must attain the NAAQS by December 31, 2021, or as expeditiously as practicable. Although neither the available 2017 nor 2025 future-year modeling data corresponds directly to the future-year attainment deadline for moderate PM2.5 nonattainment areas, EPA believes that the modeling information is still helpful for identifying potential nonattainment and maintenance receptors in the 2017-2021 period. Assessing downwind PM2.5 air-quality problems based on estimates of air-quality concentrations in a future year aligned with the relevant attainment deadline is consistent with the instructions from the United States Court of Appeals for the District of Columbia Circuit in North Carolina v. EPA, 531 F.3d 896, 911-12 (DC Cir. 2008) that upwind emission reductions should be harmonized, to the extent possible, with the attainment deadlines for downwind areas.

    7See 2015 ozone NAAQS RIA at: https://www3.epa.gov/ttnecas1/docs/20151001ria.pdf.

    Maine's Submission for Prongs 1 and 2

    On July 6, 2016, Maine DEP submitted an infrastructure SIP submission for the 2012 PM2.5 NAAQS that addressed prongs 1 and 2 for the 2012 PM2.5 NAAQS. The state's submission relied in part on EPA's analysis performed for the CSAPR rulemaking to conclude that the state will not significantly contribute to nonattainment or interfere with maintenance of the 2012 PM2.5 NAAQS in any downwind area.

    EPA analyzed the state's July 2016 submittal to determine whether it fully addresses the prong 1 and 2 transport provisions with respect to the 2012 PM2.5 NAAQS. As discussed below, EPA concludes that emissions of PM2.5 and PM2.5 precursors (NOX and SO2) in Maine will not significantly contribute to nonattainment or interfere with maintenance of the 2012 PM2.5 NAAQS in any other state.

    Analysis of Maine's Submission for the 2012 PM2.5 NAAQS

    As noted above, the modeling discussed in EPA's 2016 memorandum identified one potential maintenance receptor for the 2012 PM2.5 NAAQS at the Liberty monitor (ID number 420030064), located in Allegheny County. The memorandum also identified certain states with incomplete ambient monitoring data as areas that may require further analysis to determine whether there are potential downwind air quality problems that may be impacted by transported emissions.

    While developing the 2011 CSAPR rulemaking, EPA modeled the impacts of all 38 eastern states in its modeling domain on PM2.5 concentrations at downwind receptors in other states in the 2012 analysis year in order to evaluate the contribution of upwind states on downwind states with respect to the 1997 and 2006 PM2.5. Although the modeling was not conducted for purposes of analyzing upwind states' impacts on downwind receptors with respect to the 2012 PM2.5 NAAQS, the contribution analysis for the 1997 and 2006 standards can be informative for evaluating Maine's compliance with the Good Neighbor provision for the 2012 standard.

    This CSAPR modeling showed that Maine had a very small impact (0.003 μg/m3) on the Liberty monitor in Allegheny County, which is the only out-of-state monitor that may be a nonattainment or maintenance receptor in 2021. Although EPA has not proposed a specific threshold for evaluating the 2012 PM2.5 NAAQS, EPA notes that Maine's impact on the Liberty monitor is far below the threshold of 1% for the annual 2012 PM2.5 NAAQS (i.e., 0.12 μg/m3) that EPA previously used to evaluate the contribution of upwind states to downwind air-quality monitors. (A spreadsheet showing CSAPR contributions for ozone and PM2.5 is included in docket EPA-HQ-OAR-2009-0491-4228.) Therefore, even if the Liberty monitor were considered a receptor for purposes of transport, the EPA proposes to conclude that Maine will not significantly contribute to nonattainment, or interfere with maintenance, of the 2012 PM2.5 NAAQS at that monitor.

    In addition, the Liberty monitor is already close to attaining the 2012 PM2.5 NAAQS, and expected emissions reductions in the next four years will lead to additional reductions in measured PM2.5 concentrations. There are both local and regional components to measured PM2.5 levels. All monitors in Allegheny County have a regional component, with the Liberty monitor most strongly influenced by local sources. This is confirmed by the fact that annual average measured concentrations at the Liberty monitor have consistently been 2-4 μg/m3 higher than other monitors in Allegheny County.

    Specifically, previous CSAPR modeling showed that regional emissions from upwind states, particularly SO2 and NOX emissions, contribute to PM2.5 nonattainment at the Liberty monitor. In recent years, large SO2 and NOX reductions from power plants have occurred in Pennsylvania and states upwind from the Greater Pittsburgh region. Pennsylvania's energy sector emissions of SO2 will have decreased 166,000 tons between 2015-2017 as a result of CSAPR implementation. This is due to both the installation of emissions controls and retirements of electric generating units (EGUs). Projected power plant closures and additional emissions controls in Pennsylvania and upwind states will help further reduce both direct PM2.5 and PM2.5 precursors. Regional emission reductions will continue to occur from current on-the-books federal and state regulations such as the federal on-road and non-road vehicle programs, and various rules for major stationary emissions sources. See proposed approval of the Ohio Infrastructure SIP for the 2012 PM2.5 NAAQS (82 FR 57689; December 7, 2017).

    In addition to regional emissions reductions and plant closures, additional local reductions to both direct PM2.5 and SO2 emissions are expected to occur and should contribute to further declines in Allegheny County's PM2.5 monitor concentrations. For example, significant SO2 reductions have recently occurred at US Steel's integrated steel mill facilities in southern Allegheny County as part of a 1-hr SO2 NAAQS SIP.8 Reductions are largely due to declining sulfur content in the Clairton Coke Work's coke oven gas (COG). Because this COG is burned at US Steel's Clairton Coke Works, Irvin Mill, and Edgar Thompson Steel Mill, these reductions in sulfur content should contribute to much lower PM2.5 precursor emissions in the immediate future. The Allegheny SO2 SIP also projects lower SO2 emissions resulting from vehicle fuel standards, reductions in general emissions due to declining population in the Greater Pittsburgh region, and several shutdowns of significant sources of emissions in Allegheny County.

    8http://www.achd.net/air/pubs/SIPs/SO2_2010_NAAQS_SIP_9-14-2017.pdf.

    EPA modeling projections, the recent downward trend in local and upwind emissions reductions, the expected continued downward trend in emissions between 2017 and 2021, and the downward trend in monitored PM2.5 concentrations all indicate that the Liberty monitor will attain and be able to maintain the 2012 annual PM2.5 NAAQS by 2021. See proposed approval of the Ohio Infrastructure SIP (82 FR 57689).

    As noted in the 2016 memorandum, several states have had recent data-quality issues identified as part of the PM2.5 designations process. In particular, some ambient PM2.5 data for certain time periods between 2009 and 2013 in Florida, Illinois, Idaho, Tennessee, and Kentucky did not meet all data-quality requirements under 40 CFR part 50, appendix L. The lack of data means that the relevant areas in those states could potentially be in nonattainment or be maintenance receptors in 2021. However, as mentioned above, EPA's analysis for the 2011 CSAPR rulemaking with respect to the 2006 PM2.5 NAAQS determined that Maine's impact to all these downwind receptors would be well below the 1% contribution threshold for this NAAQS. That conclusion informs the analysis of Maine's contributions for purposes of the 2012 PM2.5 NAAQS as well. Given this, and the fact that the state's PM2.5 design values for all ambient monitors have been well below the 2012 24-hour NAAQS (35 µg/m3) and the annual PM2.5 NAAQS (12.0 µg/m3) since 2005-2007,9 EPA concludes that it is highly unlikely that Maine significantly contributes to nonattainment or interferes with maintenance of the 2012 PM2.5 NAAQS in areas with data-quality issues.

    9 Maine's PM2.5 design values for all ambient monitors from 2005-2007 through 2013-2015 are available on the Design Value Reports at https://19january2017snapshot.epa.gov/air-trends/air-quality-design-values_.html.

    Information in Maine's July 2016 SIP submission corroborates EPA's proposed conclusion that Maine's SIP meets its Good Neighbor obligations. The state's technical analysis in that submission includes 2012-2014 design values for monitors in Maine, actual and projected PM2.5 emissions from 2002 through 2020 for various source categories for Maine, and results of EPA CSAPR modeling. As mentioned above, the state's PM2.5 design values for all ambient monitors have been well below the 2012 PM2.5 NAAQS since 2005-2007. In addition, the 24-hour and annual design values for all monitors in the neighboring and nearby states of New Hampshire, Massachusetts, and Vermont also have been below the 2012 PM2.5 NAAQS since 2005-2007.

    At specific monitors in Maine, the highest 24-hour mean value satisfying minimum data completion criteria was 25 µg/m3 in 2016 at a monitor in Rumford in Oxford County. The highest annual mean value satisfying minimum data completion criteria was 9 µg/m3 in 2014 at a monitor in Madawaska in Aroostook County.10

    10 24-hour and annual PM2.5 monitor values for individual monitoring sites throughout Maine are available at www.epa.gov/outdoor-air-quality-data/monitor-values-report.

    Second, Maine's sources are well-controlled. Maine's July 2016 submission indicates that the state has many SIP-approved rules and programs that limit emissions of PM2.5 and PM2.5 precursors and the interstate transport of pollution, including 06-096 Code of Maine Regulations (CMR) Chapter 102, “Open Burning Regulation” (73 FR 9459, February 21, 2008); 06-096 CMR Chapter 103, “Fuel Burning Equipment Particulate Emission Standard” (50 FR 7770, February 26, 1985); and Chapter 145, “NOX Control Program” (70 FR 11879, March 10, 2005), as well the state's Title V permitting program (38 MRSA § 353-A; 06-096 CMR Chapter 140, which was approved by EPA on October 18, 2001 (66 FR 52874)).

    It should also be noted that Maine is not in the CSAPR program because EPA analyses show that the state does not emit NOX at a level that contributes significantly to non-attainment or interferes with maintenance of the 1997 and 2006 PM2.5 NAAQS in any other state.

    For the reasons explained herein, EPA agrees with Maine's conclusions and proposes to determine that Maine will not significantly contribute to nonattainment or interfere with maintenance of the 2012 PM2.5 NAAQS in any other state. Therefore, EPA is proposing to approve the July 2016 infrastructure SIP submission from Maine with regard to prongs 1 and 2 of CAA section 110(a)(2)(D)(i)(I) for the 2012 PM2.5 NAAQS.

    Sub-Element 2: Section 110(a)(2)(D)(i)(II)—PSD (Prong 3)

    To prevent significant deterioration of air quality, this sub-element requires SIPs to include provisions that prohibit any source or other type of emissions activity in one state from interfering with measures that are required in any other state's SIP under Part C of the CAA. One way for a state to meet this requirement, specifically with respect to in-state sources and pollutants that are subject to PSD permitting, is through a comprehensive PSD permitting program that applies to all regulated NSR pollutants and that satisfies the requirements of EPA's PSD implementation rules. For in-state sources not subject to PSD, this requirement can be satisfied through a fully-approved nonattainment new source review (NNSR) program with respect to any previous NAAQS. EPA last approved revisions to Maine's NNSR regulations on February 14, 1996 (61 FR 5690).

    To meet the requirements of Prong 3, Maine DEP cites to its PSD permitting programs under 06-096 CMR Chapter 115, “Major and Minor Source Air Emission License Regulations,” to ensure that new and modified major sources of PM2.5, SO2, and NOX emissions do not contribute significantly to nonattainment, or interfere with maintenance, of those standards. As noted above in our discussion of Element C, Maine's PSD program fully satisfies the requirements of EPA's PSD implementation rules. Consequently, we are proposing to approve Maine's infrastructure SIP submission for the 2012 PM2.5 NAAQS related to section 110(a)(2)(D)(i)(II) Prong 3 for the reasons discussed under Element C.

    Sub-Element 3: Section 110(a)(2)(D)(i)(II)—Visibility Protection (Prong 4)

    With regard to applicable requirements for visibility protection of section 110(a)(2)(D)(i)(II), states are subject to visibility and regional-haze program requirements under part C of the CAA (which includes sections 169A and 169B). EPA's 2009, 2011, and 2013 memoranda recommend that these requirements can be satisfied by an approved SIP addressing reasonably attributable visibility impairment, if required, or an approved SIP addressing regional haze. A fully approved regional haze SIP meeting the requirements of 40 CFR 51.308 will ensure that emissions from sources under an air agency's jurisdiction are not interfering with measures required to be included in other air agencies' plans to protect visibility. EPA approved Maine's Regional Haze SIP on April 24, 2012 (77 FR 24385). Accordingly, EPA proposes that Maine has met the visibility protection requirements of 110(a)(2)(D)(i)(II) for the 2012 PM2.5 NAAQS.

    Sub-Element 4: Section 110(a)(2)(D)(ii)—Interstate Pollution Abatement

    This sub-element requires each SIP to contain provisions requiring compliance with requirements of section 126 relating to interstate pollution abatement. Section 126(a) requires new or modified sources to notify neighboring states of potential impacts from the source. The statute does not specify the method by which the source should provide the notification. States with SIP-approved PSD programs must have a provision requiring such notification by new or modified sources.

    EPA-approved regulations require the Maine DEP to provide pre-construction notice of new or modified sources to, among others, “any State . . . whose lands may be affected by emissions from the source or modification.” See 06-096 CMR Chapter 115, § IX(E)(3), approved March 23, 1993 (58 FR 15422). Such notice “shall announce availability of the application, the Department's preliminary determination in the form of a draft order, the degree of increment consumption that is expected from the source or modification, as well as the opportunity for submission of written public comment.” 06-096 CMR Chapter 115, § IX(E)(2). These provisions are consistent with EPA's PSD regulations and require notice to affected states of a determination to issue a draft PSD permit. Regarding section 126(b), no source or sources within the state are the subject of an active finding with respect to the 2012 PM2.5 NAAQS. Consequently, EPA proposes to approve Maine's infrastructure SIP submittals for this sub-element with respect to the 2012 PM2.5 NAAQS.

    Sub-Element 5: Section 110(a)(2)(D)(ii)—International Pollution Abatement

    This sub-element requires each SIP to contain provisions requiring compliance with the applicable requirements of CAA § 115 relating to international pollution abatement. There are no final findings under section 115 against Maine with respect to the 2012 PM2.5 NAAQS. Therefore, EPA proposes that Maine has met the applicable infrastructure SIP requirements of section 110(a)(2)(D)(ii) related to section 115 for the 2012 PM2.5 NAAQS.

    E. Section 110(a)(2)(E)—Adequate Resources

    This section requires each state to provide for personnel, funding, and legal authority under state law to carry out its SIP and related issues. In addition, Section 110(a)(2)(E)(ii) requires each state to comply with the requirements with respect to state boards under section 128. Finally, section 110(a)(2)(E)(iii) requires that, where a state relies upon local or regional governments or agencies for the implementation of its SIP provisions, the state retain responsibility for ensuring implementation of SIP obligations with respect to relevant NAAQS. This last sub-element, however, is inapplicable to this action, because Maine does not rely upon local or regional governments or agencies for the implementation of its SIP provisions.

    Sub-Element 1: Adequate Personnel, Funding, and Legal Authority Under State Law To Carry Out Its SIP, and Related Issues

    Maine, through its infrastructure SIP submittal, has documented that its air agency has authority and resources to carry out its SIP obligations. Maine cites to 38 MRSA § 341-A, “Department of Environmental Protection,” 38 MRSA § 341-D, “Board responsibilities and duties,” 38 MRSA § 342, “Commissioner, duties” and 38 MRSA § 581, “Declaration of findings and intent.” These statutes provide the Maine DEP with the legal authority to enforce air pollution control requirements and carry out SIP obligations with respect to the 2012 PM2.5 NAAQS. Additionally, state law provides Maine DEP with the authority to assess preconstruction permit fees and annual operating permit fees from air emissions sources and establishes a general revenue reserve account within the general fund to finance the state clean air programs. Maine also receives CAA sections 103 and 105 grant funds through Performance Partnership Grants along with required state-matching funds to provide funding necessary to carry out SIP requirements. Maine DEP states that these funding sources provide it with adequate resources to carry out the SIP. Therefore, EPA proposes that Maine has met the infrastructure SIP requirements of this portion of section 110(a)(2)(E) with respect to the 2012 PM2.5 NAAQS.

    Sub-Element 2: State Board Requirements Under Section 128 of the CAA

    Section 110(a)(2)(E) also requires each SIP to provide requirements that the State comply with the state board requirements of section 128 of the CAA. Section 128(a) contains two explicit requirements: (1) That any board or body which approves permits or enforcement orders under this chapter shall have at least a majority of members who represent the public interest and do not derive any significant portion of their income from persons subject to permits and enforcement orders under this chapter, and (2) that any potential conflicts of interest by members of such board or body or the head of an executive agency with similar powers be adequately disclosed.

    As mentioned earlier, the Maine DEP consists of a Commissioner and a Board of Environmental Protection (“BEP” or “Board”), which is an independent authority under state law that reviews certain permit applications in the first instance and also renders final decisions on appeals of permitting actions taken by the Commissioner as well as some enforcement decisions by the Commissioner. Because the Board has authority under state law to hear appeals of some CAA permits and enforcement orders, EPA considers that the Board has authority to “approve” those permits or enforcement orders, as recommended in the 2013 Memorandum, and that the requirement of CAA § 128(a)(1) applies to Maine—that is, that “any board or body which approves permits or enforcement orders under this chapter shall have at least a majority of members who represent the public interest and do not derive any significant portion of their income from persons subject to permits and enforcement orders under this chapter.”

    Pursuant to state law, the BEP consists of seven members appointed by the Governor, subject to confirmation by the State Legislature. See 38 MRSA § 341-C(1). The purpose of the Board “is to provide informed, independent and timely decisions on the interpretation, administration and enforcement of the laws relating to environmental protection and to provide for credible, fair and responsible public participation in department decisions.” Id. § 341-B. State law further provides that Board members “must be chosen to represent the broadest possible interest and experience that can be brought to bear on the administration and implementation of” Maine's environmental laws and that “[a]t least 3 members must have technical or scientific backgrounds in environmental issues and no more than 4 members may be residents of the same congressional district.” Id. § 341-C(2). EPA proposes to find that these provisions fulfill the requirement that at least a majority of Board members represent the public interest, but do not address the requirement that at least a majority “not derive any significant portion of their income from persons subject to” air permits and enforcement orders. Furthermore, section 341-C is not currently in Maine's SIP. By letter dated March 1, 2018 (extended to apply to the 2012 PM2.5 NAAQS in an email dated July 17, 2018), DEP committed to revise section 341-C to address the CAA § 128(a)(1) requirement that at least a majority of Board members “not derive a significant portion of their income from persons subject to” air permits or enforcement orders and to submit, for inclusion in the SIP, the necessary provisions to EPA within one year of EPA final action on its infrastructure SIPs for the 2008 lead (Pb), 2008 ozone, and 2010 nitrogen dioxide (NO2) NAAQS. Final action on these SIPs was published on June 18, 2018 (83 FR 28157). Consequently, EPA proposes to conditionally approve Maine's infrastructure SIP submittal for this requirement of CAA § 128(a)(1) for the 2012 PM2.5 NAAQS.

    As noted above, section 128(a)(2) of the Act provides that “any potential conflicts of interest by members of such board or body or the head of an executive agency with similar powers be adequately disclosed.” As EPA has explained in other infrastructure SIP actions, the purpose of section 128(a)(2) is to assure that conflicts of interest are disclosed by the ultimate decision maker in permit or enforcement order decisions. See, e.g., 80 FR 42446, 42454 (July 17, 2015). Although the Board is the ultimate decision maker on air permitting decisions in Maine, certain air enforcement orders of the DEP Commissioner are not reviewable by the Board, but rather may be appealed directly to Maine Superior Court. For this reason, EPA interprets the conflict of interest requirement of CAA § 128(a)(2) to be applicable in Maine to both Board members and the DEP Commissioner.

    In a recent infrastructure SIP action for the 2008 Pb, 2008 ozone, and 2010 NO2 NAAQS, EPA determined that Maine's conflict of interest statute, 5 MRSA § 18, and a provision explicitly making it applicable to Board members, 38 MRSA § 341-C(7), together satisfy the CAA § 128(a)(2) requirement for Maine with respect to Board members, and EPA approved both statutes into the Maine SIP. 83 FR 28157 (June 18, 2018). For more information, see 83 FR 12905, 12912 (March 26, 2018). EPA proposes that Maine's SIP also satisfies CAA § 128(a)(2) with respect to Board members for the 2012 PM2.5 NAAQS for the same reasons discussed in the infrastructure SIP action for the 2008 Pb, 2008 ozone, and 2010 NO2 NAAQS.

    Regarding the DEP Commissioner, state law at 38 MRSA § 341-A(3)(D) also explicitly makes that official subject to 5 MRSA § 18, the same conflict-of-interest statute to which the Board is subject. In the above-referenced infrastructure SIP action, EPA also determined that together 5 MRSA § 18 (which is in the Maine SIP) and 38 MRSA § 341-A(3)(D) (which is not currently in the SIP) satisfy the conflict of interest requirement with respect to the DEP Commissioner. See 83 FR 28157; 83 FR 12905, 12912. For the same reasons discussed in the infrastructure SIP action for the 2008 Pb, 2008 ozone, and 2010 NO2 NAAQS, EPA proposes that together the two state statutes would also satisfy the conflict of interest requirement with respect to the DEP Commissioner for the 2012 PM2.5 NAAQS. While 38 MRSA § 341-A(3)(D) is not currently in the SIP, Maine DEP has already committed to submitting it to EPA for inclusion within one year of EPA's final action on Maine's infrastructure SIP submissions for the 2008 Pb, 2008 ozone, and 2010 NO2 NAAQS. See 83 FR 28157. Consequently, EPA proposes to conditionally approve Maine's infrastructure SIP submissions for the conflict of interest requirement of CAA § 128(a)(2) with respect to the DEP Commissioner for the 2012 PM2.5 NAAQS.

    F. Section 110(a)(2)(F)—Stationary Source Monitoring System

    States must establish a system to monitor emissions from stationary sources and submit periodic emissions reports. Each plan shall also require the installation, maintenance, and replacement of equipment, and the implementation of other necessary steps, by owners or operators of stationary sources to monitor emissions from such sources. The state plan shall also require periodic reports on the nature and amounts of emissions and emissions-related data from such sources, and correlation of such reports by each state agency with any emission limitations or standards. Lastly, the reports shall be available at reasonable times for public inspection.

    Maine's infrastructure submittal references several existing state regulations previously approved by EPA that require sources to monitor emissions and submit reports. The first reference is to 06-096 CMR Chapter 115, “Major and Minor Source Air Emission License Regulations.” This regulation contains compliance assurance requirements for licensed sources and stipulates that licenses shall include the following compliance assurance elements: (a) A description of all required monitoring and analysis procedures or test methods required under the requirements applicable to the source; (b) A description of all recordkeeping requirements; and (c) A description of all reporting requirements. The second reference is to 06-096 CMR Chapter 117, “Source Surveillance.” This regulation specifies which air emission sources are required to operate continuous emission monitoring systems (CEMS) and details the performance specifications, quality assurance requirements and procedures for such systems, and subsequent record keeping and reporting requirements. In addition, Maine cites its regulations implementing its operating permit program pursuant to 40 CFR part 70: 06-096 CMR Chapter 140, “Part 70 Air Emission License Regulations.” These regulations, although not in the SIP, identify the sources of air emissions that require a Part 70 air emission license and incorporate the requirements of Title IV and Title V of the Clean Air Act, as amended, 42 U.S.C. 7401, et seq., and 38 MRSA §§ 344 and 590. Chapter 140 contains compliance assurance requirements regarding monitoring and reporting for licensed sources requiring a Part 70 air emission license. The regulation was approved by EPA on October 18, 2001 (66 FR 52874). While Chapter 140 and the referenced provisions of Chapter 115 are not formally approved into Maine's SIP, they are legal mechanisms the state can use to assure the enforcement of the monitoring requirements approved in the SIP.

    Regarding the section 110(a)(2)(F) requirements that the SIP provide for the correlation and public availability of emission reports, Maine's emission statement rule, Chapter 137, requires facilities to report emissions of air pollutants on an annual basis. The DEP uses a web-based electronic reporting system, the Maine Air Emissions Inventory Reporting System (“MAIRIS”), for this purpose that allows it to package and electronically submit reported emissions data to EPA under the national emission inventory (NEI) program. NEI data are available to the public. See www.epa.gov/air-emissions-inventories/national-emissions-inventory-nei. The MAIRIS system is structured to electronically correlate reported emissions with permit conditions and other applicable standards, and identify all inconsistencies and potential compliance concerns.

    Furthermore, pursuant to DEP's EPA-approved regulations, “Except as expressly made confidential by law; the commissioner shall make all documents available to the public for inspection and copying including the following: 1. All applications or other forms and documents submitted in support of any license application: 2. All correspondence, into or out of the Department, and any attachments thereto . . . .” See 06-096 CMR Chapter 1, § 6(A). Furthermore, “The Commissioner shall keep confidential only those documents which may remain confidential pursuant to 1 MRSA Section 402.” Id. § 6(B). In its July 6, 2016, submittal, DEP certified that, “[e]xcept as specifically exempted by the Maine statute (1 MRSA Chapter 13 Public Records and Proceedings), Maine makes all records, reports or information obtained by the MEDEP or referred to at public hearings available to the public.” Maine DEP further certified therein that the information submitted to Maine DEP is “available to the public at reasonable times for public inspection pursuant to Maine law.” By letter dated March 1, 2018 (extended to apply to the 2012 PM2.5 NAAQS in an email dated July 17, 2018), Maine further certified that Maine's Freedom of Access law does not include any exceptions that apply to stationary source emissions. For these reasons, we propose to find that Maine satisfies the requirement that emissions statements be available at reasonable times for public inspection.

    Finally, in the March 1, 2018, letter (extended to apply to the 2012 PM2.5 NAAQS in an email dated July 17, 2018), DEP also certified that there are no provisions in Maine law that would prevent the use of any credible evidence of noncompliance, as required by 40 CFR 51.212. See also 06-096 CMR Chapter 140, § 3(E)(7)(a)(v) (“Notwithstanding any other provision in the State Implementation Plan approved by the EPA or Section 114(a) of the CAA, any credible evidence may be used for the purpose of establishing whether a person has violated or is in violation of any statute, regulation, or Part 70 license requirement.”). For the above reasons, EPA proposes to approve Maine's submittals for this requirement of section 110(a)(2)(F) for the 2012 PM2.5 NAAQS.

    G. Section 110(a)(2)(G)—Emergency Powers

    This section requires that a plan provide for state authority comparable to that provided to the EPA Administrator in section 303 of the CAA, and adequate contingency plans to implement such authority. Section 303 of the CAA provides authority to the EPA Administrator to seek a court order to restrain any source from causing or contributing to emissions that present an “imminent and substantial endangerment to public health or welfare, or the environment.” Section 303 further authorizes the Administrator to issue “such orders as may be necessary to protect public health or welfare or the environment” in the event that “it is not practicable to assure prompt protection . . . by commencement of such civil action.”

    We propose to find that a combination of state statutes and regulations discussed in Maine DEP's July 6, 2016, submittal and a March 1, 2018, letter (extended to apply to the 2012 PM2.5 NAAQS in an email dated July 17, 2018) provides for authority comparable to that given the Administrator in CAA section 303, as explained below. First, 38 MRSA § 347-A, “Emergency Orders,” provides that “[w]henever it appears to the commissioner, after investigation, that there is a violation of the laws or regulations [DEP] administers or of the terms or conditions of any of [DEP's] orders that is creating or is likely to create a substantial and immediate danger to public health or safety or to the environment, the commissioner may order the person or persons causing or contributing to the hazard to immediately take such actions as are necessary to reduce or alleviate the danger.” See 38 MRSA § 347-A(3). Section 347-A further authorizes the DEP Commissioner to initiate an enforcement action in state court in the event of a violation of such emergency order issued by the Commissioner. Id. § 347-A(1)(A)(4). Similarly, 38 MRSA § 348, “Judicial Enforcement,” authorizes Maine DEP to institute injunction proceedings “[i]n the event of a violation of any provision of the laws administered by [DEP] or of any order, regulation, license, permit, approval, administrative consent agreement or decision of the board or commissioner.” Id. § 348(1). Section 348 also authorizes Maine DEP to seek a court order to a restrain a source if it “finds that the discharge, emission or deposit of any materials into any waters, air or land of th[e] State constitutes a substantial and immediate danger to the health, safety or general welfare of any person, persons or property.” Id. § 348(3). Thus, these provisions authorize Maine DEP to issue an administrative order or to seek a court order to restrain any source from causing or contributing to emissions that present an imminent and substantial endangerment to public health or welfare, or the environment, if there is also a violation of a law, regulation, order, or permit administered or issued by DEP, as the case may be.

    Second, in its March 1, 2018, letter, Maine DEP also cites to 38 MRSA § 591, “Prohibitions,” as contributing to its authority. Section 591 provides that “[n]o person may discharge air contaminants into ambient air within a region in such manner as to violate ambient air quality standards established under this chapter or emission standards established pursuant to section 585, 585-B or 585-K.” In those cases where emissions of PM2.5, or PM2.5 precursors may be causing or contributing to an “imminent and substantial endangerment to public health or welfare, or the environment,” a violation of § 591 would also occur, since Maine law provides that ambient air quality standards are designed to prevent “air pollution,” id. § 584, which state law expressly defines as “the presence in the outdoor atmosphere of one or more air contaminants in sufficient quantities and of such characteristics and duration as to be injurious to human, plant or animal life or to property, or which unreasonably interfere with the enjoyment of life and property,” id. § 582(3) (emphasis added). In its March 1, 2018, letter, Maine further explains that sections 347-A and 591 “together authorize the Commissioner to issue an emergency order upon finding an apparent violation of DEP laws or regulations to address emissions of criteria pollutants, air contaminants governed by standards promulgated under section 585, and hazardous air pollutants governed by standards promulgated under section 585-B.”

    Third, in the unlikely event that air emissions are creating a substantial or immediate threat to the public health, safety or to the environment without violating any DEP law, regulation, order, or permit, emergency authority to issue an order to restrain a source may also be exercised pursuant to 37-B MRSA § 742, “Emergency Proclamation.” Maine explains that the DEP Commissioner can notify the Governor of an imminent “disaster,” and the Governor can then exercise authority to “declare a state of emergency in the State or any section of the State.” See 37-B MRSA § 742(1)(A). State law defines “disaster” in this context to mean “the occurrence or imminent threat of widespread or severe damage, injury or loss of life or property resulting from any natural or man-made cause, including, but not limited to . . . air contamination.” Id. § 703(2). Upon the declaration of a state of emergency, the Governor may, among other things, “[o]rder the termination, temporary or permanent, of any process, operation, machine or device which may be causing or is understood to be the cause of the state of emergency,” id. § 742(1)(C)(11), or “[t]ake whatever action is necessary to abate, clean up or mitigate whatever danger may exist within the affected area,” id. § 742(1)(C)(12). Thus, even if there may otherwise be no violation of a DEP-administered or -issued law, regulation, order, or permit, state authorities exist to restrain the source.

    Finally, Maine's submittal cites 06-096 CMR Chapter 109, “Emergency Episode Regulations,” which sets forth various emission reduction plans intended to prevent air pollution from reaching levels that would cause imminent and substantial harm and recognizes the Commissioner's authority to issue additional emergency orders pursuant to 38 MRSA § 347-A, as necessary to the health of persons, by restricting emissions during periods of air pollution emergencies. For these reasons, we propose to find that certain state statutes and regulations provide for authority comparable to that provided to the Administrator in CAA § 303.

    Section 110(a)(2)(G) also requires a state to submit for EPA approval a contingency plan (also known as an emergency episode plan) to implement the air agency's emergency episode authority for any Air Quality Control Region (AQCR) within the state that is classified as Priority I, IA, or II for certain pollutants. See 40 CFR 51.150. For classifications for Maine, see 40 CFR 52.1021. AQCRs classified as Priority III do not require contingency plans. See 40 CFR 51.152(c). In general, contingency plans for Priority I, IA, and II areas must meet the applicable requirements of 40 CFR part 51, subpart H (40 CFR 51.150 through 51.153) (“Prevention of Air Pollution Emergency Episodes”) for the relevant NAAQS, if the NAAQS is covered by those regulations. In the case of PM2.5, EPA has not promulgated regulations that provide the ambient levels to classify different priority levels for the 2012 standard (or any PM2.5 NAAQS). For the 2006 PM2.5 NAAQS, EPA's 2009 Guidance recommends that states develop emergency episode plans for any area that has monitored and recorded 24-hour PM2.5 levels greater than 140 μg/m3 since 2006. EPA's review of Maine's certified air quality data in AQS indicates that the highest 24-hour PM2.5 level recorded since 2006 was 83.3 μg/m3, which occurred in 2017 in the town of Madawaska in Aroostook County.11 Therefore, EPA proposes that a specific contingency plan from Maine for PM2.5 is not necessary. Furthermore, although not expected, if PM2.5 conditions in Maine were to change, Maine DEP has general authority to order a source to reduce or discontinue air pollution as required to protect the public health or safety or the environment, as discussed earlier. In addition, as a matter of practice, Maine posts on the internet daily forecasted PM2.5 levels through the EPA AirNow and EPA Enviroflash systems. Information regarding these two systems is available on EPA's website at www.airnow.gov. When levels are forecast to exceed the 24-hour PM2.5 standard in Maine, notices are sent out to Enviroflash participants, the media are alerted via a press release, and the National Weather Service (NWS) is alerted to issue an Air Quality Advisory through the normal NWS weather alert system. These actions are similar to the notification and communication requirements for contingency plans in 40 CFR 51.152.

    11 24-hour and annual PM2.5 monitor values for individual monitoring sites throughout Maine are available at www.epa.gov/outdoor-air-quality-data/monitor-values-report.

    Therefore, EPA proposes that Maine, through the combination of statutes and regulations discussed above and participation in EPA's AirNow program, meets the applicable infrastructure SIP requirements of section 110(a)(2)(G) with respect to the 2012 PM2.5 NAAQS.

    H. Section 110(a)(2)(H)—Future SIP Revisions

    This section requires that a state's SIP provide for revision from time to time as may be necessary to take into account changes in the NAAQS or availability of improved methods for attaining the NAAQS and whenever the EPA finds that the SIP is substantially inadequate.

    To address this requirement, Maine's infrastructure submittal references 38 MRSA § 581, “Declaration of findings and intent,” which characterizes the state's laws regarding the Protection and Improvement of Air as an exercise of “the police power of the State in a coordinated state-wide program to control present and future sources of emission of air contaminants to the end that air polluting activities of every type shall be regulated in a manner that reasonably insures the continued health, safety and general welfare of all of the citizens of the State; protects property values and protects plant and animal life.” In addition, we note that Maine DEP is required by statute to “prevent, abate and control the pollution of the air [, to] preserve, improve and prevent diminution of the natural environment of the State [, and to] protect and enhance the public's right to use and enjoy the State's natural resources.” See 38 MRSA § 341-A(1). Furthermore, Maine DEP is authorized to “adopt, amend or repeal rules and emergency rules necessary for the interpretation, implementation and enforcement of any provision of law that the department is charged with administering.” Id. § 341-H(2); see also id. § 585-A (recognizing DEP's rulemaking authority to propose SIP revisions). These general authorizing statutes give Maine DEP the power to revise the Maine SIP from time to time as may be necessary to take account of changes in the NAAQS or availability of improved methods for attaining the NAAQS and whenever the EPA finds that the SIP is substantially inadequate.

    Consequently, EPA proposes that Maine meets the infrastructure SIP requirements of CAA section 110(a)(2)(H) for the 2012 PM2.5 NAAQS.

    I. Section 110(a)(2)(I)—Nonattainment Area Plan or Plan Revisions Under Part D

    The CAA requires that each plan or plan revision for an area designated as a nonattainment area meet the applicable requirements of part D of the CAA. Part D relates to nonattainment areas. EPA has determined that section 110(a)(2)(I) is not applicable to the infrastructure SIP process. Instead, EPA takes action on part D attainment plans through separate processes.

    J. Section 110(a)(2)(J)—Consultation With Government Officials; Public Notifications; Prevention of Significant Deterioration; Visibility Protection

    The evaluation of the submission from Maine with respect to the requirements of CAA section 110(a)(2)(J) is described below.

    Sub-Element 1: Consultation With Government Officials

    States must provide a process for consultation with local governments and Federal Land Managers (FLMs) in carrying out NAAQS implementation requirements.

    Pursuant to state law, Maine DEP is authorized to, among other things, “educate the public on natural resource use, requirements and issues.” See 38 MRSA § 341-A(1). State law further provides that one of the purposes of the BEP is “to provide for credible, fair and responsible public participation in department decisions,” id. § 341-B, and authorizes it to “cooperate with other state or federal departments or agencies to carry out” its responsibilities, id. § 341-F(6). Furthermore, pursuant to Maine's EPA-approved regulations, Maine DEP is required to provide notice to relevant municipal officials and FLMs, among others, of DEP's preparation of a draft permit for a new or modified source. See 06-096 CMR Chapter 115, § IX(E)(3) (approved March 23, 1993 (58 FR 15422)). In addition, with respect to area reclassifications to Class I, II, or III for PSD purposes, the DEP is required to offer an opportunity for a public hearing and to consult with appropriate FLMs. See 38 MRSA § 583-B; 06-096 CMR Chapter 114, § 1(E). Maine's Transportation Conformity rule at 06-096 CMR Chapter 139 also provides procedures for interagency consultation, resolution of conflicts, and public consultation and notification. Finally, the Maine Administrative Procedures Act (Maine Revised Statutes Title 5, Chapter 375, subchapter 2) requires notification and provision of comment opportunities to all parties affected by proposed regulations. All SIP revisions undergo public notice and opportunity for hearing, which allows for comment by the public, including local governments.

    EPA proposes that Maine has met the infrastructure SIP requirements of this portion of section 110(a)(2)(J) with respect to the 2012 PM2.5 NAAQS.

    Sub-Element 2: Public Notification

    Section 110(a)(2)(J) also requires states to notify the public if NAAQS are exceeded in an area, advise the public of health hazards associated with exceedances, and enhance public awareness of measures that can be taken to prevent exceedances and of ways in which the public can participate in regulatory and other efforts to improve air quality.

    As mentioned elsewhere in this notice, state law directs Maine DEP to, among other things, “prevent, abate and control the pollution of the air . . . improve and prevent diminution of the natural environment of the State[, and] protect and enhance the public's right to use and enjoy the State's natural resources.” See 38 MRSA § 341-A(1). State law also authorizes Maine DEP to “educate the public on natural resource use, requirements and issues. Id. § 341-A(1). To that end, Maine DEP makes real-time and historical air quality information available on its website.

    The agency also provides extended-range air-quality forecasts, which give the public advanced notice of air quality events. This advance notice allows the public to limit their exposure to unhealthy air and enact a plan to reduce pollution at home and at work. Maine DEP forecasts daily ozone and particle levels and issues these forecasts to the media and to the public via its website, telephone hotline, and email. Alerts include information about the health implications of elevated pollutant levels and list actions to reduce emissions and to reduce the public's exposure. In addition, Air Quality Data Summaries of the year's air-quality monitoring results are issued annually and posted on the Maine DEP Bureau of Air Quality website. Maine is also an active partner in EPA's AirNow and EnviroFlash air quality alert programs.

    EPA proposes that Maine has met the infrastructure SIP requirements of this portion of section 110(a)(2)(J) with respect to the 2012 PM2.5 NAAQS.

    Sub-Element 3: PSD

    State plans must meet the applicable requirements of part C of the CAA related to PSD. Maine's PSD program in the context of infrastructure SIPs has already been discussed in sections 110(a)(2)(C) and 110(a)(2)(D)(i)(II) and, as we have noted, fully satisfies the requirements of EPA's PSD implementation rules. Consequently, we propose to approve the PSD sub-element of section 110(a)(2)(J) for the 2012 PM2.5 NAAQS, consistent with the actions we are proposing for sections 110(a)(2)(C) and 110(a)(2)(D)(i)(II).

    Sub-Element 4: Visibility Protection

    With regard to the applicable requirements for visibility protection, states are subject to visibility and regional haze program requirements under part C of the CAA (which includes sections 169A and 169B). In the event of the establishment of a new NAAQS, however, the visibility and regional haze program requirements under part C do not change. Thus, as noted in EPA's 2013 memorandum, we find that there is no new visibility obligation “triggered” under section 110(a)(2)(J) when a new NAAQS becomes effective. In other words, the visibility protection requirements of section 110(a)(2)(J) are not germane to infrastructure SIP submissions.

    K. Section 110(a)(2)(K)—Air Quality Modeling/Data

    Section 110(a)(2)(K) of the Act requires that a SIP provide for the performance of such air quality modeling as the EPA Administrator may prescribe for the purpose of predicting the effect on ambient air quality of any emissions of any air pollutant for which EPA has established a NAAQS, and the submission, upon request, of data related to such air quality modeling. EPA has published modeling guidelines at 40 CFR part 51, appendix W, for predicting the effects of emissions of criteria pollutants on ambient air quality. EPA has interpreted section 110(a)(2)(K) to require a state to submit or reference the statutory or regulatory provisions that provide the air agency with the authority to conduct such air quality modeling and to provide such modeling data to EPA upon request. See 2013 Memorandum at 55.

    Maine state law implicitly authorizes Maine DEP to perform air quality modeling and provide such modeling data to EPA upon request. See 38 MRSA §§ 341-A(1), 581, 591-B. In addition, Maine cites 06-096 CMR Chapters 115 and 140, which provide that any modeling required for pre-construction permits and operating permits for minor and major sources be performed consistent with EPA-prescribed modeling guidelines at 40 CFR part 51, Appendix W. Chapters 115 and 140 also require that applicants submit data related to modeling to Maine DEP. See Email from Jeff Crawford, Maine DEP, to Alison Simcox, EPA (July 17, 2018). In its July 6, 2016, submission, Maine DEP further states that it performs modeling, provides modeling data to EPA upon request, and will continue to do both. Consequently, the SIP provides for such air quality modeling as the Administrator has prescribed and for the submission, upon request, of data related to such modeling.

    EPA proposes that Maine meets the infrastructure SIP requirements of section 110(a)(2)(K) with respect to the 2012 PM2.5 NAAQS.

    L. Section 110(a)(2)(L)—Permitting Fees

    This section requires SIPs to mandate that each major stationary source pay permitting fees sufficient to cover the reasonable cost of reviewing, approving, implementing, and enforcing a permit.

    Maine implements and operates a Title V permit program, see 38 MRSA § 353-A; 06-096 CMR Chapter 140, which was approved by EPA on October 18, 2001 (66 FR 52874). To gain this approval, Maine demonstrated the ability to collect sufficient fees to run the program. See 61 FR 49289, 49291 (September 19, 1996). Maine state law provides for the assessment of application fees from air emissions sources for permits for the construction or modification of air contaminant sources and sets permit fees. See 38 MRSA §§ 353-A (establishing annual air emissions license fees), 352(2)(E) (providing that such fees “must be assessed to support activities for air quality control including licensing, compliance, enforcement, monitoring, data acquisition and administration”).

    EPA proposes that Maine meets the infrastructure SIP requirements of section 110(a)(2)(L) for the 2012 PM2.5 NAAQS.

    M. Section 110(a)(2)(M)—Consultation/Participation by Affected Local Entities

    To satisfy Element M, states must provide for consultation with, and participation by, local political subdivisions affected by the SIP. Maine's infrastructure submittal references the Maine Administrative Procedure Act, 5 MRSA Chapter 375, and explains that it requires public notice of all SIP revisions prior to their adoption, which allows for comment by the public, including local political subdivisions. In addition, Maine cites 38 MRSA § 597, “Municipal air pollution control,” which provides that municipalities are not preempted from studying air pollution and adopting and enforcing “air pollution control and abatement ordinances” that are more stringent than those adopted by DEP or that “touch on matters not dealt with” by state law. Finally, Maine cites Chapter 9 of Maine's initial SIP, which was approved on May 31, 1972 (37 FR 10842), and contains intergovernmental cooperation provisions.

    EPA proposes that Maine meets the infrastructure SIP requirements of section 110(a)(2)(M) with respect to the 2012 PM2.5 NAAQS.

    IV

    EPA proposes to approve Maine's July 6, 2016, infrastructure SIP submission certifying that its current SIP is sufficient to meet the required infrastructure elements under sections 110(a)(1) and (2) for the 2012 PM2.5 NAAQS, with the exception of CAA section 110(a)(2)(E)(ii) regarding State Boards and Conflicts of Interest, which we propose to conditionally approve, as described in more detail above. EPA's proposed actions regarding these infrastructure SIP requirements are contained in Table 1 below.

    Table 1—Proposed Action on Maine's Infrastructure SIP Submittal for the 2012 PM2.5 NAAQS Element 2012 PM2.5 (A): Emission limits and other control measures A (B): Ambient air quality monitoring and data system A (C)1: Enforcement of SIP measures A (C)2: PSD program for major sources and major modifications A (C)3: PSD program for minor sources and minor modifications A (D)1: Contribute to nonattainment/interfere with maintenance of NAAQS A (D)2: PSD A (D)3: Visibility Protection A (D)4: Interstate Pollution Abatement A (D)5: International Pollution Abatement A (E)1: Adequate resources A (E)2: State boards CA (E)3: Necessary assurances with respect to local agencies NA (F): Stationary source monitoring system A (G): Emergency power A (H): Future SIP revisions A (I): Nonattainment area plan or plan revisions under part D NG (J)1: Consultation with government officials A (J)2: Public notification A (J)3: PSD A (J)4: Visibility protection NG (K): Air quality modeling and data A (L): Permitting fees A (M): Consultation and participation by affected local entities A

    In the above table, the key is as follows:

    A Approve. CA Conditionally approve. NA Not applicable. NG Not germane to infrastructure SIPs.

    EPA is soliciting public comments on the issues discussed in this proposal or on other relevant matters. These comments will be considered before EPA takes final action. Interested parties may participate in the Federal rulemaking procedure by submitting comments to this proposed rule by following the instructions listed in the ADDRESSES section of this Federal Register. As noted in Table 1, EPA is proposing to conditionally approve one portion of Maine's July 2016 infrastructure SIP submission for the 2012 PM2.5 NAAQS pertaining to Element E(2) regarding State Boards and Conflicts of Interest.

    Under section 110(k)(4) of the Act, EPA may conditionally approve a plan based on a commitment from the State to adopt specific enforceable measures by a date certain, but not later than 1 year from the date of approval. If EPA conditionally approves the commitment in a final rulemaking action, the State must meet its commitment to submit an update to its State Board rules that fully remedies the deficiency mentioned above under element E. If the State fails to do so, this action will become a disapproval one year from the date of final approval. EPA will notify the State by letter that this action has occurred. At that time, this commitment will no longer be a part of the approved Maine SIP. EPA subsequently will publish a document in the Federal Register notifying the public that the conditional approval automatically converted to a disapproval. If the State meets its commitment, within the applicable time frame, the conditionally approved submission will remain a part of the SIP until EPA takes final action approving or disapproving the submission. If EPA disapproves the new submittal, the conditionally approved infrastructure SIP elements will also be disapproved at that time. If EPA approves the submittal, the conditionally approved infrastructure SIP elements will be fully approved in their entirety and replace the conditionally approved program in the SIP.

    If the conditional approval is converted to a disapproval, the final disapproval triggers the Federal implementation plan (FIP) requirement under section 110(c).

    V. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 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 Clean Air Act. Accordingly, this proposed 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 proposed 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);

    • This action is not expected to be an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.

    • 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 Clean Air Act; and

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

    In addition, 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 and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

    List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.

    Dated: August 6, 2018. Alexandra Dunn, Regional Administrator, EPA Region 1.
    [FR Doc. 2018-17247 Filed 8-10-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R05-OAR-2017-0060; FRL-9982-11—Region 5] Air Plan Approval; Minnesota; Infrastructure SIP Requirements for the 2012 PM2.5 NAAQS; Multistate Transport AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is proposing to approve elements of the State Implementation Plan (SIP) submission from Minnesota regarding the infrastructure requirements of section 110 of the Clean Air Act (CAA) for the 2012 annual fine particulate matter (PM2.5) National Ambient Air Quality Standard (NAAQS or standard). The infrastructure requirements are designed to ensure that the structural components of each state's air quality management program are adequate to meet the state's responsibilities under the CAA. This action pertains specifically to infrastructure requirements concerning interstate transport provisions.

    DATES:

    Comments must be received on or before September 12, 2018.

    ADDRESSES:

    Submit your comments, identified by Docket ID No. EPA-R05-OAR-2017-0060 at https://www.regulations.gov, or via email to [email protected] For comments submitted at Regulations.gov, follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. For either manner of submission, 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, please contact the person identified in the For Further Information Contact section. For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit https://www2.epa.gov/dockets/commenting-epa-dockets.

    FOR FURTHER INFORMATION CONTACT:

    Anthony Maietta, Environmental Protection Specialist, Control Strategies Section, Air Programs Branch (AR-18J), Environmental Protection Agency, Region 5, 77 West Jackson Boulevard, Chicago, Illinois 60604, (312) 353-8777, [email protected]

    SUPPLEMENTARY INFORMATION:

    Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

    I. What is the background of this SIP submission? II. What guidance and memoranda is EPA using to evaluate this SIP submission? III. EPA's Review IV. What action is EPA taking? V. Statutory and Executive Order Reviews I. What is the background of this SIP submission?

    This rulemaking addresses a submission from the Minnesota Pollution Control Agency dated January 23, 2017, which describes its infrastructure SIP for the 2012 annual PM2.5 NAAQS. Specifically, this rulemaking addresses the portion of the submission dealing with interstate pollution transport under CAA Section 110(a)(2)(D)(i), otherwise known as the “good neighbor” provision. The requirement for states to make a SIP submission of this type arises from Section 110(a)(1) of the CAA. Pursuant to Section 110(a)(1), states must submit “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof),” a plan that provides for the “implementation, maintenance, and enforcement” of such NAAQS. The statute directly imposes on states the duty to make these SIP submissions, and the requirement to make the submissions is not conditioned upon EPA's taking any action other than promulgating a new or revised NAAQS. Section 110(a)(2) includes a list of specific elements that “[e]ach such plan” submission must address. EPA commonly refers to such state plans as “infrastructure SIPs.”

    II. What guidance and memoranda is EPA using to evaluate this SIP submission?

    EPA highlighted the statutory requirement to submit infrastructure SIPs within three years of promulgation of a new NAAQS in an October 2, 2007 guidance document titled “Guidance on SIP Elements Required Under Sections 110(a)(1) and (2) for the 1997 8-hour Ozone and PM2.5 National Ambient Air Quality Standards” (2007 guidance). EPA has issued additional guidance documents and memoranda, including a September 13, 2013 guidance document titled “Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and 110(a)(2)” (2013 guidance).

    The most recent relevant document is a memorandum published on March 17, 2016, titled “Information on the Interstate Transport “Good Neighbor” Provision for the 2012 Fine Particulate Matter National Ambient Air Quality Standards under Clean Air Act Section 110(a)(2)(D)(i)(I)” (2016 memorandum). The 2016 memorandum describes EPA's consistent approach over the years to address interstate transport, and provides EPA's general review of relevant modeling data and air quality projections as they relate to the 2012 annual PM2.5 NAAQS. The 2016 memorandum provides information relevant to EPA Regional office review of the CAA section 110 (a)(2)(D)(i)(I) “good neighbor” provision in infrastructure SIPs with respect to the 2012 annual PM2.5 NAAQS. Minnesota's submittal and this rulemaking consider information provided in that memorandum.

    The 2016 memorandum provides states and EPA Regional offices with future year annual PM2.5 design values for monitors in the United States based on quality-assured and certified ambient monitoring data and air quality modeling. The 2016 memorandum further describes how these projected potential design values can be used to help determine which monitors should be further evaluated to potentially address whether emissions from other states will significantly contribute to nonattainment or interfere with maintenance of the 2012 annual PM2.5 NAAQS at those sites. The 2016 memorandum explains that, for purposes of addressing interstate transport for the 2012 annual PM2.5 NAAQS, it may be appropriate to evaluate projected air quality in 2021, which is the attainment deadline for 2012 annual PM2.5 NAAQS nonattainment areas classified as Moderate. Accordingly, because the available data includes 2017 and 2025 projected average and maximum PM2.5 design values calculated through the CAMx photochemical model, the 2016 memorandum suggests approaches that states might use to interpolate PM2.5 values at sites in 2021. The 2016 memorandum indicates that it may be reasonable to assume receptors projected to have average and/or maximum design values above the NAAQS in both 2017 and 2025 are also likely to be either nonattainment or maintenance receptors in 2021. Similarly, the 2016 memorandum indicates that it may be reasonable to assume that receptors that are projected to attain the NAAQS in both 2017 and 2025 are also likely to be attainment receptors in 2021. However, where a potential receptor is projected to be nonattainment or maintenance in 2017, but projected to be attainment in 2025, the 2016 memorandum suggests that further analysis of the emissions and modeling may be needed to make a further judgement regarding the receptor status in 2021.

    The 2016 memorandum indicates that for all but one monitor site in the eastern United States with at least one complete and valid PM2.5 design value for the annual average 2012 annual PM2.5 NAAQS in the 2009-2013 period, the modeling data shows that monitors are expected to both attain and maintain the 2012 annual PM2.5 NAAQS in both 2017 and 2025. The modeling results provided in the 2016 memorandum show that out of seven PM2.5 monitors located in Allegheny County, Pennsylvania, one monitor is expected to be above the 2012 annual PM2.5 NAAQS in 2017. Further, that monitor, the Liberty monitor (ID number 420030064), is projected to be above the NAAQS only under the model's maximum projected conditions (used in EPA's interstate transport framework to identify maintenance receptors), and is projected to both attain and maintain the NAAQS (along with all Allegheny County monitors) in 2025. The 2016 memorandum therefore indicates that under such a condition (where EPA's photochemical modeling indicates an area will maintain the 2012 annual PM2.5 NAAQS in 2025 but not attain in 2017) further analysis of the site should be performed to determine if the site may be a nonattainment or maintenance receptor in 2021 (the attainment deadline for moderate PM2.5 areas).

    The 2016 memorandum indicates that based on modeling projections, there are 17 potential nonattainment or maintenance receptors in California, located in the San Joaquin Valley and South Coast nonattainment areas, and one potential receptor in Shoshone County, Idaho.

    The 2016 memorandum indicates that for certain states with incomplete ambient monitoring data, additional information including the latest available data, should be analyzed to determine whether there are potential downwind air quality problems that may be impacted by transported emissions. These states include all or portions of Florida, Illinois, Idaho (outside of Shoshone County), Tennessee and Kentucky. With the exception of four counties in Florida, the data quality problems have subsequently been resolved for these areas, and these areas now have current design values below the 2012 annual PM2.5 NAAQS and are expected to maintain the NAAQS due to downward emission trends for NOX and SO2.

    Minnesota's submittal indicates that the state used data from the 2016 memorandum in its analysis. EPA considered the analysis from Minnesota, as well as additional analysis conducted by EPA, in its review of the Minnesota submittal. More information contained in our review can be found in the technical support document (TSD) in the docket, “[Technical Support Document for Docket #EPA-R05-OAR-2017-0060].”

    III. EPA's Review

    This rulemaking proposes action on the portion of Minnesota's January 23, 2017 SIP submission addressing the good neighbor provision requirements of CAA Section 110(a)(2)(D)(i). State plans must address four requirements of the good neighbor provisions (commonly referred to as “prongs”), including:

    —Prohibiting any source or other type of emissions activity in one state from contributing significantly to nonattainment of the NAAQS in another state (prong one);

    —Prohibiting any source or other type of emissions activity in one state from interfering with maintenance of the NAAQS in another state (prong two);

    —Prohibiting any source or other type of emissions activity in one state from interfering with measures required to prevent significant deterioration (PSD) of air quality in another state (prong three); and

    —Protecting visibility in another state (prong four).

    This rulemaking is evaluating Minnesota's January 23, 2017 submission, to determine whether Minnesota's interstate transport provisions in its PM2.5 infrastructure SIP meet prongs one and two of the good neighbor requirements of the CAA. Prongs three and four will be evaluated in a separate rulemaking.

    EPA has developed a consistent framework for addressing the interstate transport requirements required by prongs one and two with respect to the PM2.5 NAAQS in several previous Federal rulemakings. The four basic steps of that framework include:

    (1) Identifying downwind receptors that are expected to have problems attaining or maintaining the NAAQS; (2) identifying which upwind states contribute to these identified problems in amounts sufficient to warrant further review and analysis; (3) for states identified as contributing to downwind air quality problems, identifying upwind emissions reductions necessary to prevent an upwind state from significantly contributing to nonattainment or interfering with maintenance of the NAAQS downwind; and (4) for states that are found to have emissions that significantly contribute to nonattainment or interfere with maintenance of the NAAQS downwind, reducing the identified upwind emissions through adoption of permanent and enforceable measures. This framework was most recently applied with respect to PM2.5 in the August 8, 2011 Cross-State Air Pollution Rule (CSAPR) (76 FR 48208), designed to address both the 1997 and 2006 PM2.5 standards, as well as the 1997 and 2008 ozone standards.

    Minnesota's January 23, 2017 submission indicates that the Minnesota SIP contains the following major programs related to the interstate transport of pollution:

    • 7011.0500-0553 Indirect Heating Fossil Fuel Burning Equipment • 7011.0600-0625 Direct Heating Fossil Fuel Burning Equipment • 7011.1400-1430 Petroleum Refineries • 7011.1600-1605 Sulfuric Acid Plants • 7011.0150 Preventing Particulate Matter from Becoming Airborne • 7011.0710-0735 Industrial Process Equipment • 7011.0850-0859 Concrete Manufacturing Plant Standards of Performance • 7011.0900-0922 Hot Mix Asphalt Plants • 7011.1000-1015 Bulk Agricultural Commodity Facilities • 7011.1100-1125 Coal Handling Facilities • 7011.1300-1325 Incinerators • 7011.1700-1705 Nitric Acid Plants • Title I/Title V operating permits and administrative orders for facilities in the state as defined in the January 23, 2017 submittal.

    Minnesota's submittal also contains a technical analysis of its interstate transport of pollution relative to the 2012 annual PM2.5 NAAQS. The technical analysis studies Minnesota sources' contribution to monitored PM2.5 air quality values in other states and whether Minnesota would need to take further steps to decrease its emissions to (and therefore impacts on) those areas. Minnesota's technical analysis considers CSAPR rule implementation, EPA guidance and memoranda, and other factors such as meteorology and state-wide emissions inventories. Minnesota did not focus on its potential contribution to areas EPA identified as not attaining the 2012 annual PM2.5 NAAQS based on monitor data in Alaska, California, Idaho, Nevada, or Hawaii. The distance between Minnesota and these areas, coupled with the prevailing wind directions, leads EPA to propose to find that Minnesota will not contribute significantly to any of the potential receptors in those states.1

    1 It should be noted that EPA has projected that receptors in California and Idaho will be in nonattainment in 2021 but, as just noted, Minnesota's distance from those receptors, as well as the fact that the wind generally blows from west to east over the continental U.S., means that Minnesota will not contribute to them.

    Additionally, EPA's 2016 memorandum found Allegheny County, Pennsylvania, the Liberty monitor, to be a potential receptor, however, EPA proposes to find that Minnesota will not contribute significantly to the receptor. Minnesota's impacts on that potential receptor is relatively small. CSAPR contained a determination that for the 1997 and 2006 PM2.5 NAAQS, any state whose impacts on a specific receptor in a downwind state meet or exceed a threshold of 1% of the NAAQS are considered linked to that receptor (76 FR 48236). In other words, EPA determined that any state whose impacts are below that threshold will not significantly contribute to nonattainment or interfere with maintenance of the relevant NAAQS. EPA has not determined a comparable threshold for the 2012 annual PM2.5 NAAQS. EPA believes that a proper and well-supported weight of evidence approach can provide sufficient information for purposes of evaluating the impact of Minnesota on the Liberty monitor. In addition, in its review, Minnesota determined that its impact on air quality monitors in Pennsylvania is less than 1% of the 2012 annual PM2.5 NAAQS. Minnesota's determination is based on EPA's source apportionment modeling predicting state contributions to downwind monitors in 2012 under the base case scenario in our original CSAPR analysis. For these reasons, we propose to find that Minnesota's emissions will not contribute significantly to the Liberty monitor.

    With respect to Illinois, EPA's source apportionment modeling in our original CSAPR analysis predicts that Minnesota's emissions impact Illinois's monitors. The PM2.5 monitoring data for Illinois for the period from January 2011 to July 2014 suffered from data quality/completion issues, and no current annual PM2.5 design values existed for Illinois at the time of the modeling for the 2016 memorandum. Illinois has since resolved these quality control issues.

    EPA considered available data from monitors in Illinois for its analysis of Minnesota's submittal. As shown in Table 1, Illinois is now meeting the standard throughout the state.

    Table 1—Illinois Annual PM2.5 Design Values for 2015-2017 Design Period Local site name Monitoring site 2015-2017 design value
  • (μg/m3)
  • Alsip 17-031-0001 9.5 Washington High School 17-031-0022 9.3 Mayfair Pump Station 17-031-0052 9.1 Springfield Pump Station 17-031-0057 10.2 Com Ed 17-031-0076 9.5 Schiller Park 17-031-3103 10.5 Summit 17-031-3301 9.7 Des Plaines 17-031-4007 9.4 Northbrook 17-031-4201 8.4 Cicero 17-031-6005 10.0 Naperville 17-043-4002 8.3 Elgin 17-089-0003 8.3 Aurora 17-089-0007 8.3 Cary 17-111-0001 + 8.2 Joliet 17-197-1002 7.9 Braidwood 17-197-1011 7.9 Jerseyville 17-083-0117 + 8.8 Granite City 17-119-1007 9.7 Alton 17-119-2009 8.8 Wood River 17-119-3007 8.7 Houston 17-157-0001 8.5 East St. Louis 17-163-0010 9.8 Champaign 17-019-0006 7.9 Bondville 17-019-1001 7.8 Knight Prairie 17-065-0002 8.2 Normal 17-113-2003 8.0 Decatur 17-115-0013 8.4 Peoria 17-143-0037 8.2 Rock Island 17-161-3002 8.1 Springfield 17-167-0012 8.2 Rockford 17-201-0013 8.3 + Data incomplete.

    Illinois' air quality trends reflect what is shown across the nation: A general downward trend in ambient air concentrations, including sites that Minnesota analyzed in its submittal. During the last valid design period, only three Illinois counties reported 2008-2010 annual PM2.5 design values above the NAAQS: Cook, Madison, and Saint Clair counties. In Cook County, the 2008-2010 annual design value was 13.0 micrograms per cubic meter (µg/m3), and the annual mean values have trended downward. As shown in the table above, these areas are now meeting the NAAQS for the 2015 to 2017 design period. Therefore, EPA expects that all counties in Illinois will attain and maintain the PM2.5 NAAQS without the need for additional PM2.5 reductions in Minnesota, and for this reason, we propose to find that Minnesota will not contribute significantly to nonattainment or maintenance problems in Illinois.

    Minnesota found, and our review confirmed, that despite the fact that Minnesota emissions potentially contribute to monitored PM2.5 air quality in areas in other states, all of those areas were attaining the 2012 annual PM2.5 NAAQS based on 2014-2016 data. Despite Minnesota not significantly contributing to the monitored PM2.5 air quality in Pennsylvania, our review evaluated PM2.5 air quality issues in Pennsylvania. All but two areas in Pennsylvania (Allegheny and Delaware counties) were attaining the 2012 annual PM2.5 NAAQS based on 2012-2014 data. A review of 2013-2015 design values shows that all areas except for Allegheny County have attained the NAAQS. Our review also considers 2014-2016 design values, which show only Allegheny and Lancaster counties not meeting the NAAQS. In Delaware and Lebanon counties, not only do the most recent PM2.5 monitor data show these counties are attaining the PM2.5 NAAQS, EPA's PM2.5 modeling data for 2017 and 2025 do not indicate any nonattainment or maintenance issues in these counties. There is a clear downward trend in PM2.5 values in these counties. For Lancaster County, despite having a 2014-2016 design value that exceeds the NAAQS, there is a clear downward trend in the monitored PM2.5 air quality data that supports EPA's PM2.5 modeling that shows no nonattainment or maintenance problems for this county by 2021.

    The modeling information contained in EPA's 2016 memorandum shows that one monitor in Allegheny County, PA (the Liberty monitor, 420030064) may have a maintenance issue in 2017, but is projected to both attain and maintain the NAAQS by 2025. A linear interpolation of the modeled design values to 2021 shows that the monitor is likely to both attain and maintain the standard by 2021. Emissions and air quality data trends help to corroborate this interpolation.

    Over the last decade, local and regional emissions reductions of primary PM2.5, sulfur dioxide (SO2), and nitrogen oxide (NOX), have led to large reductions in annual PM2.5 design values in Allegheny County, Pennsylvania. In 2007, all of Allegheny County's PM2.5 monitors exceeded the level of the 2012 annual PM2.5 NAAQS (the 2005-2007 annual average design values ranged from 12.9-19.8 μg/m3, as shown in Table 2). The 2014-2016 annual average PM2.5 design values now show that only one monitor (Liberty, at 12.8 μg/m3) exceeds the health-based annual PM2.5 NAAQS of 12.0 μg/m3.

    Table 2—PM2.5 Annual Design Values in μg/m 3 Monitor 2005-2007 2006-2008 2007-2009 2008-2010 2009-2011 2010-2012 2011-2013 2012-2014 2013-2015 2014-2016 Avalon * 16.3 * 14.7 13.4 11.4 10.6 10.6 * 10.4 Lawrenceville 15.0 14.0 13.1 12.2 11.6 11.1 10.3 10.0 9.7 9.5 Liberty 19.8 18.3 17.0 16.0 15.0 14.8 13.4 13.0 12.6 12.8 South Fayette 12.9 * 11.8 11.7 11.1 11.0 10.5 9.6 9.0 8.8 * 8.5 North Park * 13.0 * 12.3 * 11.3 * 10.1 9.7 9.4 8.8 8.5 8.5 * 8.2 Harrison 15.0 14.2 13.7 13.0 12.4 * 11.7 10.6 10.0 9.8 9.8 North Braddock 16.2 15.2 14.3 13.3 12.7 12.5 * 11.7 11.4 11.2 11.0 Parkway East Near-Road * 10.6 Clairton 15.3 14.3 13.2 12.4 * 11.5 * 10.9 * 9.8 9.5 9.8 * 9.8 * Value does not contain a complete year's worth of data.

    The Liberty monitor is already close to attaining the NAAQS, and expected emissions reductions in the next four years will lead to additional reductions in measured PM2.5 concentrations. There are both local and regional components to the measured PM2.5 levels in Allegheny County and the greater Pittsburgh area. Previous CSAPR modeling showed that regional emissions from upwind states, particularly SO2 and NOX emissions, contribute to PM2.5 nonattainment at the Liberty monitor. In recent years, large SO2 and NOX reductions from power plants have occurred in Pennsylvania and states upwind from the Greater Pittsburgh region. Based on existing CSAPR budgets, Pennsylvania's energy sector emissions of SO2 will have decreased 166,000 tons between 2015-2017 as a result of CSAPR implementation. This is due to both the installation of emissions controls and retirements of electric generating units (EGUs) (see the TSD for more details). Projected power plant closures and additional emissions controls in Pennsylvania and upwind states will help further reduce both direct PM2.5 and PM2.5 precursors. Regional emission reductions will continue to occur from current on-the-books Federal and state regulations such as the Federal on-road and non-road vehicle programs, and various rules for major stationary emissions sources.

    In addition to regional emissions reductions and plant closures, additional local reductions of both direct PM2.5 and SO2 emissions are expected to occur and should also contribute to further declines in Allegheny County's PM2.5 monitor concentrations. For example, significant SO2 reductions have recently occurred at US Steel's integrated steel mill facilities in southern Allegheny County as part of a 1-hr SO2 NAAQS SIP.2 Reductions are largely due to declining sulfur content in the Clairton Coke Work's coke oven gas (COG). Because this COG is burned at US Steel's Clairton Coke Works, Irvin Mill, and Edgar Thompson Steel Mill, these reductions in sulfur content should contribute to much lower PM2.5 precursor emissions in the immediate future. The Allegheny SO2 SIP also projects lower SO2 emissions resulting from vehicle fuel standards, reductions in general emissions due to declining population in the Greater Pittsburgh region and several shutdowns of significant sources of emissions in Allegheny County.

    2http://www.achd.net/air/publichearing2017/SO 2 _2010_NAAQS_SIP_5-1-2017.pdf.

    EPA modeling projections, the recent downward trend in local and upwind emissions reductions, the expected continued downward trend in emissions between 2017 and 2021, and the downward trend in monitored PM2.5 concentrations, all indicate that the Liberty monitor will attain and be able to maintain the 2012 annual PM2.5 NAAQS by 2021.

    With respect to Florida, in the CSAPR modeling analysis for the 1997 PM2.5 NAAQS, Florida did not have any potential nonattainment or maintenance receptors identified for the 1997 or 2006 PM2.5 NAAQS. At this time, it is anticipated that this trend will continue, however, as there are ambient monitoring data gaps in the 2009-2013 data that could have been used to identify potential PM2.5 nonattainment and maintenance receptors for Miami/Dade, Gilchrist, Broward and Alachua counties in Florida, the modeling analysis of potential receptors was not complete for these counties. However, the most recent ambient data (2015-2017) for these counties has been preliminarily deemed complete and indicates design values well below the level of the 2012 annual PM2.5 NAAQS. In addition, the highest preliminary value for these observed monitors is 7.5 μg/m3 at the Miami-Dade County monitor (12-086-1016), which is well below the NAAQS. This is also consistent with historical data: complete and valid design values in the 2006-2008, 2007-2009 and/or 2008-2010 periods for these counties were all well below the 2012 annual PM2.5 NAAQS. This is also consistent with historical data: complete and valid design values in the 2006-2008 and/or 2007-2009 periods for these counties were well below the 2012 annual PM2.5 NAAQS. For these reasons, we find that none of the counties in Florida with monitoring gaps between 2009-2013 should be considered either nonattainment or maintenance receptors for the 2012 annual PM2.5 NAAQS. For these reasons, we propose to find that emissions from Minnesota will not significantly contribute to nonattainment or interfere with maintenance of the 2012 annual PM2.5 NAAQS in Florida. We find further support in the fact that EPA's source apportionment modeling predicted state impacts on downwind monitors in 2012 under the base case scenario in our original CSAPR analysis, showing little impact from Minnesota to any of Florida's counties.

    The conclusions of Minnesota's analysis are consistent with EPA's expanded review of its January 23, 2017 submittal. All areas that Minnesota sources potentially contribute to attain and maintain the 2012 annual PM2.5 NAAQS, and as demonstrated in its submittal, Minnesota will not contribute to projected nonattainment or maintenance issues at any sites in 2021. Minnesota's analysis shows that through permanent and enforceable measures currently contained in its SIP, and other emissions reductions occurring in Minnesota and in other states, monitored PM2.5 air quality in all identified areas that Minnesota sources may impact will continue to improve, and that no further measures are necessary to satisfy Minnesota's responsibilities under CAA section 110(a)(2)(D)(i)(I). Therefore, EPA is proposing that prongs one and two of the interstate pollution transport element of Minnesota's infrastructure SIP are approvable.

    IV. What action is EPA taking?

    EPA is proposing to approve a portion of Minnesota's January 23, 2017 submittal certifying that the current Minnesota SIP is sufficient to meet the required infrastructure requirements under CAA section 110(a)(2)(D)(i)(I), specifically prongs one and two, as set forth above. EPA is requesting comments on the proposed approval.

    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 CAA and applicable Federal regulations. 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);

    • Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866.

    • 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 this rulemaking does not involve technical standards; and

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

    In addition, 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 and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

    List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Particulate matter, Reporting and recordkeeping requirements.

    Dated: July 30, 2018. Cathy Stepp, Regional Administrator, Region 5.
    [FR Doc. 2018-17362 Filed 8-10-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 271 [EPA-R04-RCRA-2018-0255; FRL- 9981-48—Region 4] Georgia: Proposed Authorization of State Hazardous Waste Management Program Revisions AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    Georgia has applied to the Environmental Protection Agency (EPA) for final authorization of changes to its hazardous waste program under the Resource Conservation and Recovery Act (RCRA), as amended. EPA has reviewed Georgia's application and has determined that these changes satisfy all requirements needed to qualify for final authorization. Therefore, we are proposing to authorize the state's changes. EPA seeks public comment prior to taking final action.

    DATES:

    Comments must be received on or before September 12, 2018.

    ADDRESSES:

    Submit your comments, identified by Docket ID No. EPA-R04-RCRA-2018-0255, at http://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from www.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:

    Thornell Cheeks, Materials and Waste Management Branch, RCR Division, U.S. Environmental Protection Agency, Atlanta Federal Center, 61 Forsyth Street SW, Atlanta, Georgia 30303-8960; telephone number: (404) 562-8479: fax number: (404) 562-9964; email address: [email protected].

    SUPPLEMENTARY INFORMATION: A. Why are revisions to state programs necessary?

    States that have received final authorization from EPA under RCRA section 3006(b), 42 U.S.C. 6926(b), must maintain a hazardous waste program that is equivalent to, consistent with, and no less stringent than the Federal program. As the Federal program changes, states must change their programs and ask EPA to authorize the changes. Changes to state programs may be necessary when Federal or state statutory or regulatory authority is modified or when certain other changes occur. Most commonly, states must change their programs because of changes to EPA's regulations in 40 Code of Federal Regulations (CFR) parts 124, 260 through 268, 270, 273, and 279.

    New Federal requirements and prohibitions imposed by Federal regulations that EPA promulgates pursuant to the Hazardous and Solid Waste Amendments of 1984 (HSWA) take effect in authorized states at the same time that they take effect in unauthorized states. Thus, EPA will implement those requirements and prohibitions in Georgia, including the issuance of new permits implementing those requirements, until the state is granted authorization to do so.

    B. What decisions has EPA made in this rule?

    On September 22, 2015, September 12, 2016, and November 7, 2017, Georgia submitted program revision applications seeking authorization of changes to its hazardous waste program that correspond to certain Federal rules promulgated between July 1, 2005 and June 30, 2017 (also known as RCRA Clusters XVI, XIX and XXII through XXV). EPA concludes that Georgia's applications to revise its authorized program meet all of the statutory and regulatory requirements established by RCRA, as set forth in RCRA section 3006(b), 42 U.S.C. 6926(b), and 40 CFR part 271. Therefore, EPA proposes to grant Georgia final authorization to operate its hazardous waste program with the changes described in its authorization applications, and as outlined below in Section F of this document.

    Georgia has responsibility for permitting treatment, storage, and disposal facilities within its borders and for carrying out the aspects of the RCRA program described in its revised program applications, subject to the limitations of HSWA, as discussed above.

    C. What is the effect of this proposed authorization decision?

    If Georgia is authorized for the changes described in Georgia's authorization applications, these changes will become part of the authorized state hazardous waste program, and therefore will be federally enforceable. Georgia will continue to have primary enforcement authority and responsibility for its state hazardous waste program. EPA would retain its authorities under RCRA sections 3007, 3008, 3013, and 7003, including its authority to:

    • Conduct inspections, and require monitoring, tests, analyses or reports;

    • Enforce RCRA requirements, including authorized state program requirements, and suspend or revoke permits; and

    • Take enforcement actions regardless of whether the state has taken its own actions.

    This action will not impose additional requirements on the regulated community because the regulations for which EPA is proposing to authorize Georgia are already effective, and are not changed by this proposed action.

    D. What happens if EPA receives comments that oppose this action?

    If EPA receives comments on this proposed action, we will address all such comments in a later final rule. You may not have another opportunity to comment. If you want to comment on this authorization, you must do so at this time.

    E. What has Georgia previously been authorized for?

    Georgia initially received final authorization on August 7, 1984, effective August 21, 1984 (49 FR 31417), to implement the RCRA hazardous waste management program. EPA granted authorization for changes to Georgia's program on the following dates: July 7, 1986, effective September 18, 1986 (51 FR 24549); July 28, 1988, effective September 26, 1988 (53 FR 28383); July 24, 1990, effective September 24, 1990 (55 FR 30000); February 12, 1991, effective April 15, 1991 (56 FR 5656); May 11, 1992, effective July 10, 1992 (57 FR 20055); November 25, 1992, effective January 25, 1993 (57 FR 55466); February 26, 1993, effective April 27, 1993 (58 FR 11539); November 16, 1993, effective January 18, 1994 (58 FR 60388); April 26, 1994, effective June 27, 1994 (59 FR 21664); May 10, 1995, effective July 10, 1995 (60 FR 24790); August 30, 1995, effective October 30, 1995 (60 FR 45069); March 7, 1996, effective May 6, 1996 (61 FR 9108); September, 18, 1998, effective November 17, 1998 (63 FR 49852); October 14, 1999, effective December 13, 1999 (64 FR 55629); November 28, 2000, effective March 30, 2001 (66 FR 8090); July 16, 2002, effective September 16, 2002 (67 FR 46600); November 19, 2002, effective January 21, 2003 (67 FR 69690); July 18, 2003, effective September 16, 2003 (68 FR 42605); January 27, 2005, effective April 20, 2005 (70 FR 12973); April 25, 2006, effective June 26, 2006 (71 FR 23864); May 2, 2013, effective July 1, 2013 (78 FR 25579); and January 26, 2015, effective March 27, 2015 (80 FR 3888).

    F. What changes are we proposing with this action?

    On September 22, 2015, September 12, 2016, and November 7, 2017, Georgia submitted program revision applications seeking authorization of changes to its hazardous waste management program in accordance with 40 CFR 271.21. EPA proposes to determine, subject to receipt of written comments that oppose this action, that Georgia's hazardous waste program revisions are equivalent to, consistent with, and no less stringent than the Federal program, and therefore satisfy all of the requirements necessary to qualify for final authorization. Therefore, EPA is proposing to authorize Georgia for the following program changes:

    Description of federal
  • requirement
  • Federal
  • Register
  • date and page
  • Analogous state authority 1
    Checklist 213, Burden Reduction Initiative 71 FR 16862; 4/4/06 391-3-11-.05(1)-(2); 391-3-11-.07(1)-(2);
  • 391-3-11-.10(1)-(3); 391-3-11-.11(3)(h) and (7)(d); and 391-3-11-.16.
  • Checklist 228, Hazardous Waste Technical Corrections and Clarifications 77 FR 22229; 4/13/12 391-3-11-.07(1) and 391-3-11-.10(3). Checklist 229, Conditional Exclusions for Solvent Contaminated Wipes 78 FR 46448; 7/31/13 391-3-11-.02(1) and 391-3-11-.07(1). Checklist 231, Hazardous Waste Electronic Manifest Rule 79 FR 7518;
  • 2/7/14
  • 391-3-11-.02(1); 391-3-11-.08(1);
  • 91-3-11-.09; and 391-3-11-.10(1)-(2).
  • Checklist 232, Revisions to the Export Provisions of the Cathode Ray Tube Rule 79 FR 36220; 6/26/14 391-3-11-.02(1) and 391-3-11-.07(1). Checklists 219 and 233, Revisions to the Definition of Solid Waste 73 FR 64668; 10/30/08;
  • 80 FR 1694; 1/13/15
  • 391-3-11-.02(1); 391-3-11-.05(5);
  • 391-3-11-.07(1)-(2); and 391-3-11-.11(7)(d).
  • Checklist 236, Imports and Exports of Hazardous Waste 81 FR 85696; 11/28/16 391-3-11-.02(1); 391-3-11-.07(1);
  • 391-3-11-.08(1); 391-3-11-.09;
  • 391-3-11-.10(1)-(3); and 391-3-11-.18.
  • Checklist 237, Hazardous Waste Generator Improvements Rule 81 FR 85732; 11/28/16 391-3-11-.01(2)(e); 391-3-11-.02(1);
  • 391-3-11-.07(1); 391-3-11-.08(1);
  • 391-3-11-.09; 391-3-11-.10(1)-(3);
  • 391-3-11-.11(1)(a), (5), and (7)(d);
  • 391-3-11-.16; 391-3-11-.17; and 391-3-11-.18.
  • 1 The Georgia provisions are from the Georgia Rules for Hazardous Waste Management Chapter 391-3-11, effective September 28, 2017.
    G. Where are the revised state rules different from the Federal rules?

    EPA considers the following state requirements to go beyond the scope of the Federal program:

    • Georgia is broader in scope than the Federal program in its adoption of 40 CFR 260.43 (2015) and 40 CFR 261.4(a)(24) (2015) at Ga. Comp. R. & Regs. r. 391-3-11-.07(1). Both of these regulations include provisions from the 2015 Definition of Solid Waste (DSW) Rule that have been vacated and replaced with the less stringent requirements of 40 CFR 260.43 (2008) and 40 CFR 261.4(a)(24) and (25) (2008) from the 2008 DSW Rule.

    • Georgia is also broader in scope than the Federal program by not adopting the conditional exclusion for carbon dioxide streams in geologic sequestration activities (Checklist 230) at 40 CFR 261.4(h) (see Ga. Comp. R. & Regs. r. 391-3-11-.01(2)). Georgia's continued regulation of these waste streams is broader in scope than the Federal program.

    Broader-in-scope requirements are not part of the authorized program and EPA cannot enforce them. Although regulated entities must comply with these requirements in accordance with state law, they are not RCRA requirements.

    EPA cannot delegate certain Federal requirements associated with the Hazardous Waste Electronic Manifest Rule (Checklist 231), the Imports and Exports of Hazardous Waste Rule (Checklist 236), and the Revisions to the Export Provisions of the Cathode Ray Tube Rule (Checklist 232) (40 CFR 261.39(a)(5) and 261.41). Georgia has adopted these requirements and appropriately preserved EPA's authority to implement them (see Ga. Comp. R. & Regs. R. 391-3-11-.01(2)(c))

    H. Who handles permits after the final authorization takes effect?

    Georgia will issue permits for all the provisions for which it is authorized and will administer the permits it issues. EPA will continue to administer any RCRA hazardous waste permits or portions of permits which EPA issued prior to the effective date of this authorization until they are terminated. EPA will not issue any new permits or new portions of permits for the provisions listed in the Table above after the effective date of the final authorization. EPA will continue to implement and issue permits for HSWA requirements for which Georgia is not yet authorized.

    I. What is codification and will EPA codify Georgia's hazardous waste program as proposed in this rule?

    Codification is the process of placing the state's statutes and regulations that comprise the state's authorized hazardous waste program into the Code of Federal Regulations. EPA does this by referencing the authorized state rules in 40 CFR part 272. EPA is not proposing to codify the authorization of Georgia's changes at this time. However, EPA reserves the amendment of 40 CFR part 272, subpart L, for the authorization of Georgia's program changes at a later date.

    J. Statutory and Executive Order Reviews

    The Office of Management and Budget (OMB) has exempted this action from the requirements of Executive Order 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011). This action proposes to authorize state requirements for the purpose of RCRA section 3006 and imposes no additional requirements beyond those imposed by state law. Therefore, this action is not subject to review by OMB. This action is not an Executive Order 13771 (82 FR 9339, February 3, 2017) regulatory action because actions such as this proposed authorization of Georgia's revised hazardous waste program under RCRA are exempted under Executive Order 12866. Accordingly, I certify that this action will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because this action proposes to authorize pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538). For the same reason, this action also does not significantly or uniquely affect the communities of tribal governments, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action 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, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely proposes to authorize state requirements as part of the state RCRA hazardous waste program without altering the relationship or the distribution of power and responsibilities established by RCRA. This action also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant and it does not make decisions based on environmental health or safety risks. This action is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because it is not a significant regulatory action under Executive Order 12866.

    Under RCRA section 3006(b), EPA grants a state's application for authorization as long as the state meets the criteria required by RCRA. It would thus be inconsistent with applicable law for EPA, when it reviews a state authorization application, to require the use of any particular voluntary consensus standard in place of another standard that otherwise satisfies the requirements of RCRA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in proposing this rule, EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct. EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of this action in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order. This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). “Burden” is defined at 5 CFR 1320.3(b). Executive Order 12898 (59 FR 7629, February 16, 1994) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. Because this action proposes authorization of pre-existing state rules which are at least equivalent to, and no less stringent than existing Federal requirements, and imposes no additional requirements beyond those imposed by state law, and there are no anticipated significant adverse human health or environmental effects, this proposed rule is not subject to Executive Order 12898.

    List of Subjects in 40 CFR Part 271

    Environmental protection, Administrative practice and procedure, Confidential business information, Hazardous waste, Hazardous waste transportation, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements.

    Authority:

    This action is issued under the authority of sections 2002(a), 3006, and 7004(b) of the Solid Waste Disposal Act as amended, 42 U.S.C. 6912(a), 6926, and 6974(b).

    Dated: July 10, 2018. Onis “Trey” Glenn, III, Regional Administrator, Region 4.
    [FR Doc. 2018-17206 Filed 8-10-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 300 [EPA-HQ-OLEM-2017-0603; FRL-9981-49-OLEM] Documentation Supporting the Proposal of the Orange County North Basin Site; Addendum Availability AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule; notice of data availability.

    SUMMARY:

    This notice provides an opportunity to comment on additional reference documentation for the Orange County North Basin site in Orange County, California. The site was proposed to the National Priorities List (NPL) on January 18, 2018.

    DATES:

    Comments must be submitted (postmarked) on or before September 12, 2018.

    ADDRESSES:

    Submit your comments, identified by docket number EPA-HQ-OLEM-2017-0603, at https://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. The 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. The 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 https://www.epa.gov/dockets/commenting-epa-dockets.

    To send a comment via the United States Postal Service, use the following address: U.S. Environmental Protection Agency, EPA Superfund Docket Center, Mailcode 28221T, 1200 Pennsylvania Avenue NW, Washington, DC 20460. Use the Docket Center address below if you are using express mail, commercial delivery, hand delivery or courier. Delivery verification signatures will be available only during regular business hours: EPA Superfund Docket Center, WJC West Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC 20004.

    FOR FURTHER INFORMATION CONTACT:

    Jennifer Wendel, phone: (404) 562-8799, email: [email protected], Site Assessment and Remedy Decisions Branch, Assessment and Remediation Division, Office of Superfund Remediation and Technology Innovation (Mail Code 5204P), U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW, Washington, DC 20460.

    SUPPLEMENTARY INFORMATION:

    The site was proposed to the National Priorities List (NPL) on January 18, 2018 (83 FR 2576).

    Site Geological Information

    One commenter questioned the EPA's use of a reference in the HRS documentation record (HRS Reference 110—the 3DVA Technical Memorandum) to support aquifer interconnection and contaminant migration. EPA notes that the reference in question is a model, and analysis, of the hydrology and geology in the vicinity of the Orange County North Basin site. The commenter stated that the EPA cites to HRS Reference 110 and presents conclusions in the HRS documentation record based on the model in the reference that used well borehole and lithology data that was not available to the public to review to confirm the reliability of the reference.

    The EPA has examined this issue and has decided to provide the relevant documentation used to develop the content presented in the reference. This information includes well logs and lithology reports for the wells which were used to produce HRS Reference 110—the 3DVA Technical Memorandum. This data will be included as one reference to the HRS documentation record and the EPA is providing this additional document for public review and comment. This document is available at the Regional office in San Francisco, CA. Anyone wishing to comment on the information in the reference or the impact this data may have on the HRS score for the proposed Orange County North Basin site should do so within the next 30 calendar days (see DATES section at the beginning of this notice). Additional comments will not be accepted on other HRS scoring issues which could have appropriately been raised during the original comment period and are not based on information provided in these additional references.

    Comments should be submitted pursuant to instructions in the ADDRESSEES section of this notice; they may be submitted electronically, by mail or by express mail. The docket number for this site is EPA-HQ-OLEM-2017-0603 and should be identified in any correspondence/electronic submission.

    Dated: July 16, 2018. James E. Woolford, Director, Office of Superfund Remediation and Technology Innovation.
    [FR Doc. 2018-16801 Filed 8-10-18; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF THE INTERIOR Fish and Wildlife Service 50 CFR Part 17 [Docket No. FWS-R4-ES-2018-0035; FXES11130900000C2-189-FF09E42000] RIN 1018-BB98 Endangered and Threatened Wildlife and Plants; Proposed Replacement of the Regulations for the Nonessential Experimental Population of Red Wolves in Northeastern North Carolina AGENCY:

    Fish and Wildlife Service, Interior.

    ACTION:

    Proposed rule; reopening of comment period.

    SUMMARY:

    We, the U.S. Fish and Wildlife Service (Service), are reopening the public comment period on our June 28, 2018, proposed rule to replace the existing regulations governing the nonessential experimental population designation of the red wolf (Canis rufus) under section 10(j) of the Endangered Species Act of 1973, as amended (Act). We are reopening the comment period to allow the public an additional opportunity to review and comment on the proposed rule. Comments already submitted need not be resubmitted, as they will be fully considered in preparation of the final rule.

    DATES:

    The comment period for the proposed rule published on June 28, 2018, at 83 FR 30382 is reopened. We will accept comments received or postmarked on or before August 28, 2018. Comments submitted electronically using the Federal eRulemaking Portal (see ADDRESSES, below) must be submitted by 11:59 p.m. Eastern Time on the closing date.

    ADDRESSES:

    Availability of documents: The proposed rule is available on http://www.regulations.gov at Docket No. FWS-R4-ES-2018-0035 and on our website at http://www.fws.gov/Raleigh. Comments and materials we receive, as well as supporting documentation we used in preparing the proposed rule, are also available for public inspection at http://www.regulations.gov. All comments, materials, and documentation that we considered in the proposed rule are available for public inspection, by appointment, during normal business hours, at the Raleigh Ecological Services Field Office, U.S. Fish and Wildlife Service, 551F Pylon Drive, Raleigh, NC 27606; telephone 919-856-4520; facsimile 919-856-4556. Persons who use a telecommunications device for the deaf (TDD) may call the Federal Relay Service at 1-800-877-8339.

    Comment submission: You may submit written comments on the proposed rule by one of the following methods:

    (1) Electronically: Go to the Federal eRulemaking Portal: http://www.regulations.gov. In the Search box, enter FWS-R4-ES-2018-0035, which is the docket number for the rulemaking. Then, click on the Search button. On the resulting page, in the Search panel on the left side of the screen, under the Document Type heading, check the Proposed Rule box to locate this document. You may submit a comment by clicking on “Comment Now!”

    (2) By hard copy: Submit by U.S. mail or hand-delivery to: Public Comments Processing, Attn: FWS-R4-ES-2018-0035, U.S. Fish and Wildlife Service, MS: BPHC, 5275 Leesburg Pike, Falls Church, VA 22041-3803.

    We request that you send comments only by the methods described above. See Information Requested, below, for more information on submitting comments on the proposed rule.

    FOR FURTHER INFORMATION CONTACT:

    Pete Benjamin, Field Supervisor, U.S. Fish and Wildlife Service, Raleigh Ecological Services Field Office, 551F Pylon Drive, Raleigh, NC 27606; telephone 919-856-4520; facsimile 919-856-4556. Persons who use a TDD may call the Federal Relay Service at 1-800-877-8339.

    SUPPLEMENTARY INFORMATION: Background

    On June 28, 2018, we published in the Federal Register a proposed rule (83 FR 30382) to replace the regulations governing the northeast North Carolina (NC) nonessential experimental population (NEP) of the red wolf, which were codified in 1995 in title 50 of the Code of Federal Regulations (CFR) at § 17.84(c) (50 CFR 17.84(c)). That proposal had a 30-day comment period, ending July 30, 2018. The purpose of the proposed action is to incorporate the most recent science and lessons learned related to the management of red wolves to implement revised regulations that will better further the conservation of the red wolf. We propose to establish a more manageable wild propagation population that will allow for more resources to support the captive population component of the red wolf program (which is the genetic fail safe for the species); serve the future needs of new reintroduction efforts; retain the influences of natural selection on the species; eliminate the regulatory burden on private landowners; and provide a population for continued scientific research on wild red wolf behavior and population management.

    Information Requested

    We will accept written comments and information during this reopened comment period and will consider information and recommendations from all interested parties. If you previously submitted comments or information on the proposed rule, please do not resubmit them. We have incorporated them into the public record, and we will fully consider them in the preparation of our final determination. We intend that any final action resulting from the proposal will be based on the best scientific and commercial data available and be as accurate and as effective as possible.

    We request comments or information from other concerned governmental agencies, Native American tribes, the scientific community, industry, or any other interested parties concerning the June 28, 2018, proposed rule. We particularly seek comments concerning:

    (1) Contribution of the NC NEP to recovery goals for the red wolf;

    (2) The relative effects that management of the NC NEP under the proposed rule would have on the conservation of the species;

    (3) The extent to which the NC NEP may be affected by existing or anticipated Federal or State actions or private activities within or adjacent to the proposed NC NEP management area;

    (4) Appropriate provisions for protections and “take” of red wolves;

    (5) Ideas and strategies for promoting tolerance of red wolves on private property outside the NC NEP management area; and

    (6) Appropriate means to evaluate the effectiveness of the proposed action, including relevant performance measures.

    Additionally, we seek comments on the identification of direct, indirect, beneficial, and adverse effects that may result from the June 28, 2018, proposed rule. You may wish to consider the extent to which the proposed rule will affect the following when providing comments:

    (1) Impacts on floodplains, wetlands, wild and scenic rivers, or ecologically sensitive areas;

    (2) Impacts on Federal, State, local, or Tribal park lands; refuges and natural areas; and cultural or historic resources;

    (3) Impacts on human health and safety;

    (4) Impacts on air, soil, and water;

    (5) Impacts on prime agricultural lands;

    (6) Impacts to other species of wildlife, including other endangered or threatened species;

    (7) Disproportionately high and adverse impacts on minority and low income populations;

    (8) Any socioeconomic or other potential effects; and

    (9) Any potential conflicts with other Federal, State, local, or Tribal environmental laws or requirements.

    Please include sufficient information with your submission (such as scientific journal articles or other publications) to allow us to verify any scientific or commercial information you include.

    We will post all comments on http://www.regulations.gov. If you submit information via http://www.regulations.gov, your entire submission—including any personal identifying information—will be posted on the website. If your submission is made via a hardcopy that includes personal identifying information, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so. We will post all hardcopy submissions on http://www.regulations.gov.

    Comments and materials we receive, as well as supporting documentation we used in preparing the proposed rule, are available for public inspection on http://www.regulations.gov, or by appointment, during normal business hours, at the U.S. Fish and Wildlife Service, Raleigh Ecological Services Field Office (see FOR FURTHER INFORMATION CONTACT).

    Authority:

    The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.).

    Dated: July 30, 2018. James W. Kurth, Deputy Director, U.S. Fish and Wildlife Service, Exercising the Authority of the Director for the U.S. Fish and Wildlife Service.
    [FR Doc. 2018-17320 Filed 8-10-18; 8:45 am] BILLING CODE 4333-15-P
    83 156 Monday, August 13, 2018 Notices DEPARTMENT OF AGRICULTURE Agricultural Marketing Service [Docket No. AMS-ST-18-0064] Notice of Request for Revision of a Currently Approved Collection AGENCY:

    Agricultural Marketing Service, USDA.

    ACTION:

    Notice and request for comments.

    SUMMARY:

    In accordance with the Paperwork Reduction Act of 1995, this notice announces the Agricultural Marketing Service's (AMS) intention to request approval from Office of Management and Budget (OMB) for an extension of and revision to the currently approved information collection “Application for Plant Variety Protection Certification and Objective Description of Variety.”

    DATES:

    Comments must be received by October 12, 2018.

    ADDRESSES:

    Interested persons are invited to submit comments concerning this notice by using the electronic process available at http://www.regulations.gov. Written comments may also be submitted to the Plant Variety Protection Office (PVPO), Science and Technology, Agricultural Marketing Service, USDA, 1400 Independence Avenue SW, Room 4512-S, Stop 0274, Washington, DC 20250 or by facsimile to (202) 260-8976. All comments should reference the docket number AMS-ST-18-0064, the date, and the page number of this issue of the Federal Register.

    FOR FURTHER INFORMATION CONTACT:

    Bernadette Thomas, Information Technology Specialist, (202) 720-1168 or [email protected]

    SUPPLEMENTARY INFORMATION:

    Title: Regulations Governing the Application for Plant Variety Protection Certificate and Reporting Requirements under the Plant Variety Protection Act.

    OMB Number: 0581-0055.

    Expiration Date of Approval: December 31, 2018.

    Type of Request: Extension and revision of a currently approved information collection.

    Abstract: The Plant Variety Protection Act (PVPA) (7 U.S.C. 2321 et seq.) was established “To encourage the development of novel varieties of sexually reproduced plants and make them available to the public, providing protection available to those who breed, develop, or discover them, and thereby promote progress in agriculture in the public interest.”

    The PVPA is a voluntary user funded program which grants intellectual property rights protection to breeders of new, distinct, uniform, and stable seed reproduced and tuber propagated plant varieties. To obtain these rights the applicant must provide information which shows the variety is eligible for protection and that it is indeed new, distinct, uniform, and stable as the law requires. Application forms, descriptive forms, and ownership forms are furnished to applicants to identify the information which is required to be furnished by the applicant in order to legally issue a certificate of protection (ownership). The certificate is based on claims of the breeder and cannot be issued on the basis of reports in publications not submitted by the applicant. Regulations implementing the PVPA appear at 7 CFR part 92.

    Currently approved forms ST-470, Application for Plant Variety Protection Certificate, ST-470 A, Origin and Breeding History, ST-470 B, Statement of Distinctness, Form ST-470 series, Objective Description of Variety (Exhibit C), Form ST-470-E, Basis of Applicant's Ownership, are the basis by which the determination, by experts at PVPO, is made as to whether a new, distinct, uniform, and stable seed reproduced or tuber-propagated variety in fact exists and is entitled to protection.

    The ST 470 application form combines Exhibits A, B, and E into one form. The information received on applications, with certain exceptions, is required by law to remain confidential until the certificate is issued (7 U.S.C. 2426).

    The information collection requirements in this request are essential to carry out the intent of the PVPA, to provide applicants with certificates of protection, to provide the respondents the type of service they request, and to administer the program.

    Estimate of Burden: Public reporting burden for this collection of information is estimated to average 1.02 hours per response.

    Respondents: Businesses or other for-profit, not-for-profit institutions, and Federal Government.

    Estimated Number of Respondents: 93.

    Estimated Number of Responses per Respondent: 21.78.

    Estimated Total Annual Burden on Respondents: 2,063 (rounded).

    Comments are invited on: (1) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of the burden of the proposed collection of information including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. All comments received will be available for public inspection during regular business hours.

    All responses to this notice will be summarized and included in the request for OMB approval. All comments will become a matter of public record.

    Dated: August 8, 2018. Bruce Summers, Administrator, Agricultural Marketing Service.
    [FR Doc. 2018-17285 Filed 8-10-18; 8:45 am] BILLING CODE 3410-02-P
    DEPARTMENT OF AGRICULTURE Rural Business-Cooperative Service Notice of Request for Revision of a Currently Approved Information Collection AGENCY:

    Rural Business-Cooperative Service, USDA.

    ACTION:

    Proposed collection; comments requested.

    SUMMARY:

    In accordance with the Paperwork Reduction Act of 1995, this notice announces the Rural Business-Cooperative Service's intention to request an extension for a currently approved information collection in support of the program for 7 CFR part 4284, subpart J.

    DATES:

    Comments on this notice must be received by October 12, 2018 to be assured of consideration.

    FOR FURTHER INFORMATION CONTACT:

    Deputy Administrator, Cooperative Programs, U.S. Department of Agriculture, 1400 Independence Avenue SW, STOP 3250, Washington, DC 20250, Telephone: 202-720-7558.

    SUPPLEMENTARY INFORMATION:

    Title: Value-Added Producer Grants.

    OMB Number: 0570-0064.

    Expiration Date of Approval: December 31, 2018.

    Type of Request: Revision of a currently approved information collection.

    Abstract: The purpose of this information collection is to obtain information necessary to evaluate grant applications to determine the eligibility of the applicant and the project for the program and to qualitatively assess the project to determine which projects should be funded.

    Estimate of Burden: Public reporting burden for this collection of information is estimated to average 39 hours per grant application.

    Respondents: Independent producers, agriculture producer groups, farmer- or rancher-cooperatives, and majority-controlled producer-based business ventures.

    Estimated Number of Respondents: 249.

    Estimated Number of Responses per Respondent: 14.

    Estimated Number of Responses: 3,564.

    Estimated Total Annual Burden on Respondents: 52,818 hours.

    Copies of this information collection can be obtained from Kimble Brown, Regulations and Paperwork Management Branch, Support Services Division at (202) 692-0043.

    Comments

    Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the Rural Business-Cooperative Service, including whether the information will have practical utility; (b) the accuracy of the Rural Business-Cooperative Service's estimate of the burden of the proposed collection of information including validity of the methodology and assumptions 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 through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology. Comments may be sent to Kimble Brown, Regulations and Paperwork Management Branch, Support Services Division, U.S. Department of Agriculture, Rural Development, STOP 0742, 1400 Independence Avenue SW, Washington, DC 20250-0742.

    All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.

    Dated: August 6, 2018. Bette Brand, Administrator, Rural Business-Cooperative Service.
    [FR Doc. 2018-17229 Filed 8-10-18; 8:45 am] BILLING CODE 3410-XY-P
    ARCTIC RESEARCH COMMISSION Notice of 110th Commission Meeting

    A notice by the U.S. Arctic Research Commission on 08/03/2018.

    Notice is hereby given that the U.S. Arctic Research Commission will hold its 110th meeting in Kotzebue, AK, on September 4-5, 2018. The business sessions, open to the public, will convene at 8:30 a.m. at NW Borough Assembly Chambers, 163 Lagoon Street, Kotzebue, AK 99752.

    The Agenda items include:

    (1) Call to order and approval of the agenda (2) Approval of the minutes from the 109th meeting (3) Commissioners and staff reports (4) Discussion and presentations concerning Arctic research activities

    The meeting will focus on reports and updates relating to programs and research projects affecting Alaska and the greater Arctic.

    The Arctic Research and Policy Act of 1984 (Title I Pub. L. 98-373) and the Presidential Executive Order on Arctic Research (Executive Order 12501) dated January 28, 1985, established the United States Arctic Research Commission.

    If you plan to attend this meeting, please notify us via the contact information below. Any person planning to attend who requires special accessibility features and/or auxiliary aids, such as sign language interpreters, must inform the Commission of those needs in advance of the meeting.

    Contact person for further information: Kathy Farrow, Communications Specialist, U.S. Arctic Research Commission, 703-525-0111 or TDD 703-306-0090.

    Dated: August 3, 2018. Kathy Farrow, Communications Specialist.
    [FR Doc. 2018-17300 Filed 8-10-18; 8:45 am] BILLING CODE 7555-01-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-471-807] Certain Uncoated Paper From Portugal: Final Results of Antidumping Duty Administrative Review; 2015-2017 AGENCY:

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

    SUMMARY:

    The Department of Commerce (Commerce) determines that certain uncoated paper (uncoated paper) from Portugal is being, or is likely to be sold, at less than normal value during the period of review (POR), August 26, 2015, through February 28, 2017.

    DATES:

    Applicable August 13, 2018.

    FOR FURTHER INFORMATION CONTACT:

    Carrie Bethea, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-1491.

    SUPPLEMENTARY INFORMATION:

    Scope of the Order

    The product covered by this review is uncoated paper from Portugal. For a full description of the scope, see the Issues and Decision Memorandum dated concurrently with and hereby adopted by this notice.1

    1See Memorandum, “Decision Memorandum for the Preliminary Results of Antidumping Duty Administrative Review: Certain Uncoated Paper from Portugal; 2015-2017,” dated concurrently with this notice (Preliminary Decision Memorandum).

    Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties to this administrative review are addressed in the Issues and Decision Memorandum. 2 A list of the issues that parties raised and to which we responded is attached to this notice as an Appendix. The Issues and Decision Memorandum is a public document and is on-file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov and in the Central Records Unit (CRU), room B8024 of the main Department of Commerce building. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly on the internet at http://enforcement.trade.gov/frn/index.html. The signed Issues and Decision Memorandum and the electronic versions of the Issues and Decision Memorandum are identical in content.

    2See Memorandum, “Certain Uncoated Paper from Portugal: Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative Review; 2015-2017,” dated concurrently with, and hereby adopted by, this notice (Issues and Decision Memorandum).

    Changes Since the Preliminary Results

    Based on a review of the record and comments received from interested parties, we have recalculated The Navigator Company, S.A.'s (Navigator) weighted-average dumping margin using facts otherwise available for Navigator's home market bonus discounts and facts otherwise available with an adverse inference for certain of Navigator's U.S. brokerage and handling expenses. For further discussion, see the Issues and Decision Memorandum.

    Final Results of the Review

    We determine that, for the period of March 1, 2016, through February 28, 2017, the following weighted-average dumping margin exists:

    Exporter/producer Weighted-average
  • dumping margin
  • (percent)
  • The Navigator Company, S.A. 37.34
    Duty Assessment

    Commerce shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries covered by this review.

    In accordance with Commerce's “automatic assessment” practice, for entries of subject merchandise during the POR produced by Sidenor for which it did not know that the merchandise was destined for the United States, we will instruct CBP to liquidate those entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction.

    We intend to issue instructions to CBP 15 days after the publication date of the final results of this review.

    Cash Deposit Requirements

    The following cash deposit requirements will be effective upon publication of the notice of final results of administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rate for Navigator will be the rate established in the final results of this administrative review; (2) for merchandise exported by producers or exporters not covered in this administrative review but covered in a prior segment of the proceeding, the cash deposit rate will continue to be the company-specific rate published for the most recently completed segment of this proceeding; (3) if the exporter is not a firm covered in this review, a prior review, or the original investigation, but the producer is, the cash deposit rate will be the rate established for the most recently completed segment of this proceeding for the producer of the subject merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 7.80 percent, the all-others rate established in the investigation.3 These cash deposit requirements, when imposed, shall remain in effect until further notice.

    3See Certain Uncoated Paper from Portugal: Final Determination of Sales at Less than Fair Value and Final Negative Determination of Critical Circumstances, 81 FR 3105 (January 20, 2016).

    Notification to Importers

    This notice also serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this POR. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping and/or countervailing duties occurred and the subsequent assessment of doubled antidumping duties.

    Administrative Protective Order

    This notice also serves as a reminder to parties subject to administrative protective orders (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return/destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

    We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.213(h).

    Dated: August 6, 2018. James Maeder, Associate Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, performing the duties of Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations. Appendix List of Topics Discussed in the Final Decision Memorandum I. Summary II. List of Comments III. Background IV. Scope of the Order V. Use of Facts Otherwise Available and Adverse Inferences VI. Discussion of Comments Comment 1: Commerce's Liquidation Instructions Comment 2: Navigator's Allocated U.S. Brokerage and Handling Comment 3: Navigator's Home Market Bonus Discounts Comment 4: Navigator's Reporting of Home Market Indirect Selling Expenses VII. Recommendation
    [FR Doc. 2018-17294 Filed 8-10-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [C-552-824] Laminated Woven Sacks From the Socialist Republic of Vietnam: Preliminary Affirmative Countervailing Duty Determination and Alignment of Final Determination With Final Antidumping Duty Determination AGENCY:

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

    SUMMARY:

    The Department of Commerce (Commerce) preliminarily determines that countervailable subsidies are being provided to producers and exporters of laminated woven sacks (LWS) from the Socialist Republic of Vietnam (Vietnam). The period of investigation is January 1, 2017, through December 31, 2017. Interested parties are invited to comment on this preliminary determination.

    DATES:

    Applicable August 13, 2018.

    FOR FURTHER INFORMATION CONTACT:

    Thomas Martin or Ariela Garvett, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: 202-482-3936 or 202-482-3609, respectively.

    SUPPLEMENTARY INFORMATION:

    Background

    This preliminary determination is made in accordance with section 703(b) of the Tariff Act of 1930, as amended (the Act). Commerce published the notice of initiation of this investigation on April 3, 2018.1 On May 17, 2018, Commerce published its postponement of the deadline for the preliminary determination of the investigation for the full 130 days permitted under section 703(c)(1)(A) of the Act and 19 CFR 351.205(b)(2) until August 6, 2018.2

    1See Laminated Woven Sacks from the Socialist Republic of Vietnam: Initiation of Countervailing Duty Investigation, 83 FR 14253 (April 3, 2018) (Initiation Notice).

    2See Countervailing Duty Investigation of Laminated Woven Sacks from the Socialist Republic of Vietnam: Postponement of Preliminary Determination, 83 FR 22953 (May 17, 2018).

    For a complete description of the events that followed the initiation of this investigation, see the Preliminary Decision Memorandum.3 A list of topics discussed in the Preliminary Decision Memorandum is included as Appendix II to this notice. The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping (AD) and Countervailing Duty (CVD) Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at http://access.trade.gov, and is available to all parties in the Central Records Unit, Room B8024 of the main Department of Commerce building. In addition, a complete version of the Preliminary Decision Memorandum can be accessed directly at http://enforcement.trade.gov/frn/. The signed and electronic versions of the Preliminary Decision Memorandum are identical in content.

    3See Memorandum, “Decision Memorandum for the Preliminary Affirmative Determination: Countervailing Duty Investigation of Laminated Woven Sacks from the Socialist Republic of Vietnam,” dated concurrently with, and hereby adopted by, this notice (Preliminary Decision Memorandum).

    Scope of the Investigation

    The products covered by this investigation are laminated woven sacks from Vietnam. For a complete description of the scope of this investigation, see Appendix I.

    Scope Comments

    In accordance with the preamble to Commerce's regulations, we set aside a period of time in our Initiation Notice for parties to raise issues regarding product coverage and encouraged all parties to submit comments within 20 calendar days of the signature date of that notice. We received several comments concerning the scope of the AD and CVD investigations of LWS from Vietnam.

    We are currently evaluating the scope comments filed by interested parties. We intend to issue our preliminary decision regarding the scope of the AD and CVD investigations in the preliminary determination of the companion AD investigation, which is due for signature on October 3, 2018. We will incorporate the scope decisions from the AD investigation into the scope of the final CVD determination after considering any relevant comments submitted in case and rebuttal briefs.

    Methodology

    Commerce is conducting this investigation in accordance with section 701 of the Act. For each of the subsidy programs found countervailable, we preliminarily determine that there is a subsidy, i.e., a financial contribution by an “authority” that confers a benefit on the recipient, and that the subsidy is specific.4 For a full description of the methodology underlying our preliminary conclusions, see the Preliminary Decision Memorandum.

    4See sections 771(5)(B) and (D) of the Act regarding financial contribution; section 771(5)(E) of the Act regarding benefit; and section 771(5A) of the Act regarding specificity.

    Alignment

    As noted in the Preliminary Decision Memorandum, in accordance with section 705(a)(1) of the Act and 19 CFR 351.210(b)(4), Commerce is aligning the final CVD determination in this investigation with the final determination in the companion AD investigation of LWS from Vietnam, based on a request made by Laminated Woven Sacks Fair Trade Coalition (the Coalition) and its individual members Polytex Fibers Corporation and ProAmpac Holdings Inc., (the petitioners).5 Consequently, the final CVD determination will be issued on the same date as the final AD determination, which is currently scheduled to be issued no later than December 17, 2018.6

    5See Letter from the petitioners, “Investigation of Laminated Woven Sacks from the Socialist Republic of Vietnam: Petitioners' Alignment Request,” dated July 13, 2018.

    6See Laminated Woven Sacks from the Socialist Republic of Vietnam: Postponement of Preliminary Determination in the Less-Than-Fair-Value Investigation, 83 FR 36876 (July 31, 2018).

    All-Others Rate and Preliminary Determination

    With respect to the all-others rate, section 705(c)(5)(A) of the Act provides that if the countervailable subsidy rates established for all exporters and producers individually investigated are determined entirely in accordance with section 776 of the Act, Commerce may use any reasonable method to establish an all-others rate for exporters and producers not individually investigated.

    In this investigation, Commerce calculated individual estimated countervailable subsidy rates for Duong Vinh Hoa Packaging Company Ltd (DVH) and Xinsheng Plastic Industry Co Ltd (Xinsheng) that are not zero, de minimis, or based entirely on facts otherwise available. Commerce calculated the all-others rate using a weighted average of the individual estimated subsidy rates calculated for the examined respondents using each company's publicly-ranged values for the merchandise under consideration.7

    7 With two respondents under examination, Commerce normally calculates (A) a weighted-average of the estimated subsidy rates calculated for the examined respondents; (B) a simple average of the estimated subsidy rates calculated for the examined respondents; and (C) a weighted-average of the estimated subsidy rates calculated for the examined respondents using each company's publicly-ranged U.S. sale quantities for the merchandise under consideration. Commerce then compares (B) and (C) to (A) and selects the rate closest to (A) as the most appropriate rate for all other producers and exporters. See, e.g., Ball Bearings and Parts Thereof from France, Germany, Italy, Japan, and the United Kingdom: Final Results of Antidumping Duty Administrative Reviews, Final Results of Changed-Circumstances Review, and Revocation of an Order in Part, 75 FR 53661, 53663 (September 1, 2010). As complete publicly ranged sales data was available, Commerce based the all-others rate on the publicly ranged sales data of the mandatory respondents. For a complete analysis of the data, please see the All-Others' Rate Calculation Memorandum.

    Commerce summarizes its preliminary countervailable subsidy rates in the table below:

    Producer/exporter Subsidy rate
  • (percent)
  • Duong Vinh Hoa Packaging Company Limited 3.24 Xinsheng Plastic Industry Co., Ltd. 6.15 All-Others 5.19
    Suspension of Liquidation

    In accordance with section 703(d)(1)(B) and (d)(2) of the Act, Commerce will direct U.S. Customs and Border Protection (CBP) to suspend liquidation of all entries of LWS from Vietnam as described in the scope of the investigation entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. Further, pursuant to 19 CFR 351.205(d), Commerce will instruct CBP to require a cash deposit equal to the rates indicated above.

    Public Comment

    Interested parties may submit case and rebuttal briefs, as well as request a hearing. Case briefs or other written comments may be submitted to the Assistant Secretary for Enforcement and Compliance no later than seven days after the date on which the last verification report is issued in this investigation. Rebuttal briefs, limited to issues raised in case briefs, may be submitted no later than five days after the deadline date for case briefs.8 Pursuant to 19 CFR 351.309(c)(2) and (d)(2), parties who submit case briefs or rebuttal briefs in this investigation are encouraged to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities.

    8See 19 CFR 351.309; see also 19 CFR 351.303 (for general filing requirements).

    Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, limited to issues raised in the case and rebuttal briefs, must submit a written request to the Assistant Secretary for Enforcement and Compliance, U.S. Department of Commerce, within 30 days after the date of publication of this notice. Requests should contain the party's name, address, and telephone number, the number of participants, whether any participant is a foreign national, and a list of the issues to be discussed. If a request for a hearing is made, Commerce intends to hold the hearing at the U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, at a time and date to be determined. Parties should confirm by telephone the date, time, and location of the hearing two days before the scheduled date.

    International Trade Commission Notification

    In accordance with section 703(f) of the Act, Commerce will notify the International Trade Commission (ITC) of its determination. If Commerce's final determination is affirmative, the ITC will make its final determination before the later of 120 days after the date of this preliminary determination or 45 days after Commerce's final determination.

    Notification Regarding Administrative Protective Orders

    In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to an APO of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.

    This determination is issued and published pursuant to sections 703(f) and 777(i) of the Act and 19 CFR 351.205(c).

    Dated: August 6, 2018. James Maeder, Associate Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations performing the duties of the Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations. Appendix I Scope of the Investigation

    The merchandise covered by this investigation is laminated woven sacks. Laminated woven sacks are bags consisting of one or more plies of fabric consisting of woven polypropylene strip and/or woven polyethylene strip, regardless of the width of the strip; with or without an extrusion coating of polypropylene and/or polyethylene on one or both sides of the fabric; laminated by any method either to an exterior ply of plastic film such as biaxially-oriented polypropylene (BOPP), polyester (PET), polyethylene (PE), nylon, or any film suitable for printing, or to an exterior ply of paper; printed; displaying, containing, or comprising three or more visible colors (e.g., laminated woven sacks printed with three different shades of blue would be covered by the scope), not including the color of the woven fabric; regardless of the type of printing process used; with or without lining; with or without handles; with or without special closing features (including, but not limited to, closures that are sewn, glued, easy-open (e.g., tape or thread), re-closable (e.g., slider, hook and loop, zipper), hot-welded, adhesive-welded, or press-to-close); whether finished or unfinished (e.g., whether or not closed on one end and whether or not in roll form, including, but not limited to, sheets, lay-flat, or formed in tubes); not exceeding one kilogram in actual weight. Laminated woven sacks produced in the Socialist Republic of Vietnam are subject to the scope regardless of the country of origin of the fabric used to make the sack.

    Subject laminated woven sacks are currently classifiable under Harmonized Tariff Schedule of the United States (HTSUS) subheading 6305.33.0040. If entered with plastic coating on both sides of the fabric consisting of woven polypropylene strip and/or woven polyethylene strip, laminated woven sacks may be classifiable under HTSUS subheadings 3923.21.0080, 3923.21.0095, and 3923.29.0000. If entered not closed on one end or in roll form (including, but not limited to, sheets, lay-flat tubing, and sleeves), laminated woven sacks may be classifiable under other HTSUS subheadings, including 3917.39.0050, 3921.90.1100, 3921.90.1500, and 5903.90.2500. If the polypropylene strips and/or polyethylene strips making up the fabric measure more than 5 millimeters in width, laminated woven sacks may be classifiable under other HTSUS subheadings including 4601.99.0500, 4601.99.9000, and 4602.90.0000. Although HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope is dispositive.

    Appendix II List of Topics Discussed in the Preliminary Decision Memorandum I. Summary II. Background III. Scope Comments IV. Scope of the Investigation V. Alignment VI. Injury Test VII. Application of the CVD Law to Imports from Vietnam VIII. Subsidies Valuation IX. Analysis of Programs X. Calculation of the All-Others Rate XI. ITC Notification XII. Recommendation
    [FR Doc. 2018-17287 Filed 8-10-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration University of Pittsburgh of the Commonwealth System of Higher Education, et al.: Notice of Decision on Application for Duty-Free Entry of Scientific Instruments

    This is a decision pursuant to Section 6(c) of the Educational, Scientific, and Cultural Materials Importation Act of 1966 (Pub. L. 89-651, as amended by Pub. L. 106-36; 80 Stat. 897; 15 CFR part 301). Related records can be viewed between 8:30 a.m. and 5:00 p.m. in Room 3720, U.S. Department of Commerce, 14th and Constitution Ave. NW, Washington, DC.

    Docket Number: 17-017. Applicant: University of Pittsburgh of the Commonwealth System of Higher Education, Pittsburgh, PA 15260. Instrument: Photonic Professional GT System. Manufacturer: Nano scribe, Germany. Intended Use: See notice at 83 FR 31120, July 3, 2018. Comments: None received. Decision: Approved. We know of no instruments of equivalent scientific value to the foreign instruments described below, for such purposes as this is intended to be used, that was being manufactured in the United States at the time of order. Reasons: The instrument will be used to support the fabrication of devices comprised primarily of both commercially available and in house developed UV curable polymers. Biomaterials and other biopolymers that have been specifically designed to be cured using a radical polymerization process will also be investigated in this device. Any polymer or biomaterial that can be ablated using the wavelength and power available in the Nano scribe system will also be used for subtractive manufacturing.

    Docket Number: 18-001. Applicant: William March Rice University, Houston, TX 77005. Instrument: 3D-Discovery Bioprinter and Direct Write Electro spinner. Manufacturer: regnum, Switzerland. Intended Use: See notice at 83 FR 31120, July 3, 2018. Comments: None received. Decision: Approved. We know of no instruments of equivalent scientific value to the foreign instruments described below, for such purposes as this is intended to be used, that was being manufactured in the United States at the time of order. Reasons: The instrument will be used for a multitude of techniques across disciplines ranging from biology to materials science, chemical engineering and bioengineering. Techniques like thermoplastic and hydrogel extrusion, 3D printing, 2-component printing, cell-bioprinting, electrospinning/direct write electrospinning, drug/factor encapsulation.

    Docket Number: 18-002. Applicant: Centers for Disease Control and Prevention, Atlanta, GA 30333. Instrument: Cello Scope Optical Screening Instrument. Manufacturer: Bio Sense Solutions Apes, Denmark. Intended Use: See notice at 83 FR 31120, July 3, 2018. Comments: None received. Decision: Approved. We know of no instruments of equivalent scientific value to the foreign instruments described below, for such purposes as this is intended to be used, that was being manufactured in the United States at the time of order. Reasons: The instrument will be used for research use only to study several Gram-negative and Gram-positive bacterial pathogens. Use of this optical screening instrument, will be developing and evaluating an automated antimicrobial susceptibility test for bacterial pathogens based on time-lapse imaging of cells incubating in broth microdilution drug panels. Experiments to be conducted include growth assessment of these bacterial pathogens in the presence and absence of clinically relevant antibiotics. The antibiotics selected for our studies are those recommended by the Clinical and Laboratory Standards Institute (CLSI) for primary testing. The objectives of the investigations are to more rapidly determine antimicrobial susceptibility of bacterial pathogens. Currently, the gold-standard method for antimicrobial susceptibility testing requires 16-20 or 24-48 hours, depending on the species. The techniques required to perform these experiments include inoculation of a testing drug panel with a bacterial suspension and assessing susceptibly by optical screening. The research conducted using this instrument may substantially reduce the time required to make an informed therapeutic decision.

    Docket Number: 18-003. Applicant: University of Virginia, Charlottesville, VA 22903. Instrument: Superconducting Magnet System. Manufacturer: Cryogenic Ltd., United Kingdom. Intended Use: See notice at 83 FR31120, July 3, 2018. Comments: None received. Decision: Approved. We know of no instruments of equivalent scientific value to the foreign instruments described below, for such purposes as this is intended to be used, that was being manufactured in the United States at the time of order. Reasons: The instrument will be used to study the beta decay of neutrons. Neutrons are elementary constituents of any matter in our universe. The experiments require measuring the kinetic energies of electrons and protons, two of the particles that are produced in neutron decay. The Nab spectrometer is to extract the neutrino-electron correlation coefficient “a” and the Fires term “b” which describes the dynamic properties of the decay particles; the results test our understanding of the Standard Model of Elementary Particle Physics. The Nab spectrometer, electrons and protons are guided by the magnetic field, produced by the magnet system that we are importing. Electrons and protons eventually reach detectors. The detectors allow us to determine the kinetic energies of both particles, respectively.

    Docket Number: 18-004. Applicant: University of Nebraska-Lincoln, Lincoln, NE 68588-0645. Instrument: Closed Cycle Cryogen Free Cryostat. Manufacturer: Autocue Systems, Germany. Intended Use: See notice at 83 FR 31120, July 3, 2018. Comments: None received. Decision: Approved. We know of no instruments of equivalent scientific value to the foreign instruments described below, for such purposes as this is intended to be used, that was being manufactured in the United States at the time of order. Reasons: The instrument will be used to study the optoelectronic properties of novel atomically thin semiconductor materials such as metal chalcogenides, which are promising for application in energy conversion (for example solar cells) and micro-/nanoelectronics. Leading-edge fundamental research on the optoelectronic properties of novel nanomaterials, with the goal of developing advanced materials to support the needs for new energy conversion processes and next-generation electronics and computing.

    Gregory W. Campbell, Director, Subsidies Enforcement, Enforcement and Compliance.
    [FR Doc. 2018-17295 Filed 8-10-18; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration RIN 0648-XG410 New England Fishery Management Council; Public Meeting AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Notice; public meeting.

    SUMMARY:

    The New England Fishery Management Council (Council) is scheduling a public meeting of its Habitat Committee to consider actions affecting New England fisheries in the exclusive economic zone (EEZ). Recommendations from this group will be brought to the full Council for formal consideration and action, if appropriate.

    DATES:

    This meeting will be held on Tuesday, August 28, 2018 at 9 a.m.

    ADDRESSES:

    Meeting address: The meeting will be held at the Four Points by Sheraton, One Audubon Road, Wakefield, MA 01880; phone: (781) 245-9300.

    Council address: New England Fishery Management Council, 50 Water Street, Mill 2, Newburyport, MA 01950.

    FOR FURTHER INFORMATION CONTACT:

    Thomas A. Nies, Executive Director, New England Fishery Management Council; telephone: (978) 465-0492.

    SUPPLEMENTARY INFORMATION:

    Agenda

    The committee will discuss the Clam dredge framework, particularly review fishing industry proposals and preliminary Habitat Plan Development Team evaluation for exemption areas in the Great South Channel Habitat Management Area. They will recommend alternatives to the Council for inclusion in the framework and for further analysis. The committee will receive an update on recent Essential Fish Habitat consultations from Greater Atlantic Regional Fisheries Office staff. They also plan to discuss recent Council and National Marine Fisheries Services activity related to offshore wind engagement and research and monitoring plans under development by the states. Other business will be discussed as necessary.

    Although non-emergency issues not contained in this agenda may come before this group for discussion, those issues may not be the subject of formal action during these meetings. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take final action to address the emergency.

    Special Accommodations

    This meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Thomas A. Nies, Executive Director, at (978) 465-0492, at least 5 days prior to the date. This meeting will be recorded. Consistent with 16 U.S.C. 1852, a copy of the recording is available upon request.

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: August 8, 2018. Tracey L. Thompson, Acting Deputy Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2018-17309 Filed 8-10-18; 8:45 am] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration RIN 0648-XG412 Mid-Atlantic Fishery Management Council (MAFMC); Public Meetings AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Notice; public meeting.

    SUMMARY:

    The Mid-Atlantic Fishery Management Council's (Council) Spiny Dogfish Advisory Panel (AP) will meet to review recent fishery performance and develop a Fishery Performance Report and/or other recommendations in preparation for development of annual specifications commencing May 1, 2019. Specifications can be set for up to five years.

    DATES:

    The meeting will be held Monday, August 27, 2018, from 4:30 p.m. to 7 p.m.

    ADDRESSES:

    The meeting will be held via webinar, but anyone can also attend at the Council office address (see below). The webinar link is: http://mafmc.adobeconnect.com/dogfishap2018/. Please call the Council at least 24 hours in advance if you wish to attend at the Council office.

    Council address: Mid-Atlantic Fishery Management Council, 800 N. State St., Suite 201, Dover, DE 19901; telephone: (302) 674-2331.

    FOR FURTHER INFORMATION CONTACT:

    Christopher M. Moore, Ph.D. Executive Director, Mid-Atlantic Fishery Management Council; telephone: (302) 526-5255. The Council's website, www.mafmc.org also has details on the proposed agenda, webinar access, and briefing materials.

    SUPPLEMENTARY INFORMATION:

    The purpose of the meeting is to create a Fishery Performance Report by the Council's Spiny Dogfish Advisory Panel. The intent of the report is to facilitate structured input from the Advisory Panel members into the specifications development process.

    Special Accommodations

    The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to M. Jan Saunders, (302) 526-5251, at least 5 days prior to the meeting date.

    Dated: August 8, 2018. Tracey L. Thompson, Acting Deputy Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2018-17308 Filed 8-10-18; 8:45 am] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration RIN 0648-XG413 Mid-Atlantic Fishery Management Council (MAFMC); Public Meeting AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Notice of a public meeting.

    SUMMARY:

    The Mid-Atlantic Fishery Management Council's Spiny Dogfish Monitoring Committee will hold a public meeting to review annual specifications and management measures and make any appropriate recommendations.

    DATES:

    The meeting will be held Friday, September 14, 2018, from 9 a.m. to 11 a.m.

    ADDRESSES:

    The meeting will be held via webinar, but anyone can also attend at the Council office address (see below). The webinar link is: http://mafmc.adobeconnect.com/spinydogmc-2018/. Please call the Council at least 24 hours in advance if you wish to attend at the Council office.

    Council address: Mid-Atlantic Fishery Management Council, 800 N. State St, Suite 201, Dover, DE 19901; telephone: (302) 674-2331.

    FOR FURTHER INFORMATION CONTACT:

    Christopher M. Moore, Ph.D. Executive Director, Mid-Atlantic Fishery Management Council; telephone: (302) 526-5255. The Council's website, www.mafmc.org also has details on the proposed agenda, webinar access, and briefing materials.

    SUPPLEMENTARY INFORMATION:

    The Mid-Atlantic Fishery Management Council's Spiny Dogfish Monitoring Committee will hold a public meeting to review annual specifications and management measures and make any appropriate recommendations. New annual specifications should begin May 1, 2019 and can be set for up to five years. Public comment will be taken.

    Special Accommodations

    The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to M. Jan Saunders, (302) 526-5251, at least 5 days prior to the meeting date.

    Dated: August 8, 2018. Tracey L. Thompson, Acting Deputy Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2018-17310 Filed 8-10-18; 8:45 am] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration RIN 0648-XG406 Mid-Atlantic Fishery Management Council (MAFMC); Public Meeting AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Notice; public meeting.

    SUMMARY:

    The Mid-Atlantic Fishery Management Council's Surfclam and Ocean Quahog Advisory Panel will hold a public meeting.

    DATES:

    The meeting will be held on Wednesday, September 5, 2018, from 10 a.m. until 4 p.m.

    ADDRESSES:

    The meeting will be held at the Embassy Suites by Hilton—Philadelphia Airport, 9000 Bartram Ave., Philadelphia, Pennsylvania; telephone: (215) 365-4500.

    Council address: Mid-Atlantic Fishery Management Council, 800 N State Street, Suite 201, Dover, DE 19901; telephone: (302) 674-2331; www.mafmc.org.

    FOR FURTHER INFORMATION CONTACT:

    Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council, telephone: (302) 526-5255.

    SUPPLEMENTARY INFORMATION:

    The Mid-Atlantic Fishery Management Council's (MAFMC's) Surfclam and Ocean Quahog Advisory Panel will meet to provide feedback on the Public Hearing Document for the Surfclam and Ocean Quahog Excessive Shares Amendment. An agenda and background documents will be posted at the Council's website (www.mafmc.org) prior to the meeting. The meeting is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to M. Jan Saunders, (302) 526-5251, at least 5 days prior to the meeting date.

    Dated: August 8, 2018. Tracey L. Thompson, Acting Deputy Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2018-17326 Filed 8-10-18; 8:45 am] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Telecommunications and Information Administration First Responder Network Authority [Docket Number 131219999-8730-04] RIN 0660-XC009 Withdrawal of Notice of Intent To Prepare Supplemental Environmental Impact Statements and Amendment of Record of Decisions for Programmatic Environmental Impact Statements AGENCY:

    First Responder Network Authority, National Telecommunications and Information Administration, U.S. Department of Commerce.

    ACTION:

    Notice of intent; withdrawal.

    SUMMARY:

    The First Responder Network Authority (FirstNet Authority) is (1) withdrawing its Notice of Intent to Prepare Supplemental Programmatic Environmental Impact Statements (SPEISs) and Conduct Scoping for the Nationwide Public Safety Broadband Network (NPSBN), and (2) amending five (5) records of decision to remove the references to the FirstNet Authority's intent to prepare the SPEISs.

    FOR FURTHER INFORMATION CONTACT:

    Eli Veenendaal, First Responder Network Authority, National Telecommunications and Information Administration, U.S. Department of Commerce, 3122 Sterling Circle, Suite 100, Boulder, CO 80301 or [email protected]

    SUPPLEMENTARY INFORMATION:

    The Middle Class Tax Relief and Job Creation Act of 2012 (47 U.S.C. 1401 et seq.) created and authorized the FirstNet Authority to take all actions necessary to ensure the building, deployment, and operation of an interoperable NPSBN. As part of NPSBN deployment, the FirstNet Authority is required to comply with the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) (NEPA) and the implementing regulations issued by the Council on Environmental Quality (40 CFR parts 1500-1508) (CEQ Regulations) to assess the environmental effects of its proposed actions prior to making a final decision and implementing the action.

    To support NEPA compliance, the FirstNet Authority prepared and finalized five regional programmatic environmental impact statements (PEISs) that analyze the potential environmental impacts of the deployment and operation of the NPSBN at a programmatic level.1 However, prior to completing the PEISs and issuing corresponding records of decision (RODs), the FirstNet Authority was still in the process of revising the FirstNet Authority Procedures for Implementing the National Environmental Policy Act (FirstNet Authority NEPA Procedures) and identified a potential need to account for these changes in the PEISs and RODs.2

    1 Notice of Availability of a Final Programmatic Environmental Impact Statement for the East Region of the Nationwide Public Safety Broadband Network, 82 FR 49785 (Oct. 27, 2017); See also Notice of Availability of a Final Programmatic Environmental Impact Statement for the South Region of the Nationwide Public Safety Broadband Network, 82 FR 45806 (Oct. 5, 2017); See also Notice of Availability of a Final Programmatic Environmental Impact Statement for the Central Region of the Nationwide Public Safety Broadband Network, 82 FR 41594 (Sept. 1, 2017); Notice of Availability of a Final Programmatic Environmental Impact Statement for the West Region of the Nationwide Public Safety Broadband Network, 82 FR 33870 (July 21, 2017); Notice of Availability of a Final Programmatic Environmental Impact Statement for the Non-Contiguous Region of the Nationwide Public Safety Broadband Network, 82 FR 29825 (June 30, 2017).

    2 Revised National Environmental Policy Act Procedures and Categorical Exclusions, 82 FR 28621 (June 23, 2017) (proposing and seeking public comment on revised FirstNet Authority Procedures for Implementing NEPA).

    Consequently, on September 25, 2017, the FirstNet Authority published a notice of intent (NOI) in the Federal Register to prepare SPEISs to address the potential impact of the FirstNet Authority NEPA Procedures as well as the process the FirstNet Authority would follow to assess potential environmental impacts of the NPSBN deployment at the site specific-level.3 Similarly, the FirstNet Authority also included comparable language relating to its intent to prepare SPEISs in each of the RODS.4

    3 Notice of Intent To Prepare a Supplemental Programmatic Environmental Impact Statement and Conduct Scoping for the Nationwide Public Safety Broadband Network, 82 FR 44556 (Sept. 25, 2017).

    4 FirstNet Authority, Final Programmatic Environmental Impact Statement and Record of Decisions for West Region, Central Region, South Region, East Region, and Non-Contiguous Region, https://website.azurewebsites.us/network/peis-content (discussing the intent to prepare a SPEIS in section 3.4.1—Tiered Site Specific Analysis of each ROD).

    Subsequently, on February 1, 2018, following the issuance of the NOI and RODs for each region, the FirstNet Authority completed the regulatory process for and published in the Federal Register a notice responding to comments and finalizing its proposed modifications to the FirstNet Authority NEPA Procedures.5 The revised FirstNet Authority NEPA Procedures describe the process and review criteria the FirstNet Authority will follow to comply with NEPA and CEQ Regulations for proposed actions related to NPSBN deployment.6 In particular, the FirstNet Authority NEPA Procedures define the roles and responsibilities of the FirstNet Authority and its applicants and describe the criteria and process for determining the appropriate level of NEPA review and making environmental determinations and final decisions for site-specific reviews of FirstNet Authority actions related to the NPSBN.7

    5 Revised National Environmental Policy Act Procedures and Categorical Exclusions, 83 FR 4632 (Feb. 1, 2018) (responding to comments and finalizing revisions to FirstNet Authority Procedures for Implementing NEPA).

    6 FirstNet Procedures for Implementing the National Environmental Policy Act (January 2018), https://www.firstnet.gov/content/notice-revised-national-environmental-policy-act-procedures-and-categorical-exclusions.

    7See id.

    Accordingly, the FirstNet Authority has reviewed and determined that the revisions to the FirstNet Authority NEPA Procedures do not significantly impact any of the environmental analyses in the PEISs and that the information anticipated to be presented in the SPEISs related to the process for conducting site-specific reviews has already been sufficiently included in the revised FirstNet Authority Implementing Procedures. Thus, to avoid duplicative analysis and the unnecessary use of resources, the FirstNet Authority is (1) withdrawing its Notice of Intent to Prepare SPEISs and Conduct Scoping for the NPSBN, and (2) amending five (5) records of decision to remove the references to the FirstNet Authority's intent to prepare SPEISs, including section 3.4.1—Tiered Site Specific Analysis, in each of the documents.8

    8 The amended RODs for each of five regions are available at www.firstnet.gov.

    Dated: August 7, 2018. Elijah Veenendaal, Attorney-Advisor, First Responder Network Authority.
    [FR Doc. 2018-17225 Filed 8-10-18; 8:45 am] BILLING CODE 3510-TL-P
    DEPARTMENT OF COMMERCE Patent and Trademark Office [Docket No.: PTO-P-2018-0050] Office Patent Trial Practice Guide, August 2018 Update AGENCY:

    United States Patent and Trademark Office, Commerce.

    ACTION:

    Notice.

    SUMMARY:

    The United States Patent and Trademark Office (“Office”) issued an update to the Office Patent Trial Practice Guide (“TPG”) in August 2018 to provide updated guidance to the public on standard practices before the Patent Trial and Appeal Board (“Board”) in the post-grant trial procedures implemented following the Leahy-Smith America Invents Act (“AIA”). The Office publishes the TPG to provide practitioners with guidance on typical procedures and times for taking action in AIA trials, as well as to ensure consistency of procedure among panels of the Board.

    FOR FURTHER INFORMATION CONTACT:

    Michael Tierney and William Fink, Vice Chief Administrative Patent Judges, by telephone at (571) 272-9797.

    SUPPLEMENTARY INFORMATION:

    The Office issued an update to the TPG in August 2018, to update the guidance set forth in the TPG by incorporating the Board's current practices and provide further explanation of certain aspects of the Board's practices to the public. The TPG is divided into sections, each directed to a particular stage of a typical AIA trial proceeding or a specific issue commonly encountered during such proceedings. As such, the TPG contains informative material and outlines the current procedures that panels of the Board typically follow in appropriate cases in the normal course of an AIA trial proceeding. In order to expedite these updates and provide guidance to the public as quickly as possible, the Office has chosen to issue updates to the Practice Guide on a section-by-section, rolling basis, rather than a single, omnibus update addressing all aspects of the current Practice Guide. The Office anticipates releasing further revisions to the remaining sections of the TPG on a periodic basis, to take into account feedback received from stakeholders, changes in controlling precedent or applicable regulations, or the further refinement of the Board's practices over time.

    The August 2018 update revises Sections I.G. (Expert Testimony), II.A.3. (Word Count and Page Limits), II.D.2. (Considerations in Instituting a Review), II.I. (Reply to Patent Owner Response and Reply for a Motion to Amend; Sur-Replies), II.K. (Challenging Admissibility; Motions to Exclude; Motions to Strike), II.M. (Oral Hearing), and Appendix A (Sample Scheduling Order).

    The August 2018 update of the TPG, containing only the revised sections, may be viewed or downloaded free of charge from the USPTO website at https://go.usa.gov/xU7GP. The full version of the August 2012 TPG continues to be available for reference on the USPTO website at https://go.usa.gov/xU7GK.

    Dated: August 8, 2018. Andrei Iancu, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.
    [FR Doc. 2018-17315 Filed 8-10-18; 8:45 am] BILLING CODE 3510-16-P
    COMMODITY FUTURES TRADING COMMISSION Agency Information Collection Activities: Notice of Intent To Extend Collection 3038-0101, Registration of Foreign Boards of Trade AGENCY:

    Commodity Futures Trading Commission.

    ACTION:

    Notice.

    SUMMARY:

    The Commodity Futures Trading Commission (CFTC) is announcing an opportunity for public comment on the proposed renewal of a collection of certain information by the agency. Under the Paperwork Reduction Act (PRA), Federal agencies are required to publish notice in the Federal Register concerning each proposed collection of information, including proposed extension of an existing collection of information, and to allow 60 days for public comment. This notice solicits comments on collections of information provided for by Commission regulation Part 48, Registration of Foreign Boards of Trade.

    DATES:

    Comments must be submitted on or before October 12, 2018.

    ADDRESSES:

    You may submit comments, identified by “FBOT Registration” or “OMB Control No. 3038-0101” by any of the following methods:

    • The Agency's website, at http://comments.cftc.gov/. Follow the instructions for submitting comments through the website.

    Mail: Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street, NW, Washington, DC 20581.

    Hand Delivery/Courier: Same as Mail above.

    Please submit your comments using only one method. All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to http://www.cftc.gov.

    FOR FURTHER INFORMATION CONTACT:

    Duane C. Andresen, Associate Director, Division of Market Oversight, Commodity Futures Trading Commission, (202) 418-5492; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Under the PRA, 44 U.S.C. 3501 et seq., Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of Information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3 and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3506(c)(2)(A), requires Federal agencies to provide a 60-day notice in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information, before submitting the collection to OMB for approval. To comply with this requirement, the CFTC is publishing notice of the proposed collection of information listed below. An agency 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.

    Title: Registration of Foreign Boards of Trade (OMB Control No. 3038-0101). This is a request for extension of a currently approved information collection.

    Abstract: Section 738 of the Dodd-Frank Act amended section 4(b) of the Commodity Exchange Act to provide that the Commission may adopt rules and regulations requiring foreign boards of trade (FBOT) that wish to provide their members or other participants located in the United States with direct access to the FBOT's electronic trading and order matching system to register with the Commission. Pursuant to this authorization, the CFTC adopted a final rule requiring FBOTs that wish to permit trading by direct access to provide certain information to the Commission in applications for registration and, once registered, to provide certain information to meet quarterly and annual reporting requirements. The rule establishes reporting and/or recordkeeping requirements that are required by Part 48 of the Commission's regulations and are necessary to ensure that FBOTs registered to provide for trading by direct access meet statutory and regulatory requirements on an initial and ongoing basis.

    With respect to the collection of information, the CFTC invites comments on:

    • Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use;

    • The accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

    • Ways to enhance the quality, usefulness, and clarity of the information to be collected; and

    • Ways to minimize the burden of collection 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.

    You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission's regulations.1

    1 17 CFR 145.9.

    The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from http://www.cftc.gov that it may deem to be inappropriate for publication, such as obscene language. All submissions that have been redacted or removed that contain comments on the merits of the ICR will be retained in the public comment file and will be considered as required under the Administrative Procedure Act and other applicable laws, and may be accessible under the Freedom of Information Act.

    Burden Statement

    Collection 3038-0101—Registration of Foreign Boards of Trade (17 CFR part 48)

    The Commission is revising its estimate of the burden for this collection for registered FBOTs, by reducing the number of FBOTs to which the burden applies. The respondent burden for this collection is estimated to range from two to eight hours per response for submission of required reports. These estimates include the time to locate, compile, validate, and verify and disclose and to ensure such information is maintained. The respondent burden for this collection is estimated to be as follows:

    Estimated number of respondents: 23.

    Estimated Average Burden Hours Per Respondent: 375.2 hours.

    Estimated total annual burden on respondents: 8630 hours.

    Frequency of collection: When a reportable event occurs and quarterly and annually for required reports.

    There are no capital costs or operating and maintenance costs associated with this collection.

    Authority:

    44 U.S.C. 3501 et seq.

    Dated: August 8, 2018. Christopher Kirkpatrick, Secretary of the Commission.
    [FR Doc. 2018-17336 Filed 8-10-18; 8:45 am] BILLING CODE 6351-01-P
    COMMODITY FUTURES TRADING COMMISSION Agency Information Collection Activities Under OMB Review AGENCY:

    Commodity Futures Trading Commission.

    ACTION:

    Notice.

    SUMMARY:

    In compliance with the Paperwork Reduction Act of 1995 (PRA), this notice announces that the Information Collection Request (ICR) abstracted below has been forwarded to the Office of Management and Budget (OMB) for review and comment. The ICR describes the nature of the information collection and its expected costs and burden.

    DATES:

    Comments must be submitted on or before September 12, 2018.

    ADDRESSES:

    Comments regarding the burden estimate or any other aspect of the information collection, including suggestions for reducing the burden, may be submitted directly to the Office of Information and Regulatory Affairs (OIA) in OMB within 30 days of this notice's publication by either of the following methods. Please identify the comments by “OMB Control No. 3038-0007.”

    By email addressed to: [email protected] or

    By mail addressed to: the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention Desk Officer for the Commodity Futures Trading Commission, 725 17th Street NW, Washington, DC 20503.

    A copy of all comments submitted to OIRA should be sent to the Commodity Futures Trading Commission (the “Commission”) by either of the following methods. The copies should refer to “OMB Control No. 3038-0007.”

    • Through the Commission's website at http://comments.cftc.gov/. Follow the instructions for submitting comments through the website.

    By mail addressed to: Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581; or

    • By Hand Delivery/Courier to the same address; or

    Please submit your comments using only one method. All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to http://www.cftc.gov. You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission's regulations.1 The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from http://www.cftc.gov that it may deem to be inappropriate for publication, such as obscene language. All submissions that have been redacted or removed that contain comments on the merits of the ICR will be retained in the public comment file and will be considered as required under the Administrative Procedure Act and other applicable laws, and may be accessible under the Freedom of Information Act.

    1 17 CFR 145.9.

    A copy of the supporting statements for the collection of information discussed herein may be obtained by visiting http://RegInfo.gov.

    FOR FURTHER INFORMATION CONTACT:

    Jacob Chachkin, Special Counsel, Division of Swap Dealer and Intermediary Oversight, Commodity Futures Trading Commission, (202) 418-5496; email: [email protected], and refer to OMB Control No. 3038-0007.

    SUPPLEMENTARY INFORMATION:

    Title: Regulation of Domestic Exchange-Traded Options (OMB Control No. 3038-0007). This is a request for extension of a currently approved information collection.

    Abstract: The rules require futures commission merchants (FCMs) and introducing brokers (IBs): (1) To provide their customers with standard risk disclosure statements concerning the risk of trading commodity interests; and (2) to retain all promotional material and the source of authority for information contained therein. The purpose of these rules is to ensure that customers are advised of the risks of trading commodity interests and to avoid fraud and misrepresentation. This information collection contains the recordkeeping and reporting requirements needed to ensure regulatory compliance with Commission rules relating to this issue. The disclosure and recordkeeping requirements are necessary to monitor and to verify compliance by FCMs and IBs with their obligations concerning disclosure and promotional material.

    An agency 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. On June 7, 2018, the Commission published in the Federal Register notice of the proposed extension of this information collection and provided 60 days for public comment on the proposed extension, 83 FR 26437 (“60-Day Notice”). The Commission did not receive any comments on the 60-Day Notice.

    Burden Statement: The Commission estimates the burden of this collection of information as follows:

    Estimated Annual Reporting Burden Regulation Estimated number of
  • respondents or recordkeepers per year
  • Reports
  • annually
  • by each
  • respondent
  • Total annual responses Estimated
  • average
  • number of hours per
  • response
  • Estimated total number of hours of
  • annual burden in fiscal year
  • Reporting: 33.7—(Risk disclosure) 1,272.00 115.00 146,280.00 0.08 11,702.40 Recordkeeping: 33.8—(Retention of promotional material) 1,272.00 1.00 1,272.00 25.00 31,800.00 Grand total (reporting and recordkeeping) 147,552.00 43,502.40

    There are no capital costs or operating and maintenance costs associated with this collection.

    (Authority: 44 U.S.C. 3501 et seq.) Dated: August 8, 2018. Christopher Kirkpatrick, Secretary of the Commission.
    [FR Doc. 2018-17334 Filed 8-10-18; 8:45 am] BILLING CODE 6351-01-P
    COMMODITY FUTURES TRADING COMMISSION Agency Information Collection Activities: Notice of Intent To Extend Collection 3038-0085: Rule 50.50 End-User Notification of Non-Cleared Swap AGENCY:

    Commodity Futures Trading Commission.

    ACTION:

    Notice.

    SUMMARY:

    The Commodity Futures Trading Commission (“CFTC” or “Commission”) is announcing an opportunity for public comment on the proposed renewal of a collection of certain information by the agency. Under the Paperwork Reduction Act (PRA), Federal agencies are required to publish notice in the Federal Register concerning each proposed collection of information, including proposed extension of an existing collection of information, and to allow 60 days for public comment. This notice solicits comments on the renewal of the reporting requirement that is embedded in the final rule adopting the end-user exception to the Commission's swap clearing requirement.

    DATES:

    Comments must be submitted on or before October 12, 2018.

    ADDRESSES:

    You may submit comments, identified by “OMB Control No. 3038-0085” by any of the following methods:

    • The Agency's website, at http://comments.cftc.gov/. Follow the instructions for submitting comments through the website.

    Mail: Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581.

    Hand Delivery/Courier: Same as Mail above.

    Please submit your comments using only one method. All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to http://www.cftc.gov.

    FOR FURTHER INFORMATION CONTACT:

    Melissa D'Arcy, Special Counsel, Division of Clearing and Risk, Commodity Futures Trading Commission, (202) 418-5086; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Under the PRA, 44 U.S.C. 3501 et seq., Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of Information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3 and includes agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA, 44 U.S.C. 3506(c)(2)(A), requires Federal agencies to provide a 60-day notice in the Federal Register concerning each proposed collection of information, including each proposed extension of an existing collection of information, before submitting the collection to OMB for approval. To comply with this requirement, the CFTC is publishing this notice of the proposed extension of the currently approved collection of information listed below. An agency 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.

    Title: Rule 50.50 End-User Notification of Non-Cleared Swap (OMB Control No. 3038-0085). This is a request for an extension of a currently approved information collection.

    Abstract: Rule 50.50 specifies the requirements for eligible end-users who elect the end-user exception from the Commission's swap clearing requirement, as provided under section 2(h)(7) of the Commodity Exchange Act (“CEA”). Rule 50.50 requires the counterparties to report certain information to a swap data repository registered with the Commission, or to the Commission directly, if one or more counterparties elects the end-user exception. The rule establishes a reporting requirement that is required in order to ensure compliance with the Commission's clearing requirement under section 2(h)(1) of the CEA and is necessary in order for Commission staff to prevent abuse of the end-user exception under section 2(h)(1) of the CEA and pursuant to Rule 50.50.

    With respect to the collection of information, the CFTC invites comments on:

    • Whether the proposed collection of information is necessary for the proper performance of the functions of the Commission, including whether the information will have a practical use;

    • The accuracy of the Commission's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;

    • Ways to enhance the quality, usefulness, and clarity of the information to be collected; and

    • Ways to minimize the burden of collection 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.

    You should submit only information that you wish to make available publicly. If you wish the Commission to consider information that you believe is exempt from disclosure under the Freedom of Information Act, a petition for confidential treatment of the exempt information may be submitted according to the procedures established in § 145.9 of the Commission's regulations.1

    1 17 CFR 145.9.

    The Commission reserves the right, but shall have no obligation, to review, pre-screen, filter, redact, refuse or remove any or all of your submission from http://www.cftc.gov that it may deem to be inappropriate for publication, such as obscene language. All submissions that have been redacted or removed that contain comments on the merits of the ICR will be retained in the public comment file and will be considered as required under the Administrative Procedure Act and other applicable laws, and may be accessible under the Freedom of Information Act.

    Burden Statement:

    Collection 3038-0085—Rule 50.50 End-User Notification of Non-Cleared Swap (17 CFR 50.50: Exceptions to the Clearing Requirement)

    The Commission is revising its estimate of the burden for this collection for eligible end-users electing the end-user exception. The Commission is increasing the estimated number of respondents from 1,092 to 1,815 based on an observed increase in the number of entities electing the exception. The respondent burden for this collection is estimated to be as follows:

    Estimated Number of Respondents: 1,815.

    Estimated Average Burden Hours per Respondent: 0.58.

    Estimated Total Annual Burden Hours: 1,053.

    Frequency of Collection: On occasion; annually.

    There are no capital costs or operating and maintenance costs associated with this collection.

    (Authority: 44 U.S.C. 3501 et seq.) Dated: August 8, 2018. Christopher Kirkpatrick, Secretary of the Commission.
    [FR Doc. 2018-17337 Filed 8-10-18; 8:45 am] BILLING CODE 6351-01-P
    DEPARTMENT OF DEFENSE Department of the Air Force Notice of Intent To Prepare an Environmental Impact Statement for the Air Force Reserve Command F-35A Operational Beddown AGENCY:

    Department of the United States Air Force, Department of Defense.

    ACTION:

    Amended notice of intent.

    SUMMARY:

    The Air Force issued a Notice of Intent to Prepare an Environmental Impact Statement for the Air Force Reserve Command F-35A Operational Beddown Environmental Impact Statement (Vol. 83, No. 56 Federal Register, 12568, March 22, 2018) and is now being amended to correct the address for courier delivered public scoping comments.

    DATES:

    The 10-working day resubmittal period begins on the date of this notice.

    ADDRESSES:

    The address for courier delivered (e.g., Federal Express or United Parcel Service) public scoping comments is: AFCEC/CZN, (ATTN: Mr. Hamid Kamalpour), 3515 S. General McMullen Drive, Suite 155, San Antonio, Texas 78226-1710.

    The address for U.S. Postal Service mail delivery is the same as initially published on March 22, 2018: AFCEC/CZN, (ATTN: Mr. Hamid Kamalpour), 2261 Hughes Avenue, Suite 155, JBSA-Lackland Air Force Base, Texas 78236-9853.

    Both the courier address and U.S. Postal Service address are listed on the project website (www.AFRC-F35A-Beddown.com), which also provides more information on the Environmental Impact Statement and related materials.

    SUPPLEMENTARY INFORMATION:

    The Notice of Intent provided the public with instructions on how to submit scoping comments to the Air Force in consideration of the four alternatives being considered, which include: Homestead Air Reserve Base, Homestead FL; Naval Air Station Fort Worth Joint Reserve Base, Fort Worth, TX; Davis-Monthan Air Force Base, Tucson, AZ; and Whiteman Air Force Base, Knob Noster, MO. The Air Force has subsequently been made aware that the address provided for submittal of courier delivered public scoping comments (e.g., Federal Express or United Parcel Service) was incorrect. This notice corrects the address for courier delivered public scoping comments and provides 10-working days for the interested public to submit scoping comments. During this 10-working day period, the Air Force is offering multiple ways in which comments can be submitted. Comments can be provided through the project website (www.AFRC-F35A-Beddown.com), via email to the email address provided below and via regular mail or via courier to the addresses listed below. The website also provides additional information on the Environmental Impact Statement and related materials. The Air Force will consider all scoping comments submitted.

    Henry Williams, Acting Air Force Federal Register Liaison Officer.
    [FR Doc. 2018-17324 Filed 8-10-18; 8:45 am] BILLING CODE 5001-10-P
    DEPARTMENT OF ENERGY Bonneville Power Administration [BPA File No.: RP-18] Final Rules of Procedure AGENCY:

    Bonneville Power Administration (Bonneville), Department of Energy (DOE).

    ACTION:

    Notice of final rules of procedure.

    SUMMARY:

    These final rules of procedure revise the rules of procedure that govern Bonneville's hearings conducted under section 7(i) of the Pacific Northwest Electric Power Planning and Conservation Act (Northwest Power Act).

    DATES:

    The final rules of procedure are effective on September 12, 2018.

    FOR FURTHER INFORMATION CONTACT:

    Heidi Helwig, DKE-7, BPA Communications, Bonneville Power Administration, P.O. Box 3621, Portland, Oregon 97208; by phone toll-free at 1-800-622-4520; or by email to [email protected]

    Responsible Official: Mary K. Jensen, Executive Vice President, General Counsel, is the official responsible for the development of Bonneville's rules of procedure.

    SUPPLEMENTARY INFORMATION:

    Table of Contents Part I. Introduction and Background Part II. Response to Comments and Changes to Proposed Rules Part III. Final Rules of Procedure Part I—Introduction and Background

    The Northwest Power Act provides that Bonneville must establish and periodically review and revise its rates so that they recover, in accordance with sound business principles, the costs associated with the acquisition, conservation, and transmission of electric power, including amortization of the Federal investment in the Federal Columbia River Power System over a reasonable number of years, and Bonneville's other costs and expenses. 16 U.S.C. 839e(a)(1). Section 7(i) of the Northwest Power Act, 16 U.S.C. 839e(i), requires that Bonneville's rates be established according to certain procedures, including notice of the proposed rates; one or more hearings conducted as expeditiously as practicable by a Hearing Officer; opportunity for both oral presentation and written submission of views, data, questions, and arguments related to the proposed rates; and a decision by the Administrator based on the record.

    In addition, section 212(i)(2)(A) of the Federal Power Act, 16 U.S.C. 824k(i)(2)(A), provides in part that the Administrator may conduct a section 7(i) hearing to determine the terms and conditions for transmission service on the Federal Columbia River Transmission System under certain circumstances. Such a hearing must adhere to the procedural requirements of paragraphs (1) through (3) of section 7(i) of the Northwest Power Act, except that the Hearing Officer makes a recommended decision to the Administrator before the Administrator's final decision.

    Bonneville last revised its procedures to govern hearings under section 7(i) of the Northwest Power Act in 1986. See Procedures Governing Bonneville Power Administration Rate Hearings, 51 FR 7611 (Mar. 5, 1986). Since the establishment of those procedures, there have been significant advancements in the technology available to conduct the hearings. The revised rules of procedure incorporate changes to reflect the manner in which Bonneville will apply these advancements. In addition, through conducting numerous hearings over the past few decades, Bonneville gained insight regarding the strengths and weaknesses of its procedures. The revised rules reflect changes to make the hearings more efficient and to incorporate procedures that were regularly adopted by orders of the Hearing Officers in previous hearings. Finally, the revised rules now explicitly apply to any proceeding under section 212(i)(2)(A) of the Federal Power Act.

    In order to encourage public involvement and assist Bonneville in the development of the revisions to the rules, Bonneville met with customers and other interested parties on February 13, 2018, in Portland, Oregon, to discuss how the then-current rules might be revised. Bonneville also posted an initial draft of proposed revisions to the rules for public review and informally solicited written comments over a two-week period ending February 28, 2018. After reviewing the comments, Bonneville incorporated a number of revisions to the initial draft of proposed revisions to the rules. On May 2, 2018, Bonneville published a Notice of proposed revised rules of procedure in the Federal Register. See Proposed Revised Rules of Procedure and Opportunity for Review and Comment, 83 FR 19262 (May 2, 2018). Although rules of agency procedure are exempt from notice and comment rulemaking requirements under the Administrative Procedure Act, 5 U.S.C. 553(b)(3)(A), Bonneville nevertheless published notice of the proposed revisions to the procedural rules in the Federal Register to promote transparency and public participation. Bonneville accepted written comments on the proposed revisions until June 4, 2018.

    Part II—Response to Comments and Changes to Proposed Rules

    Bonneville received seven comments on its proposed revisions to the rules of procedure (“proposed rules”). In response to these comments, changes were made to the proposed rules as noted below. For purposes of clarity, if a term used in the discussion below is defined in the rules, the term has the meaning found in the rules. For example, “Party” refers to all intervenors and not Bonneville, while “Litigant” refers to all Parties and Bonneville.

    Section 1010.1 General Provisions

    Avangrid Renewables LLC, Avista Corporation, Idaho Power Company, PacifiCorp, Portland General Electric Company, and Puget Sound Energy, Inc. (“Avangrid/IOU”) note that Section 1010.1(b)(3) of the proposed rules states that the rules do not apply to “[c]ontract negotiations unless otherwise provided by paragraph (a) [general rule of applicability] of this section.” Avangrid/IOU Comments at 1. Avangrid/IOU states that this subsection is unclear, and the intent is not apparent. Id. Bonneville agrees that the provision is unclear. Upon further review, the provision is unnecessary because contract provisions are not negotiated or determined in section 7(i) ratemaking proceedings, but rather through separate negotiations. Furthermore, Bonneville's rates may be referenced in contracts, but rates can be effective only after they are established in section 7(i) proceedings. Hence, Bonneville has removed Section 1010.1(b)(3) from the final rules.

    Section 1010.2 Definitions

    Sacramento Municipal Utility District, Turlock Irrigation District, and the Transmission Agency of Northern California (the “Northern California Utilities” or “NCU”) suggest revising the definition of “Litigant” to refer to “Bonneville trial staff” rather than “Bonneville.” NCU Comments at 9. NCU separately suggests adopting “separation of functions” rules and revising the proposed ex parte rule to prohibit ex parte communications between “Bonneville trial staff” and the Administrator or other Bonneville employees during section 7(i) proceedings. Bonneville has not adopted separation of functions rules or the distinction of a separate “trial staff” for the reasons explained in the discussion of the ex parte rule in Section 1010.5 below.

    Section 1010.3 Hearing Officer

    Avangrid/IOU states that Section 1010.3(f) of the proposed rules, which requires Litigants to “direct communications regarding procedural issues to the Hearing Clerk,” could be interpreted to preclude communications between Litigants on procedural issues. Avangrid/IOU Comments at 1-2. The intent of this section was to ensure that parties would contact the Hearing Clerk with any inquiries about administrative matters arising during the hearing instead of contacting Bonneville counsel or staff. The provision was not intended to limit discussions among Litigants on procedural issues. Section 1010.3(f) has been revised accordingly.

    Section 1010.5 Ex Parte Communications

    Avangrid/IOU states that Section 1010.5(d) of the proposed rules requires notice of an anticipated “ex parte meeting” but fails to require Bonneville to prepare and make available a statement setting forth the substance of any ex parte communication that takes place at any such meeting. Avangrid/IOU Comments at 2-3. Section 1010.2(j) of the proposed rules, however, provides that an ex parte communication “means an oral or written communication (1) relevant to the merits of any issue in the pending proceeding; (2) that is not on the Record; and (3) with respect to which reasonable prior notice to Parties has not been given.” (Emphasis added.) Under this definition, oral or written statements at noticed meetings are not ex parte communications and therefore do not require the preparation of a memorandum summarizing the meeting. This is not a change from Bonneville's existing procedural rules. When public notice is provided for a meeting, all Litigants have the opportunity to attend, to identify the attendees, and to note any issues discussed, positions taken, and statements made by any other attendees. However, in order to ensure that there is no ambiguity, Bonneville has added oral or written statements made at noticed meetings to the list in Section 1010.5(b) of communications that are not ex parte.

    NCU urges Bonneville to adopt “separation of function” rules that would distinguish separate Bonneville “trial staff” that work on section 7(i) proceedings and prohibit ex parte communications between the trial staff and the Administrator or other Bonneville employees. NCU Comments at 19. NCU notes that Bonneville added language to the existing rules to prohibit ex parte communications between the Hearing Officer and Bonneville staff members and argues that the principle behind this prohibition applies equally to communications between Bonneville staff working on a section 7(i) proceeding and the Administrator. NCU suggests that such prohibitions are critical to fair and transparent proceedings. Id.

    Bonneville added the language explicitly prohibiting ex parte communications with the Hearing Officer in recognition of the Hearing Officer's unique responsibility in proceedings under section 212(i)(2)(A) of the Federal Power Act. Section 212(i)(2)(A) requires the Hearing Officer to issue a recommended decision to the Administrator on the substantive issues in a proceeding to establish terms and conditions of transmission service. This requirement does not appear in the Northwest Power Act or apply to proceedings to establish rates. In proceedings to establish rates, the Hearing Officer's decision-making is limited to procedural issues.

    NCU states that the inclusion of Bonneville staff members among those who are prohibited from having ex parte communications with the Hearing Officer under the revised rules implicitly acknowledges shortcomings in the existing rules. Id. This is incorrect. Bonneville has been conducting a public process in recent months (separate from revision of the procedural rules) to address the use of the section 212(i)(2)(A) procedures for the adoption of terms and conditions of transmission service. Stakeholders in that process expressed concern about the need to explicitly prohibit ex parte communications between the Hearing Officer and all participants in section 212(i)(2)(A) proceedings given that the Hearing Officer would make a recommended decision on the substantive issues in those proceedings. Bonneville added the language in response to those concerns, not because of a lack of transparency or fairness in the existing rules or complaints about such issues in the proceedings that Bonneville has conducted under those rules for many years.

    NCU acknowledges that Bonneville's statutes do not require adoption of rules governing the separation of functions. NCU Comments at 21. Instead, the separation of functions requirement applies only to certain adjudications under the Administrative Procedure Act. 5 U.S.C. 554. Bonneville's section 7(i) proceedings, in contrast, are formal rulemakings. Indeed, the Northwest Power Act provides that “[n]othing in this section shall be construed to require a hearing pursuant to section 554, 556, or 557 of title 5.” 16 U.S.C. 839f(e)(2). Legislative history confirms that “[t]he adjudication provisions of 5 U.S.C. 554 and 557 do not apply to hearings under this bill.” H.R. Rep. 96-976, Pt. I, 96th Cong., 2d Sess. 71 (1980). Bonneville's section 7(i) proceedings establish generally applicable rates or terms and conditions of transmission service. These proceedings do not determine the legal status of particular persons or practices. Because these proceedings are not adjudications, Bonneville is not required to adopt separation of function rules.

    Aside from the lack of legal requirements, adopting separation of function rules would lead to nonsensical results. It would effectively isolate the Administrator and the rest of Bonneville from the very subject matter experts that Bonneville employs to work on rates and terms and conditions of transmission service. Bonneville staff plays a critical role in providing expertise to the agency's establishment of rates. Sound decision-making in the context of formal rulemaking requires the input of subject matter experts.

    Bonneville has not adopted NCU's suggestion regarding the separation of functions or associated ex parte provisions in the final rule.

    Section 1010.6 Intervention

    The Alliance of Western Energy Consumers (“AWEC”) states that Bonneville should decline to adopt proposed revisions to Section 1010.6(b), which provide that petitioners other than those “that directly purchase power or transmission services under Bonneville's rate schedules, or trade organizations representing those entities” must explain their interests in sufficient detail to permit the Hearing Officer to determine whether they have a relevant interest in the proceeding. AWEC Comments at 2. AWEC believes that the interests of end-use industrial consumer groups have been directly addressed in Federal case law, that customers and Bonneville understand the rights provided under the existing rules, and that making minor adjustments to the existing language runs the risk of creating confusion and disputes. Id.

    The revisions in the proposed rules were not intended to change the rights or standards governing intervention in Bonneville's section 7(i) proceedings. The proposed rules use more specific language to clarify that the “customers and customer groups” referred to in the previous rules are entities that directly purchase power or transmission services under Bonneville's rate schedules (or trade organizations representing those entities). Those entities are permitted to intervene upon filing a petition that conforms to Section 1010.6. Any petitioners other than those entities will continue to be permitted to intervene if they submit petitions that demonstrate a relevant interest in the proceeding.

    NCU seeks clarification that a Party that is granted intervention after the deadline for petitions to intervene may introduce evidence, conduct discovery, and participate in other ways if the time for doing so under the procedural schedule has not yet lapsed. NCU Comments at 9-10. Bonneville has not made changes in the rules in response to this comment, but “late” intervenors have the same rights and obligations as other parties with respect to participation in accordance with the procedural schedule.

    Section 1010.11 Pleadings

    NCU seeks clarification of the proposed rule governing interlocutory appeal of a Hearing Officer's decision to the Administrator. NCU Comments at 10. The proposed rule requires a Litigant to submit a motion for the Hearing Officer to certify a decision for interlocutory review by the Administrator, and the Hearing Officer must grant the motion in order for any review by the Administrator to occur. NCU requests that Bonneville revise the rule to allow a Litigant to appeal an issue directly to the Administrator if the Hearing Officer denies a Litigant's motion for certification. Id.

    As the rule states, interlocutory appeal is discouraged. Bonneville included the “certification” requirement in the proposed rule to provide more guidance with respect to the process for seeking interlocutory appeal and to have the Hearing Officer assess whether appeal is justified based on specific criteria set forth in the rule. If the Hearing Officer finds that the appeal does not meet those criteria, the consideration of interlocutory review ends. The Hearing Officer acts as a gatekeeper to ensure that the Administrator is not burdened with unwarranted requests. Allowing Litigants to appeal directly to the Administrator notwithstanding the Hearing Officer's denial of certification would undermine the certification requirement. Bonneville has not made this proposed change.

    Section 1010.12 Clarification Sessions and Data Requests a. Section 1010.12(a) Clarification Sessions

    NCU seeks clarification of Section 1010.12(a)(1) that statements made during clarification sessions may be used for the limited purpose of impeachment on cross-examination and as a basis for data requests. NCU Comments at 10-11. Clarification sessions are not transcribed or otherwise recorded. Parties, however, may submit data requests about statements made in clarification sessions, subject to the limitations of the rules. Absent a data response regarding such statements, using alleged statements from clarification sessions for purposes of impeachment during cross-examination would be problematic because of the lack of a record of such statements. If a Party believes that it might want to use such a statement as part of its case, it may submit a data request to confirm the statement in writing. The Hearing Officer will decide all issues regarding data requests based on the circumstances at the time.

    b. Section 1010.12(b) Data Requests and Responses

    Multiple entities commented on the proposed rules governing data requests, which included significant changes to the existing rules. Within the last four or five section 7(i) rate proceedings, Bonneville has had multiple experiences of a single Party in the proceeding submitting hundreds of data requests to Bonneville on a single issue. In the most recent rate proceeding, a Party submitted significant numbers of data requests to parties other than Bonneville, and the Hearing Officer was required to resolve a contentious dispute over requests that raised issues about, among other things, the potential disclosure of commercially sensitive information to a business competitor. Bonneville has drawn upon these experiences in developing the proposed revisions to the rules governing data requests and has attempted to balance (1) the need for procedures that facilitate the submission of data requests that could help further the development of a full and complete record, with (2) the discouragement of requests that are disproportionate to the needs of the case or the efficient completion of the section 7(i) process. Several commenters acknowledged Bonneville's attempt to strike such a balance, but the comments reveal differing perspectives on issues related to that balance, such as the scope of permissible data requests, access to commercially sensitive information, and the treatment of claims of privilege.

    1. Section 1010.12(b)(1) Scope in General

    Section 1010.12(b)(1) of the proposed rules allows data requests “relevant to any issue in the proceeding” and includes factors that are intended to help otherwise define the scope of permissible data requests and ensure that such requests are proportional to the needs of the case. Section 1010.12(b)(1)(i) of the proposed rules requires each Litigant to be “reasonable” in the number and breadth of its data requests in consideration of these factors, and Section 1010.12(e)(4) requires the Hearing Officer to consider these factors in deciding any motion to compel. The Public Power Council, Eugene Water & Electric Board, Seattle City Light, Public Utility District No. 1 of Snohomish County, PNGC Power, Northwest Requirements Utilities, and Western Public Agencies Group (“Joint Customers”) note that the factors in Section 1010.12(b)(1) and (e)(4) appear to limit the scope of discovery and prevent abuse and suggest that Bonneville acknowledge this intent in the Final FRN. Joint Customers Comments at 2. They believe such an acknowledgement would assist the Hearing Officer in applying Section 1010.12. Other commenters made similar suggestions that Bonneville comment on or clarify the potential application of the rules under specific scenarios that could arise in the future. Bonneville is not addressing any specific scenario in this notice or determining how the Hearing Officer should resolve any specific issue. In principle, however, Bonneville agrees that its comments regarding the intent of the rules could prove useful for parties and the Hearing Officer in the future. The Joint Customers' observations about the intent behind the factors included in Section 1010.12(b)(1) and (e)(4) are correct: Those factors are intended by Bonneville to limit the scope of discovery and prevent abuse.

    Powerex comments that the relevancy standard in Section 1010.12(b)(1) creates the “potential for broad, invasive, and burdensome discovery” and that such a standard could be applied in a manner at odds with Bonneville's statutory requirement to conduct section 7(i) proceedings expeditiously and develop a full and complete record. Powerex Comments at 2. Powerex also maintains that the scope of data requests under Section 1010.12(b)(1) appears to be substantially broader than the statutory requirement that the hearing give parties “adequate opportunity to offer refutation or rebuttal of any material submitted by any other person. . . .” Id. quoting 16 U.S.C. 839(e)(i)(2)(A). Powerex believes that the factors limiting the scope of discovery and preventing abuse are necessary for conducting expeditious hearings and for reducing the disincentive to participate in Bonneville's proceedings.

    Bonneville appreciates Powerex's concern about broad, invasive, and burdensome data requests. All of the provisions in Section 1010.12(b)(1) are intended to comprehensively define the scope of permissible data requests. The relevancy standard for data requests was the subject of significant debate within Bonneville and among stakeholders. Bonneville ultimately opted for allowing data requests relevant to any issue in the proceeding, as limited by other aspects of the rules. This includes the requirement that each Litigant must be “reasonable” in the number and breadth of its requests. Bonneville intentionally used “breadth” in Section 1010.12(b)(1)(i) because that term could encompass a variety of situations or requests (or patterns of requests) of an objectionable nature. Moreover, by allowing a Responding Litigant to object to an “unreasonable” request or pattern of requests, Section 1010.12(b)(1)(i) is intended to help ensure that a Requesting Litigant will observe its obligation with respect to reasonableness at the time it is submitting requests. In the event of a dispute over a data request, Section 1010.12(e)(2) explicitly places the burden on a Litigant filing a motion to compel to demonstrate that the request is within the scope of Section 1010.12(b)(1). This includes demonstrating that the request is reasonable. Bonneville believes these limitations help limit the potential for broad, invasive, and burdensome data requests.

    Bonneville disagrees that the provisions in Section 1010.12(b)(1) are inconsistent with the Northwest Power Act's requirements to conduct proceedings expeditiously, develop a full and complete record, and provide an adequate opportunity to rebut any other person. See Powerex Comments at 2. As described above, Bonneville's goal in this section was to create a balance that implements and adheres to those standards.

    NCU urges Bonneville to revise the factor in Section 1010.12(b)(1) that considers “the extent of the Responding Litigant's testimony on the subject.” NCU Comments at 7. NCU maintains that the focus on the extent of a Litigant's testimony is an “inferior proxy for the extent of a Responding Litigant's stake in the outcome of the issue.” Id. It suggests revising the rule to refer to the Litigant's stake in the outcome.

    Bonneville has not adopted the revision suggested by NCU. Bonneville is concerned that the concept of a Litigant's “stake” in an issue is ambiguous and would be difficult to assess by an objective measure using available information. This would pose problems for the Hearing Officer in resolving disputes over data requests and for Litigants submitting those requests in the first place. Indeed, because the factors in Section 1010.12(b)(1) help define the scope of permissible data requests, a Litigant should consider those factors when drafting and submitting a data request. It is unclear how a Litigant could know another Litigant's “stake” in the outcome of an issue at the time of the request. In contrast, both a Litigant submitting a data request and a Hearing Officer addressing a dispute over a request can easily assess the extent of a Litigant's testimony on an issue.

    As an alternative to its suggestion to replace the factor referring to “the extent of the Responding Litigant's testimony,” NCU asks Bonneville to clarify that a Party cannot avoid producing relevant information solely by claiming that it has not offered testimony on the subject. Id. at 8. In response, the extent of a Litigant's testimony is just one of the factors for the Hearing Officer to consider when resolving data request issues, but this factor is intended to provide a Party some ability to manage the extent of its exposure to data requests. The scope in Section 1010.12(b)(1) is not so broad as to expose a Party to broad or invasive requests about every issue in the proceeding simply because the Party intervened. In addition, although nothing in the rules prohibits submitting a data request to a Litigant about another Litigant's testimony, Bonneville expects that, absent unusual circumstances, a request will seek information relevant to issues raised in the testimony of the Litigant to which the request is submitted.

    NCU also raises an issue related to a dispute over the scope of data requests in the BP-18 rate proceeding, arguing that Bonneville had “promised” to address the issue in the revision of the procedural rules. NCU Comments at 15. The issue in BP-18 stemmed from the Hearing Officer's denial of a motion to compel filed by Joint Party 3 (“JP03”), which consisted of the same entities that comprise NCU. In the order denying the motion to compel, the Hearing Officer found that for “information to be relevant in a rate proceeding, it must fall within the scope of the testimony put forward by the witness and the information used by the witness to produce that testimony.” Order on JP03 Motion to Compel JP01's Response to Data Requests, BP-18-HOO-21, at 2. NCU argued in BP-18 that requiring information to be “used by” a witness to be relevant and subject to data requests created the potential to shield information from discovery by not providing it to a witness. The BP-18 Final Record of Decision acknowledged this issue and stated that “Staff and stakeholders should consider these arguments in the review of Bonneville's procedural rules after the BP-18 proceeding has concluded.” Administrator's Final Record of Decision, BP-18-A-04, at 183-84.

    As an initial matter, Bonneville did not “promise” that the revised procedural rules would expressly address this issue. See NCU Comments at 15. The Final Record of Decision instructed Staff and stakeholders to consider NCU's arguments as part of the process for revising the procedural rules, and all stakeholders have now had opportunity to advocate for what they believe the rules should include. Whereas the previous rule governing data requests includes relatively undefined language that had not been interpreted in detail since it was adopted, Staff and stakeholders have had considerable discussion about the language in the revised rules and the attempts to strike the right balance concerning data requests.

    As for the specific issue NCU raises, Section 1010.12(b)(1) defines the scope of permissible data requests, and nothing in that section explicitly excludes information or materials from that scope solely because a witness did not use or rely on that information or material in the development of his or her testimony. The final rule is not intended to limit data requests to only the information that a witness relied on in developing testimony. However, Bonneville expects that the Hearing Officer will resolve any dispute over data requests based on all of the facts and information available at the time.

    Avangrid/IOU notes Section 1010.12(b)(1)(vi) of the proposed rules, which provides: Bonneville shall not be required to produce documents that, in the opinion of Counsel for Bonneville, may be exempt from production under the Freedom of Information Act, 5 U.S.C. 552, or the Trade Secrets Act, 18 U.S.C. 1905.

    Avangrid/IOU Comments at 3 (emphasis added). Avangrid/IOU believes this language is too broad and suggests the following language:

    Bonneville shall not be required to produce documents that, in the opinion of Counsel for Bonneville, would be determined to be exempt from production under the Freedom of Information Act, 5 U.S.C. 552, or the Trade Secrets Act, 18 U.S.C. 1905.

    Id. at 3-4. This is a reasonable suggestion for clarification of this provision; however, Bonneville must be mindful not to predetermine the applicability of any particular exemption under the Freedom of Information Act (“FOIA”) before it receives an actual FOIA request. Bonneville has revised the final rule to be more consistent with the language used in the existing rule. Under this subsection, Bonneville's Counsel will make a good faith effort to make a reasonable determination.

    2. Section 1010.12(b)(2) Submitting Data Requests

    Avangrid/IOU suggests Section 1010.12(b)(2)(i) of the proposed rules should be revised as follows:

    A Data Request must identify the Prefiled Testimony and Exhibits (page and line numbers insofar as is practicable) or other material addressed in the request.

    Avangrid/IOU Comments at 4. Avangrid/IOU notes that it may be impracticable to specify a page and line number in a data request if, for example, a data request asks where in a prefiled testimony or exhibit a topic is addressed. Id. Although Bonneville understands the intent behind the proposed revision, it is important that Litigants specifically identify the source material to which a data request is addressed. Avangrid/IOU's proposed language could be interpreted to allow Parties to ignore the basic rule and determine independently that a specific citation was not “practicable.” Therefore, Bonneville will not adopt the proposed language. However, in the event the source material cannot be cited by page and line number, Litigants must take steps to ensure the material is cited in a manner that allows the Responding Litigant to easily identify it.

    NCU takes issue with Section 1010.12(b)(2)(iii) of the proposed rules, which prohibits submitting data requests to any Litigant but Bonneville during the period immediately following Bonneville's initial proposal. NCU Comments at 11-12. NCU maintains that Bonneville has not explained the reason for this limitation and that the rule could make the hearing process less efficient and fair. Id. at 11.

    One of the themes that has emerged during discussions about the revising the procedural rules is that Bonneville should be the primary focus of data requests submitted by a Party in a section 7(i) proceeding. The comments of the Joint Customers and Powerex make clear their concerns about rules that create opportunities for expansive or invasive Party-to-Party data requests, particularly among competitors. Bonneville takes those concerns seriously. Moreover, Bonneville shares the perspective that Bonneville should be the primary focus in section 7(i) proceedings, particularly during the period after publishing its initial proposal.

    Bonneville adopted the limitation in Section 1010.12(b)(2)(iii) of the proposed rules out of concern that Litigants other than Bonneville potentially could be exposed to data requests over a lengthy period of time at a point in the proceeding when the Parties must be preparing their answering cases to Bonneville's extensive initial proposal. The testimony in Bonneville's initial proposal is the only testimony that would have been filed at this point. The circumstances that would justify a Party submitting data requests about Bonneville's initial proposal to a Litigant other than Bonneville would be rare.

    Bonneville acknowledges that Party-to-Party data requests about Bonneville's initial proposal have not been an issue in previous section 7(i) proceedings, but this is because such requests have never been submitted in the 38-year history of such proceedings. As explained above, however, Bonneville has seen use of the data request procedures in the last several rate proceedings that it would not have contemplated, and this is one area where Bonneville feels it is appropriate to exercise its discretion over the rules governing data requests to address this concern even if the specific situation has not yet presented itself.

    NCU's primary point is that a blanket prohibition on the submission of Party-to-Party data requests immediately following the initial proposal is overly restrictive, because a Responding Party will still have the opportunity to raise all applicable objections to a request. NCU Comments at 12. Bonneville is concerned about adopting rules that may increase the likelihood of disputes over data requests at a time in the proceeding when Parties are preparing their direct testimony, but NCU's point that a blanket prohibition lacks balance has merit. There could be limited circumstances when Party-to-Party data requests immediately following the publication of Bonneville's initial proposal might be appropriate, and a Party should not be foreclosed from the opportunity to submit such requests if it would be essential to the development of the Party's case. Bonneville has made changes in the final rule to provide the opportunity to seek leave from the Hearing Officer to submit such requests in limited circumstances. To be clear, the standard for justifying the need for such requests has intentionally been set very high, and Bonneville believes that the circumstances in which such requests would be justified are rare.

    NCU also requests clarification that the requirement in Section 1010.12(b)(2)(iv) that subparts of a data request “must address only one section or other discrete portion of a Litigant's Prefiled Testimony and Exhibits” was not intended to require that the data requests must be directed to the Responding Litigant's testimony. Id. NCU correctly notes that the intent of this provision is to ensure that the subparts of a multipart data request are limited in number and related to the same general subject matter.

    3. Section 1010.12(b)(3) Responding to Data Requests

    Powerex notes that Section 1010.12(b)(3)(iii) of the proposed rules provides that as soon as a Responding Litigant believes it will not be able to respond to one or more data requests by the due date because “of the volume of or other burden caused by the request(s),” the Responding Litigant must contact the Requesting Litigant and confer about a possible delay in the due date. Powerex Comments at 4. If the Litigants have not resolved the issues by the due date, the Responding Litigant must object and then supplement the objection with a response in good faith as soon as possible thereafter. Id. Powerex notes the rules provide that a Responding Litigant has five business days to respond to a data request, but Section 1010.12(b)(3)(iii) permits informal extension of that deadline to some undefined time to allow Responding Litigants to respond to broad and/or voluminous data requests. Id. Powerex believes only the Hearing Officer has authority to extend the due date of a data response. Id. Powerex also suggests that, in such circumstances, the Litigants should confer about the scope and burden of the data request(s) and seek to refine the request(s) to permit production within the five-day response period. Id.

    Bonneville has revised Section 1010.12(b)(3)(i) to clarify that Litigants attempting to resolve a data request dispute also have the ability to agree to a response date outside the five-day deadline. Although Powerex is correct to be concerned about an extension resulting in a response being received too late to be incorporated into a Litigant's testimony, Bonneville believes this will be avoided by the Litigants' resolution of the issue; in other words, a Requesting Litigant would not agree to a date for a response that would arrive too late to be used. In the event the Litigants cannot resolve the response date, the Hearing Officer would resolve the issue based on a motion filed by the Requesting Litigant and a response filed by the Responding Litigant.

    4. Section 1010.12(c) Information That Is Attorney-Client Privileged or Attorney Work Product

    Section 1010.12(c) of the proposed rules provides that a Litigant may be required to identify materials that the Litigant has withheld from a response to a data request on the basis of the attorney-client privilege or the work product doctrine. This section also prohibits the Hearing Officer, however, from ordering an in camera review or releasing such information.

    NCU requests clarification that the Hearing Officer may apply the sanctions provided for in Section 1010.12(f) if he or she determines that the Responding Litigant's claim of privilege is unsubstantiated. NCU Comments at 13. The proposed rule governing attorney-client privilege and work product information intentionally limits the Hearing Officer's ability to order the review or disclosure of such information. Bonneville believes that disputes about materials that are claimed to be attorney-client privileged or attorney work product are unlikely to be a productive use of resources, particularly given the requirement that, upon request, Counsel for a Responding Litigant must declare under penalty of perjury that the materials are protected from disclosure.

    Bonneville believes that a sworn declaration provided by Counsel for a Responding Litigant should be sufficient to address any questions about claims of privilege or work product in almost all cases. Nevertheless, if a Requesting Litigant believes that the information provided in such a declaration is unsubstantiated, nothing in the rules prohibits the Requesting Litigant from filing a motion to compel. If the Hearing Officer were to grant the motion to compel, failure to comply with the Hearing Officer's order would be a basis to impose sanctions under Section 1010.12(f).

    5. Section 1010.12(d) Commercially Sensitive Information and Critical Energy/Electric Infrastructure Information

    Powerex urges revision of the proposed rules related to commercially sensitive information (“CSI”). Powerex Comments at 3. Powerex argues that the permissiveness of the rules threatens the development of a full and complete record because parties are less likely to fully participate to avoid having to produce commercially sensitive information in response to data requests. Id.

    The production of commercially sensitive information has not been a significant issue in most section 7(i) proceedings. Other than a provision allowing the Hearing Officer to adopt a protective order, the previous rules do not address the disclosure of such information. In response to the discovery dispute in the BP-18 proceeding, described above, the final record of decision identified the requirements around commercially sensitive information as one of the topics to address in the revision of the procedural rules. Administrator's Final Record of Decision, BP-18-A-04, at 185.

    The proposed rules require the disclosure of commercially sensitive information (for a data request that is otherwise within the scope), subject to a protective order. The rules specify certain requirements that Bonneville needs in any protective order for procedural reasons, but the rules otherwise provide for the Requesting and Responding Litigants to negotiate the terms of the order. Notwithstanding the rules providing for disclosure of commercially sensitive information, subsection (d)(3) discourages the use of such information in any filing because of the administrative burden associated with having such information in the record.

    Powerex urges revising the rules to discourage both the discovery and use of commercially sensitive information in section 7(i) proceedings. Id. Bonneville has made no changes in response to Powerex's comments but acknowledges the concerns about discovery of commercially sensitive information. Bonneville does not typically designate information or materials as commercially sensitive in response to data requests, so the primary concern here relates to disclosure of commercially sensitive information by a Party. Some aspects of the revised rules should help to address such concerns. First, given the primary focus on Bonneville's proposals in section 7(i) proceedings, only unusual circumstances would make it important to seek a Party's commercially sensitive information to assess a Bonneville proposal. All Litigants should be particularly attentive to the requirement to be “reasonable” in the breadth of a request that might seek commercially sensitive information, particularly for a request to a competitor. Section 7(i) proceedings are not a forum to seek information to adjudicate the status of particular persons or practices or to gain strategic advantage over competitors. Bonneville will monitor this issue in upcoming proceedings to assess whether revisions to the rules are necessary to prevent abuse.

    Second, in many types of administrative proceedings, protective orders are commonly used to protect against unauthorized disclosure or misuse of confidential information provided in response to data requests. For the most part, the rules put the terms of that protective order in the hands of the Requesting and Responding Litigants. The rules allow the Responding Litigant to make a proposal for almost all of the substantive terms of the protective order, which should provide the opportunity to develop acceptable terms.

    Third, the rules provide for a “highly confidential” designation for information or materials that require heightened protection. Furthermore, the rules authorize the Hearing Officer, as a form of heightened protection, to allow the Responding Litigant to withhold the information altogether. In other words, a Litigant will have the opportunity to convince the Hearing Officer that the sensitivity of particular information justifies excusing the Responding Litigant from disclosing the information.

    Finally, Powerex urges Bonneville to revise Section 1010.13(f) to disallow the Hearing Officer to impose sanctions under certain circumstances. Powerex Comments at 3-4. Powerex maintains that “if a party files no testimony or its filed testimony does not rely on or reference CSI, then the responding party should not be penalized for protecting its own legitimate business interests when it refuses to produce CSI.” Id. at 3. Powerex's proposal would be unworkable as it relates to the provisions of the rules governing disputes over data requests and motions to compel. If the Hearing Officer grants a motion to compel a Responding Litigant to produce commercially sensitive information in response to a data request, permitting a Litigant to refuse to comply with the order would undermine the rules that govern disputes over data requests. Bonneville has not adopted Powerex's suggestion for this reason.

    With respect to Powerex's concern about being required to disclose commercially sensitive information in a situation where a Litigant files no testimony or does not rely on such information, the rules already require consideration of that factor in assessing whether a request is within the scope established in Section 1010.12(b)(1) and is “reasonable” under Section 1010.12(b)(1)(i). In addition, Section 1010.12(e)(4) requires the Hearing Officer to consider that factor in resolving a motion to compel. As described above, that factor is intended to provide a Litigant some ability to manage its exposure to data requests. A Litigant that is concerned about potentially having to provide commercially sensitive information in response to a data request certainly should not put that information at issue in its testimony. Bonneville is not directly addressing the specific situation that Powerex raises. The Hearing Officer will resolve any dispute over data requests based on the facts and information available at the time.

    In considering Powerex's comments and an NCU comment that Bonneville addresses in the next section, Bonneville found that the reference in Section 1010.12(e)(4) to whether a Litigant filed testimony related to the data request effectively repeated the factor in Section 1010.12(b)(1) referring to “the extent of the Responding Litigant's testimony on the subject.” Bonneville has removed the reference in Section 1010.12(e)(4) of the final rules, but the intent of this provision has not changed. In resolving a motion to compel, the Hearing Officer must consider the extent of a Litigant's testimony as one of the factors under Section 1010.12(b)(1).

    6. Section 1010.12(e)(4) Resolution of Dispute by the Hearing Officer

    Powerex notes that Section 1010.12(e)(4) provides that the Hearing Officer may hold a telephone conference “to discuss and attempt to resolve a data request dispute . . .” and suggests that Bonneville should clarify whether the rules allow or intend the Hearing Officer to rule on motions to compel orally during teleconferences, and if so, the rules should clarify how the Hearing Officer must document such an order. Powerex Comments at 4. Powerex states that the rules should clarify that a Hearing Officer's order on a motion to compel should be memorialized in writing if either Party so requests, in order to provide adequate opportunity for appeal, if necessary. Id. Bonneville believes the Hearing Officer should have the authority to orally rule on a data request dispute, including a motion to compel, during a teleconference. Bonneville also agrees that any oral ruling by the Hearing Officer in a teleconference must be memorialized in writing, regardless of whether a Party so requests. All Litigants should be able to know the resolution of discovery disputes arising during the proceeding. Section 1010.12(e)(4) has been revised accordingly.

    Powerex also suggests that Bonneville should clarify whether Section 1010.19, governing telephone conferences, applies to telephone conferences attempting to resolve data request disputes. Powerex Comments at 4. Section 1010.19 provides:

    Telephone conferences may be permitted in appropriate circumstances, provided that: (1) There is a proposed agenda for the conference concerning the points to be considered and the relief, if any, to be requested during the conference; and (2) Litigants are provided notice and given an opportunity to be represented on the line. If the Hearing Officer schedules a telephone conference, the Hearing Officer may require that a court reporter be present on the line.

    Section 1010.19 does not apply to conferences under Section 1010.12(e)(4) to resolve data request disputes. Section 1010.19 is intended to apply to telephone conferences regarding issues in which all Litigants might have an interest and which all Litigants should have the opportunity to attend. Data request disputes should be resolved, if possible, by the Litigants involved in the dispute and the Hearing Officer. As such, conferences to address data request disputes should not be subject to the notice and other requirements in Section 1010.19. Conferences regarding such disputes should involve only matters of procedure and not substantive matters that would result in ex parte communications with the Hearing Officer. In the event that communications relevant to the merits of any issue in the proceeding are made to the Hearing Officer during such a conference, the requirements of Section 1010.5(f) apply. Section 1010.12(e)(4) has been revised to remove the reference to a “telephone” conference to reflect that the requirements of Section 1010.19 do not apply to conferences regarding data request disputes.

    NCU urges Bonneville to modify Section 1010.12(e)(4) to require the Hearing Officer to consider a Litigant's “stake in the outcome” of an issue in deciding a motion to compel rather than whether the Litigant “filed testimony related to the data request” before it received the request. NCU Comments at 14-15. NCU raises the same concern that it did under Section 1010.12(b)(1), discussed above. Bonneville is not adopting this factor for the reasons discussed previously.

    Section 1010.13 Prefiled Testimony and Exhibits

    Avangrid/IOU suggests Section 1010.13(a)(5) of the proposed rules should be revised as follows:

    Rebuttal testimony must insofar as is practicable refer to the specific material being addressed (pages, lines, topic).

    Avangrid/IOU Comments at 4. Avangrid/IOU notes that it may be impracticable to specify pages and lines being addressed—for example, if the rebuttal testimony points out that the testimony being rebutted fails to address a factor. Id. Although Bonneville understands the intent of Avangrid/IOU's proposed revision, it will not be adopted for the reasons stated in response to Avangrid/IOU's comments on Section 1010.12(b)(2)(i) above. If the testimony being rebutted fails to address a factor, a Litigant should cite where the other factors are addressed.

    Section 1010.14 Cross-Examination

    Avangrid/IOU notes Section 1010.14(k)(1) of the proposed procedures:

    A Litigant must file each Cross-examination Exhibit to be presented to a witness for any purpose two Business Days before the witness is scheduled to appear.

    Avangrid/IOU Comments at 4. Avangrid/IOU suggests that this sentence be clarified to explain how a Cross-Examination Exhibit is to be filed. Id. In response, Section 1010.10(a) of the proposed rules provides that “[u]nless otherwise specified, a Litigant shall make any filing provided for by these rules with the Hearing Officer through the Secure Website.” This provision governs the manner in which Cross-Examination Exhibits are to be filed.

    Section 1010.20 Hearing Officer's Recommended Decision

    NCU argues that the Hearing Officer should issue a recommended decision in Bonneville's rate cases. NCU Comments at 22-24. NCU suggests this would ensure that the first look at the Bonneville staff's proposal would be an independent one, not influenced by communications from the same Bonneville staff advocating for its adoption. Id. at 22. This proposal, however, is not supported by the language or the intent behind section 7(i) of the Northwest Power Act and is contrary to 38 years of administrative practice.

    Section 7(i) of the Northwest Power Act prescribes the procedures Bonneville uses to establish its power and transmission rates. 16 U.S.C. 839e(i). Section 7(i) provides that, when establishing rates, “[o]ne or more hearings shall be conducted as expeditiously as practicable by a Hearing Officer to develop a full and complete record and to receive public comment in the form of written and oral presentation of views, data, questions, and argument related to such proposed rates.” Id. Thus, the Hearing Officer's role in the section 7(i) ratemaking hearings is to develop the record. Section 7(i) does not grant the Hearing Officer the authority to make any decision regarding the merits of the issues in the ratemaking proceedings, nor to make any substantive or recommended decision on the merits.

    This is in contrast to Section 212 of the Federal Power Act, which provides that when the Bonneville Administrator provides an opportunity for a hearing under section 7(i)(1)-(3) of the Northwest Power Act, “the hearing officer shall . . . make a recommended decision to the Administrator that states the hearing officer's findings and conclusions, and the reasons or basis thereof, on all material issues of fact, law, or discretion presented on the record . . . .” 16 U.S.C. 824k(i)(2)(A)(ii)(II) (emphasis added). Congress explicitly requires a Hearing Officer to make a recommended decision to the Administrator in a section 212 proceeding, but there is no such requirement for the Hearing Officer in Bonneville's power and transmission rate cases.

    Furthermore, as noted previously, the adjudication requirements of the Administrative Procedure Act do not apply. The Northwest Power Act explicitly provides that “[n]othing in this section shall be construed to require a hearing pursuant to section 554, 556, or 557 of title 5.” 16 U.S.C. 839f(e)(2). The legislative history confirms that “[t]he adjudication provisions of 5 U.S.C. 554 and 557 do not apply to hearings under this bill.” H.R. Rep. 96-976, Pt. I, 96th Cong., 2d Sess. 71 (1980).

    Finally, sound decision-making regarding Bonneville's rates necessitates access to Bonneville staff with subject matter expertise. This is particularly necessary to determine whether Bonneville's rates are set to satisfy the applicable statutory requirements. It would be impractical for the Administrator to delegate substantive rate decision-making authority to the Hearing Officer or limit access to Bonneville staff expertise.

    NCU argues that despite the fact that section 7(i) does not mandate that a Hearing Officer issue a recommended decision, the functions of advising the agency head and litigating the rate case should be handled by separate personnel to preserve the actual and perceived fairness of the process. NCU Comments at 22-23. NCU also argues that having agency staff assist with preparing the Administrator's draft and final records of decision reduces the value of the rule prohibiting ex parte communications between Bonneville employees and the Hearing Officer. Id. at 24. Bonneville addressed NCU's comments regarding separation of functions and the ex parte rule in the discussion of Section 1010.5 of the rules above. Bonneville has been conducting section 7(i) proceedings to establish rates for almost 40 years and has not heard public concern about actual or perceived unfairness in those proceedings during that time. Bonneville is following the process prescribed by Congress to establish rates, and there is nothing novel or unfair about having agency staff prepare a rulemaking proposal and assist the decision-maker in developing a final proposal. Also, the Hearing Officer addresses only procedural matters in Bonneville's rate cases