Federal Register Vol. 83, No.165,

This action, pursuant to 5 U.S.C. 553, proposes an amendment to regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing Agreement and Order No. 906, as amended (7 CFR part 906), regulating the handling of oranges and grapefruit grown in the Lower Rio Grande Valley in Texas. Part 906 (referred to as “the Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Committee locally administers the Order and is comprised of producers and handlers of oranges and grapefruit operating within the area of production.

The Department of Agriculture (USDA) is issuing this proposed rule in conformance with Executive Orders 13563 and 13175. This proposed rule falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this proposed rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled `Reducing Regulation and Controlling Regulatory Costs' ” (February 2, 2017).

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order now in effect, Texas citrus handlers are subject to assessments. Funds to administer the Order are derived from such assessments. It is intended that the assessment rate would be applicable to all assessable oranges and grapefruit for the 2018-19 crop year and continue until amended, suspended, or terminated.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. Such handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

The Order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members are familiar with the Committee's needs and with the costs of goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

This proposed rule would decrease the assessment rate from $0.02, the rate that was established for the 2017-18 and subsequent fiscal periods, to $0.01 per 7/10-bushel carton or equivalent of oranges and grapefruit handled for the 2018-19 and subsequent fiscal periods. The Committee recommended decreasing the assessment rate and utilizing funds from its authorized reserve in order to reduce the reserve balance. The reserve balance has been greater than the sum allowable under the Order, which is approximately equivalent to one year's operating expenses, since 2017. In 2017-18, the Committee was able to reduce its budget by more than $595,000 when an alternative funding source was found for the Mexican fruit fly control program. This dramatic reduction in the overall budget prompted the Committee's need to reduce the balance of the authorized reserve to reflect the lower operating budget.

The Committee met on May 23, 2018, and unanimously recommended 2018-19 expenditures of $152,920 and an assessment rate of $0.01 per 7/10-bushel carton or equivalent of oranges and grapefruit. The itemized budgeted expenses, including $79,220 for management, $50,000 for compliance, and $23,700 for operating expenses, are the same as the previous fiscal period. However, the proposed assessment rate of $0.01 is lower than the $0.02 rate currently in effect.

The assessment rate recommended by the Committee was derived by considering anticipated expenses, expected shipments of 7.5 million 7/10-bushel cartons, and the amount of funds available in the authorized reserve. Income derived from handler assessments, calculated at $75,000 (7.5 million × $0.01), along with interest income and funds from the Committee's authorized reserve, would be adequate to cover budgeted expenses of $152,920. Funds in the reserve are estimated to be $287,295 at the end of the 2017-18 fiscal period. No additional funds can be added to the reserve until the balance drops below approximately one fiscal period's expenses as stated in § 906.35.

The assessment rate proposed in this rule would continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate would be in effect for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Committee's 2018-19 budget and those for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this proposed rule on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 170 producers of oranges and grapefruit in the production area and 13 handlers subject to regulation under the Order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,500,000 (13 CFR 121.201).

According to Committee data, the average price for Texas citrus during the 2016-17 season was approximately $16 per carton and total shipments were 7.6 million cartons. Using the average price and shipment information, the number of handlers, and assuming a normal distribution, the majority of handlers would have average annual receipts of greater than $7,500,000 ($16 per carton times 7.6 million cartons equals $121.6 million, divided by 13 equals $9.4 million per handler).

In addition, based on National Agricultural Statistics Service information, the weighted grower price for Texas citrus during the 2016-17 season was approximately $9.35 per carton. Using the weighted average price and shipment information, the number of producers and assuming a normal distribution, the majority of producers would have annual receipts of $418,000, which is less than $750,000 ($9.35 per carton times 7.6 million cartons equals $71.06 million, divided by 170 equals $418,000 per producer). Thus, the majority of handlers of Texas citrus may be classified as large entities, while the majority of producers may be classified as small entities.

This proposal would decrease the assessment rate collected from handlers for the 2018-19 and subsequent fiscal periods from $0.02 to $0.01 per 7/10-bushel carton or equivalent of Texas citrus. The Committee unanimously recommended 2018-19 expenditures of $152,920 and an assessment rate of $0.01 per 7/10-bushel carton or equivalent handled. The proposed assessment rate of $0.01 is $0.01 lower than the 2017-18 rate. The quantity of assessable oranges and grapefruit for the 2018-19 fiscal period is estimated at 7.5 million 7/10-bushel cartons. Thus, the $0.01 rate should provide $75,000 in assessment income (7.5 million × $0.01). Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve, would be adequate to cover budgeted expenses.

The major expenditures recommended by the Committee for the 2018-19 year include $79,220 for management, $50,000 for compliance, and $23,700 for operating expenses. Budgeted expenses for these items in 2017-18 were the same.

The Committee recommended decreasing the assessment rate and utilizing funds from its authorized reserve in order to reduce the reserve balance to bring it in line with the limitation under the Order of approximately one year's expenses.

Prior to arriving at this budget and assessment rate, the Committee considered information from various sources, such as the Committee's Budget and Personnel Committee, and the Research Committee. Alternative expenditure levels were discussed by these committees who reviewed the relative value of various activities to the Texas citrus industry. These committees determined that all program activities were adequately funded and essential to the functionality of the Order; thus, no alternate expenditure levels were deemed appropriate. Additionally, the Committee discussed alternatives of maintaining the current assessment rate of $0.02 and lowering the assessment rate to $0.015 per 7/10-bushel carton or equivalent. However, these alternatives were not recommended because the Committee determined that these assessment rates would not draw a sufficient amount of funds from the authorized reserve to bring the reserve fund total in line with Order requirements.

Based on these discussions and estimated shipments, the recommended assessment rate of $0.01 would provide $75,000 in assessment income. The Committee determined that assessment revenue, along with funds from the reserve and interest income, would be adequate to cover budgeted expenses for the 2018-19 fiscal period.

A review of historical information and preliminary information pertaining to the upcoming fiscal period indicates that the average grower price for the 2018-19 season should be approximately $9.50 per 7/10-bushel carton or equivalent of oranges and grapefruit. Therefore, the estimated assessment revenue for the 2018-19 crop year as a percentage of total grower revenue would be about 0.1 percent.

This proposed rule would decrease the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers and may also reduce the burden on producers.

The Committee's meeting was widely publicized throughout the Texas citrus industry. All interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the May 23, 2018, meeting was a public meeting, and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and information collection impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by the OMB and assigned OMB No. 0581-0189, Fruit Crops. No changes in those requirements would be necessary as a result of this proposed rule. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would not impose any additional reporting or recordkeeping requirements on either small or large Texas orange and grapefruit handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions about the compliance guide should be sent to Richard Lower at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

For the reasons set forth in the preamble, 7 CFR part 906 is proposed to be amended as follows:

The objectives of this proposed rule are to:

• Amend the eligibility criteria for outside director in § 611.220(a);

• Remove the definition of outside director in § 619.9235;

• Strengthen the safety and soundness of System institutions;

• Strengthen the independence of System institution boards; and

• Incorporate many of the best corporate governance practices for System institutions.

The Farm Credit Act of 1971, as amended (Act),1 establishes that System banks and associations must elect a board of directors with such qualifications as may be required by the institution's bylaws. Additionally, the Act specifies that at least one member must be appointed by the stockholder-elected directors and that such member must not be a director, officer, employee, agent, or stockholder of a System institution.2

Outside directors are appointed by stockholder-elected directors to provide independent perspective and expertise in appropriate areas. Outside directors achieve this by broadening the board's collective knowledge, enhancing the board's independence, and improving the board's ability to carry out its fiduciary duties to the System institution, stockholders and investors. Current FCA regulations, however, do not specify how far removed from the statutory prohibited relationships the outside director candidate must be to adequately fulfill the intended independent role of an outside director. This proposed rule seeks to clarify the eligibility requirements of an outside director to achieve the independence intended by the statutory requirements.

As a result of the proposed changes in eligibility criteria for outside directors in § 611.220, discussed below, we are proposing to add a new definition section in § 611.220 that would only apply to that section. The newly defined terms are meant to provide clarity on the meaning of the new outside director eligibility criteria.

The proposed rule would add affiliated organizations to the definitions in § 611.220. The new term affiliated organization is defined to mean an entity that is legally distinct from any System institution, but is organized and operated for the benefit of, and in support of, an institution and conducts activities that advance the mission of an institution.

The proposed rule would add borrowers to the list of persons excluded from consideration for an outside director position under § 611.220. Accordingly, the new term borrower is added to the definitions in § 611.220 and is defined to mean an individual, sole proprietorship, partnership, joint venture, trust, corporation, or other business entity to which an institution has made a loan or a commitment to make a loan or purchased a loan or participation interest in a loan. The new term borrower would also include any person or entity to whom an institution has made a lease or a commitment to make a lease, or who guarantees repayment of a loan.

The proposed rule would add controlling interest to the definitions in § 611.220. The new term controlling interest is defined to mean an individual that, directly or indirectly, or acting through or in concert with one or more persons:

(1) Owns 5 percent or more of the equity in an entity;

(2) Owns, controls, or has the power to vote 5 percent or more of any class of voting securities of an entity; or

(3) Has the power to exercise a controlling influence over the management of policies of such entity. The new term controlling interest is consistent with the definition of controlled entity found in § 612.2130(c). The proposed rule would add the new term entity to the definitions in § 611.220. The new term entity means a corporation, company, association, firm, joint venture, partnership (general or limited), society, joint stock company, trust (business or otherwise), fund, or other organization or institution. This is consistent with the definition of entity found in § 612.2130(e).

The proposed rule would add the new term immediate family member to the definitions in § 611.220. The new term immediate family member is defined to mean spouse, parent(s), sibling(s), children, mother(s)- and father(s)-in-law, brother(s)- and sister(s)-in-law, and son(s)- and daughter(s)-in-law. This is consistent with the definition of immediate family member found in § 620.1(e).

As a result of the proposed changes in eligibility criteria for an outside director in § 611.220, we are proposing to delete the definition of outside director in § 619.9235. The current definition in § 619.9235 is not consistent with the changes proposed in § 611.220, and it is unnecessary to duplicate the same language as is proposed in that section. Deleting § 619.9235 will provide clarity in who may serve as an outside director and will avoid redundancy.

We propose modifying the existing outside director eligibility criteria in § 611.220(a) 3 by expanding the list of persons who would be excluded from nomination for an outside director's seat. The proposed rule would add the following to the list of persons excluded from consideration for an outside director position:

(1) Borrowers of the institution;

(2) Immediate family members of any director, officer, employee, agent, stockholder or borrower of a System institution; and

(3) Anyone who has a controlling interest in:

(i) An entity that borrows from a System institution; or

(ii) An affiliated organization of a System institution.

The purpose of expanding those individuals ineligible to serve in the outside director's role is to further strengthen the independence perspective on each System institution's board. Congress' intent on establishing the outside director role was to ensure an independent voice was brought to the boards of System institutions. As such, outside directors are only permitted to serve on the board of directors of one System institution or affiliated organization at a time.4

To maintain that independent voice, current FCA regulations specify that a candidate for outside director should not be a stockholder of a System institution. However, the regulations do not specifically exclude a borrower from serving as an outside director. Borrowers may not necessarily be stockholders in a System institution. We believe that to be truly independent of a System institution when being vetted for an outside director's seat, all borrowers should be specifically excluded from consideration. This addition would capture those individuals who have signed a promissory note in a joint capacity (i.e., co-applicant, guarantor), but do not own System stock.

To further ensure independence from System institutions, we propose excluding individuals from serving as an outside director if they have an immediate family member who is a director, officer, employee, agent, stockholder, or a borrower of a System institution. This would provide additional clarity to our existing rule as to which individuals would be ineligible to serve as an outside director.

We also propose that a person who has a controlling interest in an entity that borrows from a System institution or an affiliated organization of a System institution should not be eligible to serve as an outside director. Those persons who have a controlling stake in, or influence the decisions of, an entity should not be considered to serve as an outside director if that entity is a borrower of a System institution. A person who maintains a controlling interest in an entity who borrows from the System or in an affiliated organization does not have the independence meant to fill the outside director's role. The proposed rule would not limit employees of entity borrowers or affiliated organizations from consideration as an outside director. Instead, it aims to clarify that those persons who control or advance the financial or policy decisions of an entity, borrower, or affiliated organization must not be considered as an outside director because their controlling stake or position in the entity or affiliated organization could lessen their independence.

We believe that expanding the list of those excluded from outside director consideration will further improve the board's ability to carry out its fiduciary responsibilities to the System institution and its stockholders and investors. We do not believe that including additional eligibility criteria would adversely affect the board's ability to select a qualified candidate for an outside director seat.

System institutions would be required to comply with the changes in the eligibility criteria of outside directors at the next appointment of an outside director candidate after the effective date of the final rule. We invite your specific comments on the compliance timeframe if this rule becomes a final rule. If a later compliance date is suggested, please provide a specific burden that would be alleviated with any later compliance date.

Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), FCA hereby certifies that the proposed rule will not have a significant impact on a substantial number of small entities. Each of the banks in the Farm Credit System, considered together with its affiliated associations, has assets and annual income in excess of the amounts that would qualify them as small entities. Therefore, System institutions are not “small entities” as defined in the Regulatory Flexibility Act.

For the reasons stated in the preamble, parts 611 and 619 of chapter VI, title 12 of the Code of Federal Regulations are proposed to be amended as follows:

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-2018-0760; Product Identifier 2018-NM-095-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.

We have received a report indicating that cracked reinforcing straps (doublers) were found on the ailerons of Dassault Aviation airplanes equipped with blended winglets installed in accordance with Supplemental Type Certificate (STC) ST02188SE or STC ST02241SE. This condition is the result of hydrogen embrittlement in the reinforcing strap manufacturing process. If not addressed, this condition could lead to fatigue cracking of the ailerons and subsequent loss of control of the airplane.

We reviewed Aviation Partners, Inc., Falcon Service Bulletin SBF9-17-001, Revision B, dated December 20, 2017. This service information describes procedures for detailed inspections for any signs of cracking of the external upper and lower reinforcing straps on the left-hand (LH) and right-hand (RH) ailerons.

We also reviewed Aviation Partners, Inc., Falcon Service Bulletin SBF9-17-002, Revision A, dated December 20, 2017. This service information describes procedures for replacing the external upper and lower reinforcing straps on the LH and RH ailerons.

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

We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.”

Aviation Partners, Inc., Falcon Service Bulletin SBF9-17-002, Revision A, dated December 20, 2017, specifies salvaging and returning a damaged strap to Aviation Partners, Inc. However, this proposed AD does not include that requirement.

We estimate that this proposed AD affects 70 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

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

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 and associated appliances to the Director of the System Oversight Division.

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.

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

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-2018-0759; Product Identifier 2018-NM-055-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.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2018-0034, dated February 5, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for Airbus SAS Model A330-200 series airplanes; Model A330-200 Freighter series airplanes; and Model A330-300 series airplanes. The MCAI states:

The unsafe condition is fatigue cracking, accidental damage, or corrosion in certain principle structural elements, and possible failure of certain life limited parts, which could result in reduced structural integrity of the airplane. 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-2018-0759.

This NPRM does not propose to supersede AD 2017-10-24. Rather, we have determined that a stand-alone AD would be more appropriate to address the changes in the MCAI. This NPRM would require revising the maintenance or inspection program, as applicable, to incorporate new or more restrictive instructions and/or airworthiness limitations. Accomplishment of the proposed actions would then terminate all requirements of AD 2017-10-24.

Airbus SAS has issued A330 Airworthiness Limitations Section (ALS) Part 1, Safe Life Airworthiness Limitation Items (SL-ALI), Revision 09, dated September 18, 2017. This service information describes SL-ALI for the landing gear.

Airbus SAS has also issued A330 ALS Part 1, SL-ALI, Variation 9.2, dated November 28, 2017, and A330 ALS Part 1, SL-ALI, Variation 9.3, dated November 29, 2017. This service information describes revised life limits for certain parts.

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

This proposed AD does not include the Model A340 airplanes that are specified in the MCAI. Instead, we have added the MCAI to the required airworthiness actions list (RAAL) for the Model A340 airplanes.

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.

This proposed AD would require revising the maintenance or inspection program, as applicable, to incorporate new, more restrictive instructions and/or airworthiness limitation requirements, except as discussed under “Differences Between this Proposed AD and the MCAI.”

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

The FAA recently became aware of an issue related to the applicability of ADs that require incorporation of an ALS revision into an operator's maintenance or inspection program.

Typically, when these types of ADs are issued by civil aviation authorities of other countries, they apply to all airplanes covered under an identified type certificate (TC). The corresponding FAA AD typically retains applicability to all of those airplanes.

In addition, U.S. operators must operate their airplanes in an airworthy condition, in accordance with 14 CFR 91.7(a). Included in this obligation is the requirement to perform any maintenance or inspections specified in the ALS, and in accordance with the ALS as specified in 14 CFR 43.16 and 91.403(c), unless an alternative has been approved by the FAA.

When a type certificate is issued for a type design, the specific ALS, including revisions, is a part of that type design, as specified in 14 CFR 21.31(c).

The sum effect of these operational and maintenance requirements is an obligation to comply with the ALS defined in the type design referenced in the manufacturer's conformity statement. This obligation may introduce a conflict with an AD that requires a specific ALS revision if new airplanes are delivered with a later revision as part of their type design.

To address this conflict, the FAA has approved alternative methods of compliance (AMOCs) that allow operators to incorporate the most recent ALS revision into their maintenance/inspection programs, in lieu of the ALS revision required by the AD. This eliminates the conflict and enables the operator to comply with both the AD and the type design.

However, compliance with AMOCs is normally optional, and we recently became aware that some operators choose to retain the AD-mandated ALS revision in their fleet-wide maintenance/inspection programs, including those for new airplanes delivered with later ALS revisions, to help standardize the maintenance of the fleet. To ensure that operators comply with the applicable ALS revision for newly delivered airplanes containing a later revision than that specified in an AD, we plan to limit the applicability of ADs that mandate ALS revisions to those airplanes that are subject to an earlier revision of the ALS, either as part of the type design or as mandated by an earlier AD.

This proposed AD therefore would apply to Airbus SAS Model A330-200 series airplanes; Model A330-200 Freighter series airplanes; and Model A330-300 series airplanes with an original certificate of airworthiness or original export certificate of airworthiness that was issued on or before the date of the ALS revision identified in this proposed AD. Operators of airplanes with an original certificate of airworthiness or original export certificate of airworthiness issued after that date must comply with the airworthiness limitations specified as part of the approved type design and referenced on the type certificate data sheet.

We estimate that this proposed AD affects 105 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

We have determined that revising the maintenance or inspection program takes an average of 90 work-hours per operator, although we recognize that this number may vary from operator to operator. In the past, we have estimated that this action takes 1 work-hour per airplane. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), we have determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, we estimate the total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).

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.

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.

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

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would establish Class E airspace at Sioux County Regional Airport, in support of standard instrument approach procedures for IFR operations at the airport.

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments, as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal. Communications should identify both docket numbers and be submitted in triplicate to the address listed above. Commenters wishing the FAA to acknowledge receipt of their comments on this notice must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to Docket No. FAA-2018-0671; Airspace Docket No. 18-ACE-3.” The postcard will be date/time stamped and returned to the commenter.

All communications received before the specified closing date for comments will be considered before taking action on the proposed rule. The proposal contained in this notice may be changed in light of the comments received. A report summarizing each substantive public contact with FAA personnel concerned with this rulemaking will be filed in the docket.

An electronic copy of this document may be downloaded through the internet at http://www.regulations.gov. Recently published rulemaking documents can also be accessed through the FAA's web page at http://www.faa.gov/air-traffic/publications/airspace-amendments/.

You may review the public docket containing the proposal, any comments received, and any final disposition in person in the Dockets Office (see the ADDRESSES section for the address and phone number) between 9:00 a.m. and 5:00 p.m., Monday through Friday, except federal holidays. An informal docket may also be examined during normal business hours at the Federal Aviation Administration, Air Traffic Organization, Central Service Center, Operations Support Group, 10101 Hillwood Parkway, Fort Worth, TX 76177.

This document proposes to amend FAA Order 7400.11B, Airspace Designations and Reporting Points, dated August 3, 2017, and effective September 15, 2017. FAA Order 7400.11B is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11B lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by establishing Class E airspace extending upward from 700 feet above the surface within a 6.5-mile radius of Sioux County Regional Airport, Maurice, IA, to accommodate new standard instrument approach procedures developed for the airport. This action would enhance safety and the management of IFR operations at the airport.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11B, dated August 3, 2017, and effective September 15, 2017, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designation listed in this document will be published subsequently in the Order.

The FAA has determined that this proposed regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (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); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that will only affect air traffic procedures and air navigation, it is certified that this proposed rule, when promulgated, would not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

This proposal will be subject to an environmental analysis in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures” prior to any FAA final regulatory action.

Accordingly, pursuant to the authority delegated to me, the Federal Aviation Administration proposes to amend 14 CFR part 71 as follows:

The purpose of the public hearings is to provide the public an opportunity to present oral comments regarding NHTSA and EPA's proposals for the SAFE Vehicles Rule. These hearings also offer an opportunity for the public to provide oral comments regarding NHTSA's Draft EIS, accompanying the proposed NHTSA fuel economy standards. The agencies will assume that all oral comments presented at the hearing are addressed to the joint proposed rules only, unless speakers specifically reference NHTSA's Draft EIS in oral or written testimony.

The SAFE Vehicles Rule, if finalized, would amend certain existing Corporate Average Fuel Economy (CAFE) and tailpipe carbon dioxide emissions standards for passenger cars and light trucks and establish new standards, all covering model years 2021 through 2026. More specifically, NHTSA is proposing new CAFE standards for model years 2022 through 2026 and amending its 2021 model year CAFE standards because they are no longer maximum feasible standards, and EPA is proposing to amend its carbon dioxide emissions standards for model years 2021 through 2025 because they are no longer appropriate and reasonable in addition to establishing new standards for model year 2026. The preferred alternative is to retain the model year 2020 standards (specifically, the footprint target curves for passenger cars and light trucks) for both programs through model year 2026, but comment is sought on a range of alternatives discussed throughout this document. Compared to maintaining the post-2020 standards set forth in 2012, current estimates indicate that the proposed SAFE Vehicles Rule would save over 500 billion dollars in societal costs and reduce highway fatalities by 12,700 lives (over the lifetimes of vehicles through MY 2029). U.S. fuel consumption would increase by about half a million barrels per day (2-3 percent of total daily consumption, according to the Energy Information Administration), emissions would increase by 7,400 million metric tons of carbon dioxide by 2100, and would impact the global climate by 3/1000th of one degree Celsius by 2100, also when compared to the standards set forth in 2012.

The proposal for which EPA and NHTSA are holding the public hearings was signed on August 2, 2018 and the pre-publication version is available at the web pages listed above under FOR FURTHER INFORMATION CONTACT and, also in the rulemaking dockets. NHTSA's Draft Environmental Impact Statement is available on NHTSA's web page and in NHTSA's docket for the EIS, both referenced above. We expect the official proposal to be published in the Federal Register soon. Please note that the pre-publication version of the proposal specified that the agencies would hold three public hearings in Washington DC, Detroit Michigan, and Los Angeles California, with details to be announced in a forthcoming Federal Register notice. The agencies have decided instead to hold three public hearings, in Fresno California, Dearborn, Michigan, and Pittsburgh Pennsylvania, as specified above in this notice. Once NHTSA and EPA learn how many people have registered to speak at each public hearing, we will allocate an appropriate amount of time to each participant, allowing time for necessary breaks. In addition, we will reserve a block of time for anyone else in the audience who wishes to give an oral presentation. For planning purposes, each speaker should anticipate speaking for approximately five minutes. We request that you bring three copies of your statement or other material for the EPA and NHTSA panels. To accommodate as many speakers as possible, we prefer that speakers not use technological aids (e.g., audio-visuals, computer slideshows). However, if you wish to do so, you must notify the contact persons in the FOR FURTHER INFORMATION CONTACT section above. You also must make arrangements to provide your presentation or any other aids to NHTSA and EPA in advance of the hearing in order to facilitate set-up.

NHTSA and EPA will conduct the hearings informally, and technical rules of evidence will not apply. We will arrange for a written transcript of each hearing and keep the official record of each hearing open for 30 days to allow speakers to submit supplementary information to the dockets listed above. Panel members may ask clarifying questions during the oral presentations, but will not respond to the presentations at that time. You may make arrangements for copies of the transcripts directly with the court reporter.

Written statements and supporting information submitted during the comment period will be considered with the same weight as oral comments and supporting information presented at the public hearings. To be assured of consideration, written comments on the proposal must be received by the date indicated in the Federal Register once the document publishes. Written comments on NHTSA's Draft EIS must be received or uploaded to NHTSA's docket for the EIS by September 24, 2018.

I. General Information A. Does this action apply to me?

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT for the division listed at the end of the pesticide petition summary of interest.

1. Submitting CBI. Do not submit this information to EPA through regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2. Tips for preparing your comments. When preparing and submitting your comments, see the commenting tips at http://www.epa.gov/dockets/comments.html.

3. Environmental justice. EPA seeks to achieve environmental justice, the fair treatment and meaningful involvement of any group, including minority and/or low-income populations, in the development, implementation, and enforcement of environmental laws, regulations, and policies. To help address potential environmental justice issues, the Agency seeks information on any groups or segments of the population who, as a result of their location, cultural practices, or other factors, may have atypical or disproportionately high and adverse human health impacts or environmental effects from exposure to the pesticides discussed in this document, compared to the general population.

EPA is announcing its receipt of several pesticide petitions filed under section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, requesting the establishment or modification of regulations in 40 CFR part 180 for residues of pesticide chemicals in or on various food commodities. The Agency is taking public comment on the requests before responding to the petitioners. EPA is not proposing any particular action at this time. EPA has determined that the pesticide petitions described in this document contain the data or information prescribed in FFDCA section 408(d)(2), 21 U.S.C. 346a(d)(2); however, EPA has not fully evaluated the sufficiency of the submitted data at this time or whether the data support granting of the pesticide petitions. After considering the public comments, EPA intends to evaluate whether and what action may be warranted. Additional data may be needed before EPA can make a final determination on these pesticide petitions.

Pursuant to 40 CFR 180.7(f), a summary of each of the petitions that are the subject of this document, prepared by the petitioner, is included in a docket EPA has created for each rulemaking. The docket for each of the petitions is available at http://www.regulations.gov.

As specified in FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), EPA is publishing notice of the petitions so that the public has an opportunity to comment on these requests for the establishment or modification of regulations for residues of pesticides in or on food commodities. Further information on the petitions may be obtained through the petition summaries referenced in this unit.

PP 8F8680. (EPA-HQ-OPP-2018-0520). Eden Research plc, 6 Priory Ct., Priory Court Business Park, Poulton, Cirencester, GL7 5JB, United Kingdom (c/o SciReg, Inc., 12733 Director's Loop, Woodbridge, VA 22192), requests to amend an exemption from the requirement of a tolerance in 40 CFR 180.1240 to include residues of the fungicide and nematocide thymol in or on raw agricultural commodities or processed food. The petitioner believes no analytical method is needed because an exemption from the requirement of a tolerance for residues of thymol is being requested; therefore, the requirement to provide an analytical method for detecting and measuring the levels of pesticide residue is not applicable. Contact: BPPD.

PP IN-11098. (EPA-HQ-OPP-2018-0203). Spring Trading Company (203 Dogwood Trail, Magnolia, TX 77354) on behalf of Sasol Chemicals (USA) LLC, 12120 Wickchester Lane, Houston, TX 77079) requests to establish an exemption from the requirement of a tolerance for residues of alcohols, C2-33, manuf. of, by-products from, overheads (CAS Reg. No. 876065-86-0) when used as an inert ingredient (solvent) in pesticide formulations applied to growing crops and or to raw agricultural commodities after harvest under 40 CFR 180.910 and applied to animals under 40 CFR 180.930. The petitioner believes no analytical method is needed because it is not required for an exemption from the requirement of a tolerance. Contact: RD.

1. PP 8F8681. (EPA-HQ-OPP-2018-0522). Eden Research plc, 6 Priory Ct., Priory Court Business Park, Poulton, Cirencester, GL7 5JB, United Kingdom (c/o SciReg, Inc., 12733 Director's Loop, Woodbridge, VA 22192), requests to establish an exemption from the requirement of a tolerance in 40 CFR part 180 for residues of the fungicide eugenol in or on raw agricultural commodities or processed food. The petitioner believes no analytical method is needed because an exemption from the requirement of a tolerance for residues of eugenol is being requested; therefore, the requirement to provide an analytical method for detecting and measuring the levels of pesticide residue is not applicable. Contact: BPPD.

2. PP 8F8690. (EPA-HQ-OPP-2016-0073). LAM International Corp., 117 South Parkmont St., Butte, MT 59701, requests to establish an exemption from the requirement of a tolerance in 40 CFR part 180 for residues of the nematocide Purpureocillium lilacinum strain PL11 in or on all food commodities. The petitioner believes no analytical method is needed because, when used as proposed, Purpureocillium lilacinum strain PL11 would not result in residues that are of toxicological concern. Contact: BPPD.

1. PP 8E8674. (EPA-HQ-OPP-2018-0525). Dow Agro Sciences LLC, 9330 Zionsville Road, Indianapolis, Indiana 46268-1054, requests to establish import tolerances in 40 CFR part 180.495 for the residues of the insecticide spinosad, determined by measuring only the two related active ingredients: Spinosyn A (Factor A: CAS #131929-60-7) or 2-[(6-deoxy-2,3,4-tri- O -methyl-α- L -manno-pyranosyl)oxy]-13-[[5-(dimethylamino)-tetrahydro-6-methyl-2H-pyran-2-yl]oxy]-9-ethyl-2,3,3a,5a,5b,6,9,10,11,12,13,14,16a,16b-tetradecahydro-14-methyl-1H-as-Indaceno[3,2-d]oxacyclododecin-7,15-dione; and Spinosyn D (Factor D; CAS #131929-63-0) or 2-[(6-deoxy-2,3,4-tri- O -methyl-α- L -manno-pyranosyl)oxy]-13-[[5-(dimethyl-amino)-tetrahydro-6-methyl-2H-pyran-2-yl]oxy]-9-ethyl-2,3,3a,5a,5b,6,9,10,11,12,13,14,16a,16b-tetradecahydro-4,14-methyl-1H-as-Indaceno[3,2-d]oxacyclododecin-7,15-dione] in or on tea, dried at 70 parts per million (ppm) and tea, instant at 70 ppm. The EPA has determined adequate tolerance enforcement methods are available for spinosad residues in a variety of plant and animal matrices including a number of high-performance liquid chromatography (HPLC)/Mass Spectrometry (MS)/MS methods. Additional details on the analytical methods can be found in the supporting documentation in docket ID (EPA-HQ-OPP-2011-0666-0025). Contact: (RD)

2. PP 7F8640. (EPA-HQ-OPP-2018-0088). Syngenta Crop Protection, LLC, P.O. Box 18300 Greensboro, NC 27419-8300, requests to establish a tolerance in 40 CFR part 180 for residues of the insecticide, emamectin, in or on vegetable, cucurbit, group 9 at 0.03 parts per million. The high performance liquid chromatography (HPLC) analytical method is used to measure and evaluate the chemical emamectin. Contact: RD.

DoD is proposing to revise the DFARS to implement the antiterrorism training requirements for contractors provided in DoD Instruction (DoDI) O-2000.16, Volume 1, DoD Antiterrorism (AT) Program Implementation: DoD AT Standards (available at http://www.esd.whs.mil/Directives/issuances/dodi/). The rule will ensure contractors are aware of the requirement for contractor personnel, who as a condition of contract performance require routine physical access to a Federally-controlled facility or military installation, to complete Level I DoD antiterrorism awareness training. Routine physical access is considered more than intermittent access, such as when a contractor employee is required to obtain a Common Access Card. The training is required within 30 days of requiring access and annually thereafter and must be completed either through DoD-sponsored and certified computer or web-based distance learning instruction, or under the instruction of a qualified Level I antiterrorism awareness instructor.

This rule proposes a new DFARS subpart 204.7X, Antiterrorism Awareness Training, to address the requirement for covered contractors to complete Level I antiterrorism awareness training. The new subpart advises contracting officers of the training requirement, the authorized sources of training, and when training must be completed by contractors. This subpart also prescribes a new DFARS clause 252.204-7XXX, Antiterrorism Awareness Training for Contractors, for use in all solicitations and contracts, including those for the acquisition of commercial items, when contractor personnel will require routine physical access to a Federally-controlled facility or military installation. The clause advises contractors of the training requirements, provides a reference to additional information and guidance available on the internet, and instructs contractors to include the clause in all subcontracts. Conforming changes are made to DFARS 212.301(f)(ii) to add the new clause to the list of contract clauses applicable to the acquisition of commercial items.

This rule proposes to create a new clause, DFARS 252.204-7XXX, Antiterrorism Awareness Training for Contractors, to advise DoD contractors of the requirement for its employees (and those of its subcontractors, if applicable) to complete Level I antiterrorism awareness training within 30 days of requiring access and annually thereafter, if, as a condition of contract performance require routine physical access to a Federally-controlled facility or a military installation. DoD plans to apply this clause to solicitations and contracts below the SAT and to the acquisition of commercial items, including COTS items (as defined in Federal Acquisition Regulation 2.101). This is necessary in order to reach as wide an audience as possible to ensure contractor personnel who are required to have routine physical access to a Federally-controlled facility or military installation are aware of this training requirement.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

This proposed rule is not expected to be an E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, regulatory action, because this proposed rule is not significant under E.O. 12866.

This rule is not expected to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. An initial regulatory flexibility analysis has been performed and is summarized as follows:

This action is necessary to implement the requirements of DoD Instruction O-2000.16, Volume 1, DoD Antiterrorism (AT) Program Implementation: DoD AT Standards, to ensure that contractors complete Level I antiterrorism awareness training.

The objective of this proposed rule is to ensure contractor personnel who, as a condition of contract performance, require routine physical access to a Federally-controlled facility or military installation are aware of terrorism threats and the proper responses to threat actions. In recent years, there have been terrorist events directed at Federally-controlled facilities and military installation and all personnel that routinely access those facilities need to be aware of the threat.

It is expected that contracts that contain the clause at Federal Acquisition Regulation (FAR) 52.204-9, Personal Identity Verification of Contractor Personnel, are contracts that would require contractor personnel to have routine physical access to Federally-controlled facilities or military installations. According to data available in the Electronic Data Access system, in fiscal year 2017, DoD awarded 137,106 contracts containing the clause at FAR 52.204-9 to 15,814 businesses, of which 10,837 (68.5 percent) were to small businesses. Common Access Cards (CAC) are issued to contractors who require routine physical access to a Federally-controlled facility or military installation. There are currently 507,665 contractors that hold CAC cards.

The impact is not expected to be significant, because current contractor employees who hold a CAC have already completed the requisite training and the cost of training new contractor personnel is at the expense of the Department. The time allotted for the training is approximately two hours per year. The training will provide safety awareness and precautionary measures that will benefit contractor personnel requiring routine physical access to a Federally-controlled facilities or military installations. This awareness not only benefits the contractor personnel, but also DoD civilians, military, and its assets.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2017-D034), in correspondence.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

Therefore, 48 CFR parts 204, 212, and 252 are proposed to be amended as follows:

I. Background

DoD is proposing to revise the DFARS to implement section 813(b) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018. Section 813(b) repeals section 858 of the NDAA for FY 2015, effective October 1, 2018, but does not repeal section 846 of the NDAA for FY 2011. DoD published the final rule to implement section 858 under DFARS case 2015-D007 in the Federal Register on November 20, 2015 (80 FR 72599).

Section 858 of the NDAA for FY 2015 did not contain specific language to rescind or supersede section 846 of the NDAA for FY 2011, which was first implemented in the DFARS by an interim rule under DFARS Case 2011-D046, published in the Federal Register on December 20, 2011 (76 FR 78858), and then finalized on May 22, 2012 (77 FR 30368).

Section 846 applies to contracts awarded by DoD, including energy savings performance contracts, utility energy service contracts, and private housing contracts, to the extent that such contracts result in ownership of photovoltaic devices by DoD. Section 846 further provides that DoD is deemed to own a photovoltaic device if the device is—

• Installed on DoD property or in a facility owned by DoD; and

• Reserved for the exclusive use of DOD for the full economic life of the device.

Section 858 substituted “or” for “and” in connecting the two conditions. Therefore, either one of the conditions would be sufficient to make the law applicable. By repealing section 858, the law does not apply unless both of the conditions are met. Although section 858 explicitly restricted applicability to the United States, that restriction is still equivalent to the section 846 applicability, because the Buy American statute invoked in section 846 does not apply overseas. Land leases are not addressed in this rule because land leases are outside the scope of the FAR and DFARS.

Section 846 requires that, with some exceptions, photovoltaic devices provided under covered contracts comply with the Buy American statute. The Buy American statute requires, for use inside the United States, that manufactured articles, materials and supplies be manufactured in the United States, substantially all from articles, materials, or supplies mined, produced, or manufactured in the United States. When section 858 was enacted, it imposed basically the same requirement, requiring that any photovoltaic device installed under a covered contract be manufactured in the United States substantially all from articles, materials or supplies mined, produced, or manufactured in the United States, but no longer referenced the Buy American statute.

Because the requirement under section 858 was separated from the explicit application of the Buy American statute, the exceptions and waivers that apply to the Buy American statute no longer automatically applied to the restrictions of section 858, unless provided for and authorized by section 858. Now that section 858 has been repealed, the following exceptions are again applicable:

• Exceptions for domestic nonavailability and acquisitions in which the values of the photovoltaic devices does not exceed the micro-purchase threshold.

• Public interest determination. The Buy American statute provides for individual or class determinations that application of the Buy American statute is inconsistent with the public interest. Through public interest class determinations, DoD does not apply the Buy American statute to (1) qualifying country end products; or (2) U.S.-made end products, if the World Trade Organization Government Procurement Agreement applies (i.e., the aggregate value of the photovoltaic devices to be utilized is $180,000 or more). In implementing section 846, this determination was applied to photovoltaic devices not acquired as end products. Section 858 only allowed, on a case-by-case basis, determinations that application of the restriction in 858 are not in the public interest. Such case-by-case determinations are no longer required in order to allow a contractor to utilize a qualifying country photovoltaic device or a U.S.-made photovoltaic device.

• Determination of unreasonable cost. Both the Buy American statute and section 858 allow a determination not to utilize a domestic product if the cost of the domestic product is unreasonable. With regard to determining that the cost of a domestic item is unreasonable, Executive Order 10582, Prescribing Uniform Procedures for Certain Determinations under the Buy-American Act, provides a methodology to determine unreasonable cost, using a minimum differential of 6 percent, but also provides that the head of an executive agency may determine that the use of a higher differential between the cost of materials of domestic origin and the cost of materials of foreign origin “is not unreasonable.” The then Secretary of Defense, Cyrus Vance, signed a memorandum on May 7, 1964, providing for application of a 50 percent differential under the Buy American statute. Therefore, DoD proposes to continue application of a 50 percent evaluation factor when determining whether the price of domestic photovoltaic devices is unreasonable when the estimated aggregate value of the photovoltaic devices to be utilized is less than $180,000 (the World Trade Organization Government Procurement Agreement threshold). The application of an evaluation factor to foreign products to determine whether the price of domestic products is reasonable is not applicable when the World Trade Organization Government Procurement Agreement applies, because there is a prohibition under that agreement to buying any products that are not designated, domestic, U.S.-made, or qualifying country products. DoD has waived the application of the Buy American statute to U.S.-made products so no evaluation factor is applicable.

• Exemption for commercially available off-the-shelf (COTS) items. Pursuant to 41 U.S.C. 1907 and determinations by the Administrator of Federal Procurement Policy, the component test of the Buy American statute does not apply to the acquisition of COTS items. This exemption no longer applied to photovoltaic devices utilized under section 858, but is now re-instated under section 846.

• Trade agreements or otherwise provided by law. The restrictions of both section 846 and section 858 are subject to the exceptions provided in the Trade Agreements Act or otherwise provided by law. The Trade Agreements Act (19 U.S.C. 2501 et seq.) provides authority for the President to waive the Buy American statute and other discriminatory provisions (e.g., sections 846 and 858) for eligible products from designated countries. This authority has been delegated to the United States Trade Representative (USTR).

This proposed rule essentially reinstates the DFARS regulations as they existed prior to publication of the final rule under DFARS Case 2015-D007 on November 20, 2015, except for—

• Baseline changes such as increased trade agreement thresholds and addition of new qualifying countries);

• Use of the term “micro-purchase threshold” rather than a specific dollar value, to provide more flexibility when the micro-purchase threshold increases;

• Retaining the explicit statement that these restrictions only apply in the United States; and

• Restructuring of the certifications in DFARS provision 252.225-7018. In each dollar range, the first paragraph is limited to a certification that the photovoltaic devices are domestic (or U.S.-made for paragraph (6)). This avoids the necessity of identifying the country of origin for such domestic or U.S.-made products.

This rule does not affect the applicability of DFARS clause 252.225-7017, Photovoltaic Devices, and DFARS provision 252.225-7018, Photovoltaic Devices—Certification. A determination was signed by the Director, Defense Procurement and Acquisition Policy, on October 13, 2011, to not apply the requirements of section 846 of the NDAA for FY 2011 to contracts at or below the simplified acquisition threshold, but to apply the rule to contracts for the acquisition of commercial items, including COTS items.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

This proposed rule is not expected to be an E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, regulatory action, because this proposed rule is not significant under E.O. 12866.

DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

This rule proposes to implement the repeal of section 858 of the Carl Levin and Howard P. “Buck” McKeon National Defense Authorization Act (NDAA) for FY 2015 (Pub. L. 113-291), while retaining the requirements of section 846 of the NDAA for FY 2011, with regard to sources of contractor-purchased photovoltaic devices that become the property of DoD.

The objective of this rule is to revert to the regulations on photovoltaic devices that were in effect prior to superimposing the additional regulations required by section 858 on November 20, 2015 (80 FR 72599). By restoring the tie to the Buy American statute, this rule reinstates the Buy American exceptions for acquisitions below the micro-purchase threshold, nonavailabilty, unreasonable cost, and public interest, including the DoD class determinations that exempt U.S.-made and qualifying country photovoltaic devices from the requirement of the Buy American statute, as well as the Governmentwide determination that removes the component test for commercially-available off-the-shelf items.

This rule generally applies at the prime contract level to other than small entities. When purchasing renewable power generated via on-site photovoltaic devices, DoD can either purchase the photovoltaic devices and thereby own, operate, and maintain the devices for their full economic life (already covered in DFARS part 225 under standard Buy American statute/Trade Agreements regulations) or, for example, may do some variation of the following:

• Enter into an energy savings performance contract, which is a contracting method in which the contractor provides capital to facilitate energy conservation measures and maintains them in exchange for a portion of the energy savings generated. Under this arrangement, the Government would take title to the devices during contract performance or at the conclusion of the contract. For example, DoD uses either the master indefinite delivery-indefinite quantity contract of the Department of Energy or the Army Corps of Engineers and awards task orders off one of those contracts. Generally, the same approved contractors are on each contract. Of the approved contractors, all except one are large businesses. There are subcontracting goals that each contractor has to meet, but the ultimate task order award is most often made to a large business.

• Enter into a power purchase agreement, also referred to as a utility service contract, for the purchase of the power output of photovoltaic devices that are installed on DoD land or buildings, but owned, operated, and maintained by the contractor. At the conclusion of the contract, DoD would either require the contractor to dismantle and remove the photovoltaic equipment or abandon the equipment in place. Prime contractors for this type of contract would generally be large businesses, based on the capital costs involved in these projects. However, many developers tend to subcontract out the majority of work to smaller companies.

There are approximately 80 manufacturers of photovoltaic devices. DoD does not currently have data available on whether any of the manufacturers of photovoltaic devices are small entities, because the Federal Procurement Data System does not collect such data on subcontractors.

There are no new reporting burdens under this rule. In fact, there is a de minimis reduction in burden, because no certification will be required if the value of the photovoltaic devices does not exceed the micro-purchase threshold, and identification of country of origin will no longer be required if the photovoltaic devices are domestic or U.S.-made. Contracting officers will no longer be required to do a determination and findings in order to allow utilization of qualifying country or U.S.-made photovoltaic devices or other foreign photovoltaic devices on the bases of unreasonable cost. Furthermore, since the prime contractors subject to this rule are other than small businesses, the existing reporting requirements do not impact small entities.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

DoD did not identify any significant alternatives that meet the requirements of the statute and would have less impact on small entities. The overall effect of this rule is deregulatory and it does not have significant impact on small entities.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D007), in correspondence.

The rule contains information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C chapter 35); however, these changes to the DFARS do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 0704-0229, entitled “Defense Federal Acquisition Regulation Supplement (DFARS) Part 225, Foreign Acquisition, and related clauses at DFARS 252.225.”

Therefore, 48 CFR parts 212, 225, and 252 are proposed to be amended as follows:

The revisions read as follows:

The revisions read as follows:

I. Background

This rule proposes to modify DFARS clause 252.247-7023, Transportation of Supplies By Sea, to include the instructions currently specified in DFARS clause 252.247-7024, Notification of Supplies By Sea. Combining these clauses will result in DFARS clause 252.247-7024 being removed.

DFARS provision 252.247-7022, Representation of Extent of Transportation By Sea, is included in solicitations and requires an offeror to represent with its offer whether it anticipates that supplies will or will not be transported by sea in the performance of the contract.

DFARS clause 252.247-7023 is included in all contracts, except for those that directly purchase ocean transportation services, and provides contractors with terms and conditions that apply when transporting supplies by sea under the contract.

DFARS clause 252.247-7024, Notification of Transportation of Supplies By Sea, is included in contracts when the contractor indicated in DFARS provision 252.247-7022 that it did not anticipate transporting supplies by sea. The clause requires the contractor to notify the Government in the event that, during performance of the contract, the contractor learns that supplies will be transported by sea, and requires the contractor to comply with the terms and conditions in DFARS clause 252.247-7023.

Since DFARS clause 252.247-7023 is included in all contracts, and DFARS clause 252.247-7024 is associated with the requirements of 252.247-7023, the text of the two clauses can be combined to help minimize the number of clauses contained in the contract, while still maintaining the intent of both clauses.

The modification of this DFARS text supports a recommendation from the DoD Regulatory Reform Task Force. On February 24, 2017, the President signed Executive Order (E.O.) 13777, Enforcing the Regulatory Reform Agenda, which established a Federal policy “to alleviate unnecessary regulatory burdens” on the American people. In accordance with E.O. 13777, DoD established a Regulatory Reform Task Force to review and validate DoD regulations, including the DFARS. The DoD Task Force reviewed the requirements of DFARS clause 252.247-7023 and 252.247-7024 and determined that the clauses could be combined.

A public notice of the establishment of the DFARS Subgroup to the DoD Regulatory Reform Task Force, for the purpose of reviewing DFARS provisions and clauses, was published in the Federal Register at 82 FR 35741 on August 1, 2017, and requested public input. Two respondents submitted a public comment on these clauses summarized as follows:

Comment: Both respondents recommended DoD remove these clauses, as they are based on the requirements of the Cargo Preference Act of 1904 (10 U.S.C. 2631), which was written at a time before many modern forms of cargo transportation were invented and overly burdens the DoD supply chain to use US-flag ships. The respondents also suggested that DoD follow the less burdensome Cargo Preference Act of 1954 (46 U.S.C. 1241(b)).

Response: DoD must comply with the requirements of 10 U.S.C. 2631. Currently, 10 U.S.C. 2631 requires 100 percent of all items for or owned by DoD that require transportation by sea be carried exclusively on U.S. flag vessels. This cargo policy helps retain and encourage a privately owned and operated U.S.-flag merchant marine, which benefits the U.S. in terms of trade and in times of emergency. It is not in the Government's best interests to rescind 10 U.S.C. 2631. In the event that a U.S.-flag vessel is not available for timely shipment or the freight charges are excessive or unreasonable, the clause permits the contractor to submit a request to use a foreign-flag vessel to the contracting officer. For this reason, DoD does not concur that the DoD supply chain is necessarily overburdened by this Act.

This rule does not create any new provisions or clauses. This rule merely consolidates existing instructions regarding notifications of transportation of supplies by sea in a single DFARS clause.

E.O. 12866, Regulatory Planning and Review, and E.O. 13563, Improving Regulation and Regulatory Review, direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Office of Management and Budget, Office of Information and Regulatory Affairs (OIRA), has determined that this is not a significant regulatory action as defined under section 3(f) of E.O. 12866 and, therefore, was not subject to review under section 6(b). This rule is not a major rule as defined at 5 U.S.C. 804(2).

This proposed rule is not expected to be an E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, regulatory action, because this proposed rule is not significant under E.O. 12866.

DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because the rule is not creating any new requirements or changing any existing requirements for contractors. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

The Department of Defense (DoD) is proposing to modify DFARS clause 252.247-7023, Transportation of Supplies By Sea, to include the instructions currently specified in DFARS clause 252.247-7024, Notification of Supplies By Sea. Combining these clauses will result in DFARS clause 252.247-7024 being removed.

The objective of this proposed rule is to streamline the instructions to contractors pertaining to the transportation of supplies by sea. The combination of these DFARS clauses supports a recommendation from the DoD Regulatory Reform Task Force under Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs.

Based on data available in the Federal Procurement Data System for fiscal year 2016, DoD awarded approximately 83,000 contract actions that included DFARS clause 252.247-7023 to 22,000 unique entities, of which approximately 39,000 awards (47 percent) were made to 15,000 unique small businesses entities (68 percent).

This proposed rule does not include any new reporting, recordkeeping, or other compliance requirements for small businesses.

This rule does not duplicate, overlap, or conflict with any other Federal rules.

There are no known significant alternative approaches to the proposed rule that would meet the proposed objectives.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities. DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D028) in correspondence.

The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; however, these changes to the DFARS do not impose additional information collection requirements to the paperwork burden previously approved under OMB Control Number 0704-0245, titled: Defense Federal Acquisition Regulation Supplement (DFARS) Part 247, Transportation and Related Clauses.

Therefore, 48 CFR parts 212, 247, and 252 are proposed to be amended as follows:

The additions read as follows:

I. Background

DoD is proposing to amend the DFARS to implement the following two sections of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328):

Section 817 extends the domestic source requirements of 10 U.S.C. 2533a (the Berry Amendment) below the simplified acquisition threshold, when acquiring athletic footwear to be furnished to the members of the Army, Navy, Air Force, or Marine Corps upon their initial entry into the Armed Forces.

Section 881(b) amends 10 U.S.C. 2500(1) by adding Australia and the United Kingdom of Great Britain and Northern Ireland to the United States and Canada as the countries within which the activities of the national technology and industrial base are conducted. 10 U.S.C. 2534, Miscellaneous Limitations on the Procurement of Goods Other Than United States Goods, requires that DoD only procure certain items if the manufacturer of the items is part of the national technology and industrial base.

This rule proposes to amend the DFARS as follows—

Amends DFARS 225.7002(a) to ensure that purchases of athletic footwear valued at or below the SAT are not exempt from the Berry Amendment (i.e. shall be procured from domestic sources). A conforming change is made at DFARS 225.7002-3(a) to remove the phrase “that exceed the simplified acquisition threshold” in order to rely on the introductory text of the section, which qualifies all of the prescription in the section as inapplicable if an exception at DFARS 225.7002-2 applies.

Modifies the following DFARS sections, which implement the restrictions of 10 U.S.C. 2534, to allow acquisition of certain items from Australia and the United Kingdom:

• DFARS 225.7004, Restriction on acquisition of foreign buses.

• DFARS 225.7005, Restriction on certain chemical weapons antidote.

• DFARS 225.7006, Restriction on air circuit breakers for naval vessels.

• DFARS 252.225-7037, Evaluation of Offers for Air Circuit Breakers.

• DFARS 252.225-7038, Restriction on Acquisition of Air Circuit Breakers.

Purchases from the United Kingdom were already authorized in the provision and clause through annual waivers, which cover air circuit breakers and certain other naval vessel components.

In addition, this rule proposes to remove coverage at DFARS 225.7006-3(b) and 225.7006-4(a)(2) of the annual waiver for air circuit breakers for naval vessels from the United Kingdom, because waiver is no longer required.

This rule proposes to amend the applicability of existing DFARS solicitation provisions and contract clauses as follows:

• To implement section 817 of the NDAA for FY 2017, this rule proposes to extend use of DFARS clause 252.225-7012, Preference for Certain Domestic Commodities, to acquisitions at or below the simplified acquisition threshold (SAT) when buying athletic footwear to be furnished to enlisted members of the Armed Forces upon their initial entry into the Armed Forces. This clause is already prescribed for use in solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, including commercially available off-the-shelf (COTS) items.

• To implement section 881(b) of the NDAA for FY 2017, this rule proposes to modify the provision at DFARS 252.225-7037, Evaluation of Offers for Air Circuit Breakers, and the clause at DFARS 252.225-7038, Restriction on Acquisition of Air Circuit Breakers, to add Australia as a country from which items restricted by 10 U.S.C. 2534 may be purchased. This rule does not change the prescriptions for the use of this provision or clause, which are already required for use in solicitations and contracts for commercial items, including COTS items. The clause does not apply below the SAT.

41 U.S.C. 1905 governs the applicability of laws to contracts or subcontracts in amounts not greater than the SAT. It is intended to limit the applicability of laws to such contracts or subcontracts. 41 U.S.C. 1905 provides that if a provision of law contains criminal or civil penalties, or if the Federal Acquisition Regulation (FAR) Council makes a written determination that it is not in the best interest of the Federal Government to exempt contracts or subcontracts at or below the SAT, the law will apply to them. The Director, Defense Pricing and Contracting (DPC), is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the FAR system of regulations.

41 U.S.C. 1906 governs the applicability of laws to contracts for the acquisition of commercial items, and is intended to limit the applicability of laws to contracts for the acquisition of commercial items. 41 U.S.C. 1906 provides that if a provision of law contains criminal or civil penalties, or if the FAR Council makes a written determination that it is not in the best interest of the Federal Government to exempt commercial item contracts, the provision of law will apply to contracts for the acquisition of commercial items. Likewise, 41 U.S.C. 1907 governs the applicability of laws to COTS items, with the Administrator for Federal Procurement Policy the decision authority to determine that it is in the best interest of the Government to apply a provision of law to acquisitions of COTS items in the FAR. The Director, DPC, is the appropriate authority to make comparable determinations for regulations to be published in the DFARS, which is part of the FAR system of regulations.

A determination under 41 U.S.C. 1905 is not required to prescribe DFARS 252.225-7012 for use in solicitations and contracts valued at or below the SAT, because section 817 of the NDAA for FY 2017 specifically states that DoD shall acquire athletic footwear that complies with the requirements of 10 U.S.C. 2533a “without regard to the applicability of any simplified acquisition threshold under chapter 137 of title 10 (or any other provision of law).”

A determination under 41 U.S.C. 1906 and 1907 is not required to apply the requirements of DFARS 252.225-7037 and 252.225-7038 to acquisitions for commercial items, including COTS items, because the statute that this provision and clause implements is not a covered statute subject to 41 U.S.C. 1905-1907. At the time of the Federal Acquisition Streamlining Act of 1994 (FASA) (Pub. L. 103-355), now codified in part at 41 U.S.C. 1905-1907, this provision and clause were a single clause, DFARS 252.225-7029, Restriction on Acquisition of Air Circuit Breakers, which implemented 10 U.S.C. 2534. Because 10 U.S.C. 2534 predated FASA, it was not subject to 41 U.S.C. 1905-1907. The DFARS clause 252.225-7029 was included on the initial list of statutes applicable to the acquisition of commercial items at DFARS 252.212-7001, incorporated in the DFARS by DFARS Case 95-D712 on November 30, 1995 (Defense Acquisition Circular 91-9).

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

This proposed rule is not expected to be an E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, regulatory action, because this proposed rule is not significant under E.O. 12866.

DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

The reason for this rule is to implement sections 817 and 881(b) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328).

The objectives of the rule are as follows:

• To remove the exception to domestic source restriction of the Berry Amendment (10 U.S.C. 2533a) for acquisitions at or below the simplified acquisition threshold when buying athletic footwear to be furnished to enlisted members of the Armed Forces upon their initial entry into the Armed Forces, as required by section 817 of the NDAA for FY 2017.

• To allow acquisition of certain items from Australia and the United Kingdom, for which purchase is currently restricted to items from the United States or Canada, in accordance with 10 U.S.C. 2534, as amended by section 881(b) of the NDAA for FY 2017.

This rule may apply to only a few small entities, because there are few sources that meet the domestic source requirements of the Berry Amendment with regard to athletic footwear. The Defense Logistics Agency (DLA) estimates a potential annual demand for approximately 200,000 to 250,000 pairs of athletic shoes to be delivered at the rate of approximately 27,500 pairs per month. In response to a request for information issued by DLA in December 2016, there were 5 responses from athletic footwear manufacturers, one of which was a small business. Small entities who are athletic shoe manufacturers could likely support portions of DoD's total requirements for athletic footwear. In addition, there are likely a number of domestic component suppliers who are small entities who would benefit from this new requirement as well. On the other hand, small entities that cannot provide athletic shoes that meet the domestic source requirements of the Berry Amendment, will no longer be able to compete for acquisition of athletic footwear at or below the simplified acquisition threshold that are for the purpose of providing athletic footwear to enlisted members of the Armed Forces upon their initial entry into the Armed Forces.

This rule will not apply to any small entities at the prime contract level, as there are only a few prime contractors for the restricted items, which are all U.S. firms that are other than small businesses. For the definition of “small business,” the Regulatory Flexibility Act refers to the Small Business Act, which in turn allows the U.S. Small Business Administration (SBA) Administrator to specify detailed definitions or standards (5 U.S.C. 601(3) and 15 U.S.C. 632(a)). The SBA regulations at 13 CFR 121.105 discuss who is a small business: “(a)(1) Except for small agricultural cooperatives, a business concern eligible for assistance from SBA as a small business is a business entity organized for profit, with a place of business located in the United States, and which operates primarily within the United States or which makes a significant contribution to the U.S. economy through payment of taxes or use of American products, materials or labor.” Therefore, if an item currently purchased from a U.S. entity that is other than a small business were to be purchased from an entity in the Australia or the United Kingdom, there could be an impact on a few small entities that are currently subcontractors to a U.S. prime contractor.

There are no projected reporting or recordkeeping requirements of this rule. The only compliance requirements are to furnish athletic footwear that complies with the Berry Amendment.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

By extending the restriction of the Berry Amendment to acquisitions that do not exceed the simplified acquisition threshold, this rule may benefit small entities that can provide athletic footwear that is compliant with the Berry Amendment, because they may be more able to compete for smaller acquisitions.

DoD was unable to identify any alternatives that would meet the requirements of the statutes.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2017-D011), in correspondence.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

Therefore, 48 CFR parts 225 and 252 are proposed to be amended as follows:

I. Public Meeting

DoD is hosting a public meeting to obtain views of experts and interested parties in Government and the private sector regarding revising policies and procedures with regard to customary progress payment rates and maximum performance-based payment rates for DoD contracts.

Registration: Individuals wishing to attend the public meeting must register by September 6, 2018, to ensure adequate room accommodations and to facilitate security screening and entry to the Mark Center. Individuals desiring to attend the meeting must register at this website, https://www.acq.osd.mil/dpap/dars/performance-based_payments_and_progress_payments.html, by providing the following information:

(1) Company or organization name.

(2) Full name, valid email address, and telephone number of each person planning to attend, and whether the individual is a U.S. citizen. For each person, the Pentagon Force Protection Agency will send additional instructions to the email address provided at the time of registration in order for the individual to be approved for entry to the Mark Center.

(3) Name, title, organizational affiliation of presenter, if desiring to make a presentation, limited to a 5-minute presentation per company or organization. This limitation may be subject to adjustment, depending on the number of entities requesting to present, in order to ensure adequate time for discussion.

Once registered, attendees will be prompted by the Pentagon Force Protection Agency on building entry requirements.

One valid government-issued photo identification card (i.e., driver's license or passport) will be required in order to enter the building.

Attendees are encouraged to arrive at least 45 minutes early to accommodate security procedures. Public parking is not available at the Mark Center.

Presentations: If you wish to make a presentation, please submit an electronic copy of your presentation to [email protected] no later than September 10, 2018. When submitting presentations, provide presenter's name, organization affiliation, telephone number, and email address on the cover page. Please submit presentations only and cite “Public Meeting, DFARS Case 2017-D019” in all correspondence related to the public meeting. There will be no transcription at the meeting. The submitted presentations will be the only record of the public meeting.

Special accommodations: The public meeting is physically accessible to people with disabilities. Requests for reasonable accommodations, sign language interpretation or other auxiliary aids should be directed to Daniel Weinstein at 571-372-6105, at least 10 working days prior to the meeting date.

The TTY number for further information is: 1-800-877-8339. When the operator answers the call, let them know the agency is the Department of Defense; the point of contact is Daniel Weinstein at 571-372-6105.

Correspondence and Comments: Please cite “Public Meeting, DFARS Case 2017-D019” in all correspondence related to this public meeting. The submitted presentations will be the only record of the public meeting. To have a presentation considered as a public comment for the formation of the final rule, the presentation, or pertinent excerpts, must be submitted separately as a written comment as instructed in the paragraph titled “Submission of Comments” in ADDRESSES.

The fundamental purpose of the rule change is to increase the effectiveness and efficiency of the Department of Defense in five domains while recognizing that its cash flow policy was outdated and costly to the tax payers. The five domains are:

• On Time or Accelerated Contract Deliveries;

• Contractor Quality;

• Contractor Business Systems;

• Increasing Contract Opportunities for Small Business and for the Blind and Severely Disabled; and

• Receipt of Timely Quality Proposals.

The present progress payment rate was established in an economic environment when interest rates were significantly higher than the historic lows that have been experienced over the past several years. As a result of the aforementioned, and because DoD desires to take an enterprise-wide view of contractor performance and to recognize and distinguish performance among the companies with which it deals, DoD is proposing to modify the customary progress payment rate for large businesses. DoD recognizes that small businesses do not have the borrowing power that large businesses have and, therefore, is not proposing a change to the basic customary progress payment for small business, which is 90 percent. In modifying the customary rate for large business, DoD is proposing to allow large and small business to achieve progress payment rates greater than the customary rates.

The goal would be that a significant majority of the large and small businesses would eventually meet the desired level of enterprise-wide performance.

In the case of large business, for progress payments, a two-step process:

1. Modify the customary progress payment rate to 50 percent (effectively updating the premises of the Defense Financial and Investment Review (DFAIR) study to address today's business and market environment).

2. Establish opportunities for recognizing contractor behaviors that align themselves with the performance objectives established in the five business domains that are important to the DoD such that large business contractors could potentially increase the rate determined in Step 1 and receive progress payments that can be as high as 95 percent of contract cost. The increased customary progress payment rate will be established for each company or company division as the case may be.

The most comprehensive review of Government financing was the DFAIR study. One key recommendation from the DFAIR study was that “interest cost should remain an unallowable cost and progress payment rates should be reset in the future based on changes in interest rates.” Between the DFAIR study in 1985 and 2001, the customary progress payment rate for other than small business was changed five times and was usually a somewhat delayed reaction to changes in interest rates in prior years. In 2001, the customary rate was increased from 75 percent to 80 percent and has remained unchanged ever since.

In the rule making process it is customary to analyze the impact of the proposed rule versus the status quo and that traditional analysis is included in the regulatory cost analysis (see section V. of this preamble). However, DoD has been providing financing in excess of that warranted based on the historically low interest rates in effect since 2008. By modifying the customary progress payment rate to 50 percent, it will result in savings hundreds of millions of dollars to the taxpayers by eliminating an unintended consequence of the past practice associated with providing contract financing in excess of what was necessary. In the future, contractors will have the opportunity to earn increased contract financing benefit through improved performance.

DoD is proposing to amend DFARS parts 232, 242, and 252 to revise how contract financing, in the form of progress payments and performance-based payments, is calculated and determined for DoD contracts.

1. Progress payments. Currently, FAR 52.232-16, Progress Payments, sets a customary progress payment rate of 80 percent, except the rate is 85 percent for a small business, unless it is a letter contract. There is a statutory cap of 80 percent for letter contracts. DFARS 252.232-7004, DoD Progress Payment Rates, currently increases the FAR customary progress payment rate for small businesses to 90 percent (except for letter contracts).

2. Performance-based payments. FAR 52.232-28, Invitation to Propose Performance-Based Payments, sets a maximum performance-based rate of 90 percent of the contract price if on a whole contract basis, or 90 percent of the delivery item price if on a delivery item basis. DFARS 232.1004 provides procedures for analysis of proposed performance-based payments using the performance-based payments analysis tool, and also requires that the contractor provide consideration to the Government, if the performance-based payments payment schedule will be more favorable to the contractor than customary progress payments. DFARS 232.1005-70 prescribes the use of the provision at DFARS 252.232-7012, Performance-Based Payments—Whole Contract Basis, or the provision at DFARS 252.232-7013, Performance-Based Payments—Deliverable Item Basis.

1. Progress payments (DFARS 232.501-1(a) and 52.232-7004). DoD proposes a customary progress payment rate of 50 percent for other than small businesses and retains the 90 percent rate for small businesses, but provides criteria by which contractors can achieve a customary progress payment rate of up to 95 percent. However, if a contractor or any of its principals has within the preceding Government fiscal year been convicted of or had a civil judgment rendered against the contractor or any of its principals for commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (Federal, State, or local) contract or subcontract; violation of Federal or State antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating Federal criminal tax laws, or receiving stolen property, then the contractor will not be eligible for any incentives and the customary progress payment rate will be 25 percent for that contractor.

On December 1 of each year, a contractor, or higher-level owner of a contractor, may submit a representation as to which criteria it meets and request a higher customary progress payment rate. Based on the representation received, the Director of Defense Pricing and Contracting will determine the appropriate customary progress payment rate for the following calendar year, and that data will be entered into the Contract Business Analysis Repository (CBAR) by December 31.

If a contractor fails to submit by the December 1 deadline, then the rate for that contractor in CBAR will be 50 percent if the offeror is other than a small business and 90 percent if the offeror is a small business, unless the rate is 25 percent as provided in DFARS 232.501-1(a)(ii). If the offeror subsequently submits a representation after the December 1 deadline, any increase in rates will not be effective in CBAR until 30 days after submission.

The rate may be adjusted at any time during the year if it is subsequently determined that the representation provided by a contractor was not accurate.

2. Performance-based payments (DFARS 232.1004(b)(2) and 252.232-70YY). For maximum performance-based payments, DoD proposes rates and procedures comparable to those for determining the customary progress payment rate. The same representation will be used to determine both the customary progress payment rate and the maximum performance-based payment rate.

DoD proposes to amend DFARS 232.1004 to remove the procedures for analysis of proposed performance-based payments using the performance-based payments analysis tool, and also removes the requirement that the contractor provide consideration to the Government, if the performance-based payments payment schedule will be more favorable to the contractor than customary progress payments. The current solicitation provisions at DFARS 252.232-7012 and 252.232-7013 are no longer required and will be removed, thus reducing burden on contractors.

3. Corrective action requests (DFARS 242.302(a)). One of the criteria to qualify for higher customary progress payments or maximum performance-based payments is that the offeror/contractor does not have any open level III or level IV corrective action requests. Because the DFARS does not currently address corrective action requests, a paragraph has been added at DFARS 242.302(a) to explain the different levels of corrective action requests.

4. Withholding of payments (DFARS 242.7000 and 252.242-7005). DFARS 242.7000, Contractor business system deficiencies, and 252.242-7005, Contractor Business Systems, provide for withholding of payments (including progress and performance-based payments) when there are significant deficiencies in a required business system. However, the contracting officer will not withhold progress or performance-based payments from a contract that includes the clause 252.232-7004 or the provision 252.232-70YY, unless the contractor is receiving progress payments or performance-based payments under the contract at a rate specified in CBAR that includes the 10 percent incentive based on having acceptable business systems without significant deficiencies.

5. Preference for performance-based payments. This rule also proposes to implement section 831 of the National Defense Authorization Act for Fiscal Year 2017, which modifies 10 U.S.C. 2307(b) to address preference for performance-based payments.

This rule proposes to amend the clause at DFARS 252.232-7004, DoD Progress Payment Rates, and adds a new provision at DFARS 252.232-70YY, DoD Maximum Performance-Based Payment Rates. DFARS 252.232-7004 is used with FAR clause 52.232-16, Progress Payments, and DFARS 252.232-70YY is used with FAR provision 52.232-28, Invitation to Propose Performance-Based Payments. The FAR provision and clause are not prescribed for use in contracts for the acquisition of commercial items or for acquisitions at or below the SAT. The DFARS provision and clause, therefore, will not be applied to commercial items or to contact actions at or below the simplified acquisition threshold.

This rule proposes to amend the DFARS to implement changes to the progress payment and performance-based payment policies for DoD contracts by amending the section on customary progress payment rates at DFARS 232.501-1; adding new procedures for performance-based payments at 232.1003; amending the clause at 252.232-7004, DoD Customary Progress Payment Rates, and adding a new provision at 252.232-70YY, DoD Maximum Performance-Based Payment Rates. This rule also proposes to delete the clauses at DFARS 252.232-7012, Performance-Based Payments—Whole Contract Basis, and 252.232-7013, Performance-Based Payments—Deliverable Item Basis.

This rule will impact all offerors/contractors (large or small) seeking DoD contracts that offer progress payments or performance-based payments. Although there are added costs associated with submission of an annual representation, the contractors/offerors that can meet the criteria will qualify for substantial savings on interest payments, due to increased Government financing.

The expected benefits are that the modified approach to the establishment of a performance-based cash flow environment will enable DoD to take an enterprise-wide view of contractor performance and to recognize and distinguish performance among the companies with which it deals. The goal would be that a significant majority of the large and small businesses would eventually meet the desired level of enterprise-wide performance. As a result of the improved industrial performance, DOD's efficiency and effectiveness will be improved thereby increasing the lethality of its fighting force and positively reforming DOD's business practices.

A. Summary of Expected Costs to the Public. DoD has performed a regulatory cost analysis on this rule. The following is a summary of the estimated net public costs in millions, calculated in 2016 dollars in perpetuity at a 7-percent discount rate.

B. Summary of Expected Transfers. The following is a summary of the expected transfer of interest costs/savings from the Government to the public, due to an expected net increase in progress payment and performance-based payment rates paid by the Government.

1. Reduced Interest Payments by Contractors:

2. Increased Interest Payments by Government:

To access the complete Regulatory Cost Analysis, go to the Federal eRulemaking Portal at www.regulations.gov, search for “DFARS Case 2017-D019”, click “Open Docket”, and view “Supporting Documents”.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is an economically significant regulatory action and, therefore, was subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is a major rule under 5 U.S.C. 804.

This proposed rule is subject to E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, because this rule is a significant regulatory action under E.O. 12866. If finalized as proposed, this rule would be an E.O. 13771 regulatory action. The E.O. 13771 status will be informed by public comment, so please share any data and/or analysis that would relate to the rule's potential to be considered a deregulatory action. Details on the expected costs and benefits can be found in section V of this preamble.

DoD expects that this proposed rule may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. Therefore, an initial regulatory flexibility analysis has been prepared and is summarized as follows:

This rule revises progress payments and performance-based payments policies for DoD contracts, basing the payment rate on whether the offeror/contractor has met certain performance criteria. This rule also implements section 831 of the National Defense Authorization Act for Fiscal Year (FY) 2017, which modifies 10 U.S.C. 2301(b) to address preference for performance-based payments.

The objective of this rule is to increase the effectiveness and efficiency of DoD in five domains: on time or accelerated contract deliveries, contractor quality, contractor business systems, increasing contract opportunities for small businesses and for the blind and severely disables, and receipt of timely quality proposals. The statutory basis is 41 U.S.C. 1303 and 10 U.S.C. 2301(b).

This rule will apply to small entities that receive either progress payments or performance-based payments for noncommercial fixed-price contracts. There were 1,938 unique small entities receiving progress payments or performance-based payments in FY 2017.

The rule provides an opportunity to submit a representation as to whether a small entity meets certain performance criteria, in order to obtain higher progress payments or performance-based payments. DoD estimates that the professional skill set necessary to prepare the representation annually will approximate 25 percent at the journeyman level, 60 percent at the senior level, and 15 percent at the executive/attorney level. DoD estimates an average of 13 hours per response from small entities. The rule also removes a burden of approximately one hour per entity, associated with paragraph (b) of DFARS subpart 32.10 and the associated clauses at DFARS 252.232-7012 and 252.232-7013, which this rule proposes to delete.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

DoD did not identify any significant alternatives that would meet the objectives of the rule. However, the rule provides certain advantages for small entities as the basic customary progress payment rate for small entities remains at 90 percent, with possible increase up to 95 percent. So, small entities can continue to get the same rate, even if they do not submit a representation or meet the criteria. Small entities are only asked to represent with regard to three criteria: timely delivery or performance, contractor quality, and contractor business systems.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2017-D019), in correspondence.

The rule contains information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). Accordingly, DoD has submitted a request for approval of a revised information collection requirement 0704-0359, Defense Federal Acquisition Regulation Supplement (DFARS) Part 232, Contract Financing, and associated clauses at DFARS 252.232, to the Office of Management and Budget.

1. Public reporting burden for the collection of information proposed by this DFARS case 2017-D019 is estimated to average 28.8 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

The annual reporting burden estimated as follows:

Respondents: 3,200.

Responses per respondent: 1.

Total annual responses: 3,200.

Preparation hours per response: 28.8 hours.

Total response Burden Hours: 92,027 hours.

2. In addition, this information collection includes a pre-existing burden related to DFARS clause 252.232-7007 (800 hours, 1 response per respondent, 800 responses, 1 hour per response, for a total of 8,000 hours). Therefore, the total burden for 0704-0359, rounded, is as follows:

Respondents: 4,000.

Responses per respondent: 1.

Total annual responses: 4,000.

Preparation hours per response: 24 hours.

Total response Burden Hours: 93,000 hours.

Written comments and recommendations on the proposed information collection, including suggestions for reducing this burden, should be sent to Ms. Jasmeet Seehra at the Office of Management and Budget, Desk Officer for DoD, Room 10236, New Executive Office Building, Washington, DC 20503, or email [email protected], with a copy to the Defense Acquisition Regulations System, Attn: Ms. Amy G. Williams, OUSD (A&S) DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060. Comments can be received from 30 to 60 days after the date of this notice, but comments to OMB will be most useful if received by OMB within 30 days after the date of this notice.

Public comments are particularly invited on: whether this collection of information is necessary for the proper performance of functions of the DFARS, and will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.

To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Defense Acquisition Regulations System, Attn: Ms. Amy G. Williams, OUSD (A&S) DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060, or email [email protected]. Include DFARS Case 2017-D019 in the subject line of the message.

This rule also affects the information collection requirements at DFARS subpart 232.10 (and associated clauses at DFARS 252.232-7012 and 252.232-7013, currently approved under OMB Control Number 0704-0359. This rule proposes to remove these requirements.

Therefore, 48 CFR parts 232, 242, and 252 are proposed to be amended as follows:

The revision and addition read as follows:

This rule proposes to revise the DFARS to implement section 823 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91). Section 823 amends 10 U.S.C. 2305a to allow for more than the maximum number of five offerors when a solicitation is issued using two-phase design-build selection procedures for an indefinite-delivery, indefinite-quantity (IDIQ) contract that exceeds $4 million.

Prior to the amendments made by section 823, 10 U.S.C. 2305a required the head of the contracting activity to approve the contracting officer's justification that it is in the best interest of the Government to exceed the maximum number of five offerors that may be selected to submit phase-two proposals, if certain conditions apply. Section 823 eliminates the requirement for such a justification when the solicitation is for an IDIQ contract that exceeds $4 million.

The two-phase design-build selection procedures authorized by 10 U.S.C. 2305a are implemented at Federal Acquisition Regulation (FAR) subpart 36.3. The statutory requirement for a contracting officer to justify exceeding the maximum number of five offerors is implemented at FAR 36.303-1(a)(4). This rule proposes to implement section 823 by adding a new DFARS section 236.303-1(a)(4), to be used in lieu of the procedures at FAR 36.303-1(a)(4). The new DFARS section implements 10 U.S.C. 2305a, as amended by section 823, by providing—

• The new authority to exceed the five offeror maximum when the solicitation is for an IDIQ contract that exceeds $4 million;

• The authority to exceed the five offeror maximum when the contracting officer's decision is approved by the head of the contracting activity when the solicitation is for a contract that exceeds $4 million; and

• A statement that the number of offerors is at the contracting officer's discretion when the solicitation is for a contract that does not exceed $4 million.

This rule does not propose to create any new provisions or clauses or impact any existing provisions or clauses.

Executive Order (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This is not a major rule under 5 U.S.C. 804.

This proposed rule is not expected to be an E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, regulatory action, because this proposed rule is not significant under E.O. 12866.

DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because the scope of the rule only changes internal Government operating procedures for the design-build selection procedures. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

This rule proposes to amend the Defense Federal Acquisition Regulation (DFARS) to implement section 823 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L. 115-91). Section 823 amends 10 U.S.C. 2305a to allow contracting officers to exceed the maximum number of five offerors for solicitations issued using two-phase design-build selection procedures for indefinite-delivery, indefinite-quantity (IDIQ) contracts that exceed $4 million.

The objective of this rule is to implement the statutory changes to the two-phase design-build selection procedures by adding a new DFARS section 236.303-1(a)(4), to be used in lieu of Federal Acquisition Regulation 23.303-1(a)(4). The new DFARS section provides—

• The new authority to exceed the five offeror maximum when the solicitation is for an IDIQ contract that exceeds $4 million;

• The authority to exceed the five offeror maximum when the contracting officer's decision is approved by the head of the contracting activity when the solicitation is for a contract that exceeds $4 million; and

• A statement that the number of offerors is at the contracting officer's discretion when the solicitation is for a contract that does not exceed $4 million.

The legal basis for this rule is section 823 of the NDAA for FY 2018.

Based on FY 2017 data from the Federal Procurement Data System, DoD issued approximately 499 new awards for construction exceeding $4 million, to include IDIQ contracts, purchase orders, and orders under basic ordering agreements. Of the 499 new awards for construction, approximately 305 awards were made to 252 unique small businesses entities.

This proposed rule does not include any new reporting, recordkeeping, or other compliance requirements for small entities. However, this rule may create additional opportunities for small entities, because the rule allows the maximum number of offerors selected to submit phase-two proposals to exceed five, when the solicitation is for an IDIQ contract valued at greater than $4 million, without requiring additional justification or approval.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

There are no known significant alternative approaches to the proposed rule that would meet the requirements of the applicable statute.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D011), in correspondence.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

Therefore, 48 CFR 236 is proposed to be amended as follows:

The Board proposes to modify and update its rules pertaining to certain payment, filing, and service procedures. The Board proposes to update these rules pursuant to a recommendation of its Regulatory Reform Task Force (RRTF), which was established to comply with the spirit of Executive Order 13,777. The RRTF's mission is to identify Board rules and practices that are burdensome, unnecessary, or outdated and to recommend how they should be addressed. See Regulatory Reform Task Force, EP 738 (STB served June 20, 2017). In a status report issued in May 2017, the RRTF identified the Board's payment and filing procedures as a potential area for reform and, following stakeholder input, recommended in its November 2017 status report that the Board update procedural and filing rules that are in need of modernization.1 As explained further below, the Board proposes changes relating to methods of payment, filing procedures, electronic service of Board decisions, and fees for copying, printing, and related services.

Currently, the Board's generally applicable regulation on filing fees provides that fees may be paid in one of the following manners: By billing account, check, money order, or credit card. 49 CFR 1002.2(a). That regulation further provides that, except as specified in section 1002.2, all filing fees are payable at the time and place that the document is tendered for filing. 49 CFR 1002.2(a)(1).

The Board proposes two modifications to its generally applicable filing fee regulation at 49 CFR 1002.2. First, the Board proposes to add an electronic payment option at 49 CFR 1002.2(a). The electronic payment option would be a convenient and quick method for the payment of fees to the Board and would facilitate increased use of electronic filing (e-filing) as described below in the discussion of filing procedures.

The Board would implement electronic payment through Pay.gov, a website operated by the Department of Treasury and used by many federal agencies.2 The Pay.gov service is a “fast way to make secure electronic payments” to various federal agencies.3 Pay.gov currently allows payment through the following four methods, all of which the Board would accept: Bank accounts, credit cards, debit cards with a MasterCard or Visa logo, and digital wallet.4 As discussed below in the section on filing procedures, parties filing pleadings electronically would be required to submit payments electronically, and all other filers would be encouraged to do so. A link to Pay.gov would be available on the Board's website. In addition, the Pay.gov website would have a page for the Board, with links to make user fee payments.5 Once filers access the Board's page on the Pay.gov website, specific instructions for processing payments would be provided.

Second, the Board proposes to eliminate the options of using billing accounts and making payments by credit card directly to the Board, although, as noted, parties will still be able to make credit card payments using Pay.gov.6 Given the availability of electronic payments, billing accounts and payment by credit card directly to the Board are no longer necessary or efficient. These proposed changes would provide filers with a modern, efficient payment option, and, as described below, facilitate the increased use of electronic filing. In addition, the changes would ensure more timely payments of the Board's various fees, would provide a more secure method of payment, and would simplify the Board's accounting procedures. Under the proposed rules, those that have previously used accounts or paid by credit card directly to the Board would have the option of using the Board's electronic payment option (described above) or any of the Board's remaining payment methods (check or money order).

The Board currently accepts payments associated with recordations of security interests 7 in the same manner as noted above: By billing account, check, money order, or credit card. See 49 CFR 1002.2(a) (filing fees for documents submitted for recording may be charged to accounts); see also 49 CFR 1177.3. The Board proposes to modify this practice and the language at section 1002.2(a) to be consistent with the proposed changes described above. Although recordations can already be submitted to the Board through e-filing, these proposed changes are necessary for the Board to eliminate entirely the options of billing accounts and credit cards in order to simplify the Board's accounting procedures. As discussed below in the section on filing procedures, parties filing recordations electronically would be required to submit payments electronically; parties filing recordations in paper form would be encouraged to submit payments electronically as well.

The Board's regulations also establish the method of payment for filing water carrier tariffs and contract summaries. Specifically, the tariff or contract summary must be accompanied by the filing fee, the account number to be billed, or the credit card to be charged. 49 CFR 1312.4(a)(2)(iii), section 1313.4(a)(3)(iii); see also 49 CFR 1002.2(a) (filing fees for tariffs and contract summaries may be charged to accounts); section 1002.2(b) (providing that the Board may reject a tariff filing filed without the fee if the filer repeatedly fails to submit the appropriate fee).

The Board proposes to make changes to these regulations to correspond to the changes described above that are being proposed for section 1002.2. The proposed regulations would eliminate the option of and references to billing accounts and payment by credit card directly to the Board, and would add an option of electronic billing through Pay.gov.8 Although both water carrier tariffs and contract summaries are often already submitted electronically to the Board,9 these changes are necessary for the Board to eliminate entirely the options of billing accounts and credit cards in order to simplify the Board's accounting procedures.

The Board is also proposing changes to increase the use of e-filing. The Board's current filing procedures for pleadings, found at 49 CFR 1104.1 and described in more detail on the Board's website,10 prohibit e-filing in three circumstances: (1) Initial filings in a proceeding; (2) any filings (except recordations) 11 with associated fees; and (3) large filings in excess of 100 megabytes. If paper filings are submitted, the original and 10 copies must generally be submitted to the Board,12 along with any required payment in the manner prescribed by 49 CFR 1002.2. The first and second of these limitations exist to allow the Board to confirm payment before it accepts a filing, while the third limitation exists due to file size limitations in the Board's e-filing program.

Under the proposal, e-filing would be permitted for all pleadings and recordations (100 megabytes or less). The proposed rules at section 1002.2(a) would require that any fees associated with e-filings be paid electronically, allowing the Board to confirm payment via its electronic payment processer when it receives an e-filing. These modifications would eliminate the need to require paper filings for initial pleadings and fee-related pleadings that are e-filed. The proposed rules at section 1104.1 would also be revised to reflect that change, and would direct filers to the Board's website for details regarding permissible formats, acceptable signature formats, and other information. However, the Board would continue to require that large filings in excess of 100 megabytes be filed in paper form at this time. The Board may also require alternative filing procedures in particular cases.

To utilize e-filing, a filer would first pay any required fee via electronic payment on the Pay.gov website. Once the payment has been submitted, a confirmation email from Pay.gov would be sent containing a unique transaction number. The filer then would go to the Board's e-filing website to submit a filing. Once the filer has logged in, there would be a field for the filer to enter the transaction number received from Pay.gov and, if applicable, note that a fee waiver is being requested.13 This transaction number would ensure that the Board can match the payment with the e-filing. If no payment is associated with the filing, the filer would check a box to indicate either that no fee is required or that a fee waiver has been requested. The filer must either enter the transaction number or check the box to complete submission of a filing. After the transaction number has been entered or the box has been checked, the filer would complete the form and attach the document for e-filing. Once the filing is submitted, a confirmation email would be sent to the filer, as is currently done.

E-filing would not be mandatory, but parties making paper filings would be encouraged to also use the Board's electronic payment processor. Paper filers using the electronic payment processing option should note the transaction number they receive from Pay.gov and provide it to the Board with their paper filing or when communicating with Board staff regarding payment of fees.

Although many practitioners already make use of the Board's e-filing system, these proposed changes are intended to promote increased use of e-filing and result in cost savings to both practitioners and the Board.

Because the paper filing option would still be available, the Board also proposes to modify its requirements for paper filers to reduce the burden on those filers. The Board's general provision on copies, found at 49 CFR 1104.3(a), requires 10 copies of paper filings, unless otherwise specifically directed by another Board regulation. Various other provisions of the regulations require a different number of copies.14 The Board proposes to harmonize its rules by eliminating the requirements to file extra copies of paper filings. Instead, paper filers generally would be required to file only the original paper filing. However, the Board would reserve the right to direct filers (including those who e-file) to provide paper copies of filings when necessary. Because of the voluminous nature of filings in merger proceedings, the Board would keep the current requirement regarding the number of paper copies in those regulations (49 CFR 1180.4).

The Board also proposes to modify its regulations at 49 CFR 1104.3(b) which governs electronic submissions accompanying paper filings. First, the Board proposes to modify the regulations to eliminate the requirement that electronic versions of pleadings that are 20 or more pages be submitted on compact discs or 3.5-inch floppy diskettes. See 49 CFR 1104.3(b)(1), (b)(3), (b)(4). Instead, the proposed regulations would require such filings to be accompanied by electronic versions, and would direct filers to the Board's website for information on how to provide those electronic versions.15 Such a change would allow the Board to more easily keep filing requirements consistent with evolving technology and software. For the same reason, the Board proposes to revise the outdated requirements at 49 CFR 1104.3(b)(2) regarding the submission of evidence or workpapers consisting of mathematical computations by directing filers to the Board's website or the procedural orders in the case for instructions on the proper formatting for such evidence.

With the same objective of updating and streamlining Board procedures, the Board also proposes new procedures regarding service of decisions.16 Currently, the Board mails paper copies of its decisions to parties on the service list for each case, incurring costs for mailing and associated resources, and also delaying what could otherwise be more immediate notification to service list participants. Under the proposal, Board decisions would be served by email to those who consent to e-service, thereby streamlining the current process. It is anticipated that the Board would serve decisions by email immediately following posting of decisions on the Board's website, allowing participants to receive more expeditious notification of decisions than with paper service. As discussed below, paper service of Board decisions would still be used for those parties who do not consent to e-service.

Under this proposal, parties that provide an email address to the Board when making a filing would be deemed to have consented to e-service of decisions in one of two ways. First, a party making an e-filing in a proceeding would also be consenting to e-service in that proceeding. The email address(es) provided in the required field in the e-filing form would be included on the service list on behalf of that party for the proceeding. This field in the e-filing form would allow an e-filer to enter multiple email addresses on behalf of that party as e-service recipients. Second, a party who makes a paper filing and includes an email address(es) on such filings would also be deemed to consent to e-service in the proceeding in which the filing was made unless the party opts out. The Board would send such paper filers a letter informing them that the email address(es) on the filing would be used on the service list unless the filer opts out, and verifying that the email address(es) provided is correct.

The email addresses used by the Board for e-service would be listed on the public service list for each proceeding. Filers should be aware, however, that, at this time, consent for e-service would be proceeding-specific and not filer-specific. Thus, the inclusion of an email address on one service list would not mean that the email address will automatically appear on a service list for a different proceeding in which they are participating.

The Board would continue to send paper copies of Board decisions as a backup to e-service during the early stages of e-service implementation. The Board expects that this transitional dual service period would last for up to three months after the effective date of any final rule.

The Board would treat proceedings that are open at the time the rule becomes effective as follows. Email addresses that were previously provided by service list participants when filing (including when e-filing) would not automatically be used for e-service. However, consistent with the procedures explained above, after the effective date of this rule, a party's email address would be added to the e-service list if the party: (1) Utilizes e-filing, or (2) does not opt out of e-service after making a paper filing that includes an email address.

The Board is proposing to update and clarify its fees for copying, printing, and related services found at 49 CFR 1002.1. These changes would reduce costs to the public, simplify the fees and associated accounting of such fees, and update obsolete or incorrect references.

The proposed regulations would reduce the charge for copying and printing tariffs, reports, and other public documents at 49 CFR 1002.1(d) from $1.50 per letter or legal size exposure with a $7.50 minimum to $0.25 per letter or legal size exposure. There would be no charge for the first 100 pages of copying or printing, which would be consistent with current Freedom of Information Act (FOIA) regulations at section 1002.1(g) that exclude charges for the first 100 pages for certain categories of users.17 The same reduced charge of $0.25 per page would also apply to copying and printing documents not considered public under FOIA at current 49 CFR 1002.1(g)(7).

In addition, the Board is proposing to eliminate current 49 CFR 1002.1(f) and (g)(8), governing search and copying services requiring computer processing, which are obsolete and outdated.

Because these proposed revisions relate to rules of agency organization, procedure, or practice, they are not subject to the provisions of the Administrative Procedure Act (APA) requiring notice and opportunity for public comment. See 5 U.S.C. 553(b)(3)(A). Because the Board has determined that notice and comment are not required under the APA for this rulemaking, the requirements of the Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 601-612, do not apply. Nevertheless, the Board has determined that it would be useful to publish these proposed rule changes for notice and comment before adoption.

It is ordered:

1. Comments are due by September 24, 2018.

2. Notice of this decision will be published in the Federal Register.

3. This decision is effective on its date of service.

For the reasons set forth in the preamble, the Surface Transportation Board proposes to amend parts 1002, 1012, 1104, 1110, 1111, 1113, 1130, 1132, 1150, 1152, 1155, 1182, 1244, 1312, and 1313 of title 49, chapter X, of the Code of Federal Regulations as follows:

The revisions read as follows:

The revisions read as follows:

The revisions read as follows:

The revisions read as follows:

The revisions read as follows:

49 U.S.C. 1321, 10707, 11144, 11145.