Federal Register Vol. 83, No.166,

Federal Register Volume 83, Issue 166 (August 27, 2018)

Page Range43501-43737
FR Document

83_FR_166
Current View
Page and SubjectPDF
83 FR 43607 - Significant New Use Rules on Certain Chemical SubstancesPDF
83 FR 43710 - Sunshine Act MeetingsPDF
83 FR 43635 - Adjustment of Appendices Under the Dairy Tariff-Rate Import Quota Licensing Regulation for the 2018 Tariff-Rate Quota YearPDF
83 FR 43637 - Assessment of Fees for Dairy Import Licenses for the 2019 Tariff-Rate Import Quota YearPDF
83 FR 43634 - Nuseed Americas Inc.; Determination of Nonregulated Status of Canola Genetically Engineered for Altered Oil ProfilePDF
83 FR 43501 - Irish Potatoes Grown in Colorado; Increased Assessment Rate for Area No. 2PDF
83 FR 43637 - Stakeholder Listening Opportunity for Priorities in Research, Education and ExtensionPDF
83 FR 43527 - Significant New Use Rules on Certain Chemical SubstancesPDF
83 FR 43663 - Agency Information Collection Activities Under OMB ReviewPDF
83 FR 43675 - Agency Information Collection Activities; Proposed Renewal of an Exiting Collection (EPA ICR No. 1446.12); Comment RequestPDF
83 FR 43606 - Significant New Use Rules on Certain Chemical SubstancesPDF
83 FR 43571 - Approval and Promulgation of Air Quality Implementation Plans; Maryland; Regional Haze Five-Year Progress ReportPDF
83 FR 43689 - Agency Information Collection Activities: Proposed Collection; Comment RequestPDF
83 FR 43664 - Defense Advisory Committee on Investigation, Prosecution, and Defense of Sexual Assault in the Armed Forces; Notice of Federal Advisory Committee Meeting; CancellationPDF
83 FR 43676 - Announcement of the Per- and Polyfluoroalkyl Substances (PFAS) Heartland Community EngagementPDF
83 FR 43704 - Notice of Realty Action: Non-Competitive (Direct) Sale of Public Land in Esmeralda County, NVPDF
83 FR 43607 - Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding the Anti-Kickback Statute and Beneficiary Inducements CMPPDF
83 FR 43737 - Advisory Committee on Structural Safety of Department of Veterans Affairs Facilities; Notice of MeetingPDF
83 FR 43702 - 30-Day Notice of Proposed Information Collection: Community Development Block Grant-Disaster Recovery (CDBG-DR); 2 Year Expenditure Deadline Extension RequestPDF
83 FR 43700 - 60-Day Notice of Proposed Information Collection: Neighborhood Stabilization Program 2 Reporting NSP2PDF
83 FR 43687 - Final National Occupational Research Agenda for Traumatic Injury PreventionPDF
83 FR 43656 - Submission for OMB Review; Comment RequestPDF
83 FR 43724 - Notice of Opportunity for Public Comment To Dispose of 4.68 Acres of Airport Land at Houlton International Airport, Houlton, MEPDF
83 FR 43508 - Modification and Establishment of Restricted Areas; Townsend, GAPDF
83 FR 43733 - Denial of Motor Vehicle Defect PetitionPDF
83 FR 43725 - Agency Information Collection Activities: Requests for Comments; Clearance of Renewed Approval of Information Collection: Certification of Airmen for the Operation of Light-Sport AircraftPDF
83 FR 43724 - Agency Information Collection Activities: Requests for Comments; Clearance of Renewed Approval of Information Collection: Procedures for Non-Federal Navigation FacilitiesPDF
83 FR 43723 - Determinations Regarding Use of Chemical Weapons by Russia Under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991PDF
83 FR 43664 - Reserve Forces Policy Board; Notice of Federal Advisory Committee MeetingPDF
83 FR 43557 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; 2018 Commercial Accountability Measures and Closure for Atlantic Migratory Group CobiaPDF
83 FR 43730 - Petition for Waiver of CompliancePDF
83 FR 43611 - Natural Resource Damages for Hazardous SubstancesPDF
83 FR 43586 - Promulgation of Air Quality Implementation Plans; State of Texas; Regional Haze and Interstate Visibility Transport Federal Implementation Plan: Proposal of Best Available Retrofit Technology (BART) and Interstate Transport ProvisionsPDF
83 FR 43691 - Submission for OMB Review; Comment RequestPDF
83 FR 43731 - Petition for Waiver of CompliancePDF
83 FR 43735 - Mutual Savings Association Advisory Committee and Minority Depository Institutions Advisory CommitteePDF
83 FR 43736 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Multiple CDFI Information Collection RequestsPDF
83 FR 43731 - Meeting Notice-U.S. Maritime Transportation System National Advisory CommitteePDF
83 FR 43646 - Large Diameter Welded Pipe From the Republic of Turkey: Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final DeterminationPDF
83 FR 43644 - Large Diameter Welded Pipe From the People's Republic of China: Preliminary Determination of Sales at Less Than Fair ValuePDF
83 FR 43649 - Large Diameter Welded Pipe From Canada: Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Extension of Provisional MeasuresPDF
83 FR 43640 - Large Diameter Welded Pipe From Greece: Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final DeterminationPDF
83 FR 43651 - Large Diameter Welded Pipe From the Republic of Korea: Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final DeterminationPDF
83 FR 43653 - Large Diameter Welded Pipe From India: Preliminary Determination of Sales at Less Than Fair ValuePDF
83 FR 43692 - Meeting of the Presidential Advisory Council on Combating Antibiotic-Resistant BacteriaPDF
83 FR 43525 - Competition With Civilian BandsPDF
83 FR 43708 - Agency Information Collection Activities; Submission for OMB Review; Comment Request, Evaluation of the American Apprenticeship Initiative, New CollectionPDF
83 FR 43709 - Advisory Committee on Veterans' Employment, Training and Employer Outreach (ACVETEO): MeetingPDF
83 FR 43726 - Surface Transportation Project Delivery Program; Florida DOT Audit #1 ReportPDF
83 FR 43710 - New Postal ProductsPDF
83 FR 43659 - Mid-Atlantic Fishery Management Council (MAFMC); Public MeetingPDF
83 FR 43561 - Airworthiness Directives; Leonardo S.p.A. HelicoptersPDF
83 FR 43671 - Public Notice: Records Governing Off-the-Record CommunicationsPDF
83 FR 43671 - Combined Notice of Filings #2PDF
83 FR 43673 - Combined Notice of Filings #1PDF
83 FR 43668 - Topsham Hydro Partners Limited Partnership Pejepscot Hydroelectric Project; Notice of Dispute Resolution Panel Meeting and Technical Conference, and Revised SchedulePDF
83 FR 43665 - Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization: MC Project Company LLCPDF
83 FR 43672 - Notice of Intent To Terminate Conduit Exemption and Soliciting Comments, Protests, and Motions To Intervene: City of San Luis ObispoPDF
83 FR 43667 - Notice of Schedule for Environmental Review of the Dominion Energy Transmission, Inc. Sweden Valley ProjectPDF
83 FR 43669 - AEP Generation Resources, Inc.; Notice of Intent To File License Application, Filing of Pre-Application Document (PAD), Commencement of Pre-Filing Process, and Scoping; Request for Comments on the Pad and Scoping Document, and Identification of Issues and Associated Study RequestsPDF
83 FR 43665 - Order On Intent To Revoke Market-Based Rate AuthorityPDF
83 FR 43702 - Announcement of Public Meetings: North American Wetlands Conservation Council; Neotropical Migratory Bird Conservation Advisory GroupPDF
83 FR 43705 - National Register of Historic Places; Notification of Pending Nominations and Related ActionsPDF
83 FR 43662 - North Pacific Fishery Management Council; Public MeetingPDF
83 FR 43662 - Mid-Atlantic Fishery Management Council (MAFMC); Public MeetingPDF
83 FR 43659 - New England Fishery Management Council; Public MeetingPDF
83 FR 43660 - Mid-Atlantic Fishery Management Council (MAFMC); Public MeetingPDF
83 FR 43658 - New England Fishery Management Council; Public MeetingPDF
83 FR 43661 - New England Fishery Management Council; Public MeetingPDF
83 FR 43525 - Safety Zone; Upper Mississippi River, Mile Markers 751.2 to 751.8, Alma, WIPDF
83 FR 43707 - National Register of Historic Places; Notification of Pending Nominations and Related ActionsPDF
83 FR 43722 - Administrative Declaration of a Disaster for the State of NEW MEXICOPDF
83 FR 43660 - New England Fishery Management Council; Public MeetingPDF
83 FR 43661 - Fisheries of the Caribbean; Southeast Data, Assessment, and Review (SEDAR); Public MeetingPDF
83 FR 43683 - Agency Information Collection Activities; Proposed Collection; Comment RequestPDF
83 FR 43685 - Proposed Data Collection Submitted for Public Comment and RecommendationsPDF
83 FR 43688 - Agency Forms Undergoing Paperwork Reduction Act ReviewPDF
83 FR 43695 - Extension of the Designation of Somalia for Temporary Protected StatusPDF
83 FR 43638 - Submission for OMB Review; Comment RequestPDF
83 FR 43710 - 30-Day Notice for the “NEA Funding Reporting Requirements-Final Descriptive Reports FY2019 and Later”PDF
83 FR 43690 - Agency Information Collection Activities: Submission for OMB Review; Comment RequestPDF
83 FR 43642 - Fresh Tomatoes From Mexico: Preliminary Results of the Five-Year Sunset Review of the 2013 Suspension Agreement on Fresh Tomatoes From MexicoPDF
83 FR 43657 - National Institute of Standards and Technology Performance Review Board MembershipPDF
83 FR 43657 - Meeting of the Visiting Committee on Advanced TechnologyPDF
83 FR 43656 - Announcing Request for Nominations for Lightweight Cryptographic AlgorithmsPDF
83 FR 43510 - Chief Compliance Officer Duties and Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap ParticipantsPDF
83 FR 43680 - Proposed Agency Information Collection Activities; Comment RequestPDF
83 FR 43720 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Independence Policy of the Board of Directors of the ExchangePDF
83 FR 43715 - Tortoise Capital Advisors, L.L.C., et al.PDF
83 FR 43711 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Make a Number of Non-Substantive Changes to the RulebookPDF
83 FR 43703 - Indian Gaming; Approval of Tribal-State Class III Gaming Compact Amendments in the State of OklahomaPDF
83 FR 43704 - Indian Gaming; Approval of Tribal-State Class III Gaming Compact Amendments in the State of OklahomaPDF
83 FR 43732 - Reports, Forms and Record Keeping Requirements Agency Information Collection Activity Under OMB ReviewPDF
83 FR 43674 - Magellan Pipeline Company L.P.; Notice of Petition for Declaratory OrderPDF
83 FR 43668 - Empire Pipeline, Inc.; Notice of Schedule for Environmental Review of the Empire North ProjectPDF
83 FR 43666 - Combined Notice of Filings #1PDF
83 FR 43713 - Cushing Asset Management, LP et al.PDF
83 FR 43735 - Multiemployer Pension Plan Application To Reduce BenefitsPDF
83 FR 43677 - Privacy Act of 1974; System of RecordsPDF
83 FR 43674 - Meetings of the Local Government Advisory Committee and the Small Communities Advisory SubcommitteePDF
83 FR 43576 - Air Plan Revisions; California; Technical AmendmentsPDF
83 FR 43538 - Significant New Use Rules on Certain Chemical SubstancesPDF
83 FR 43694 - National Institute of Mental Health; Notice of Closed MeetingsPDF
83 FR 43694 - National Cancer Institute Cancellation; Notice of MeetingPDF
83 FR 43693 - National Cancer Institute; Notice of Closed MeetingsPDF
83 FR 43694 - National Institute of Mental Health; Notice of MeetingPDF
83 FR 43563 - Contributions in Exchange for State or Local Tax CreditsPDF
83 FR 43559 - Airworthiness Directives; Airbus Helicopters Deutschland GmbH HelicoptersPDF
83 FR 43503 - Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages)PDF
83 FR 43556 - LPTV, TV Translator, and FM Broadcast Station Reimbursement; Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive AuctionsPDF
83 FR 43613 - LPTV, TV Translator, and FM Broadcast Station Reimbursement, Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive AuctionsPDF

Issue

83 166 Monday, August 27, 2018 Contents Agency Toxic Agency for Toxic Substances and Disease Registry NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43685-43687 2018-18446 Agricultural Marketing Agricultural Marketing Service RULES Irish Potatoes Grown in Colorado: Increased Assessment Rate for Area No. 2, 43501-43503 2018-18560 Agriculture Agriculture Department See

Agricultural Marketing Service

See

Animal and Plant Health Inspection Service

See

Foreign Agricultural Service

See

National Institute of Food and Agriculture

Animal Animal and Plant Health Inspection Service NOTICES Nonregulated Statuses; Determinations: Nuseed Americas Inc.; Canola Genetically Engineered for Altered Oil Profile, 43634-43635 2018-18565 Army Army Department RULES Competition with Civilian Bands, 43525 2018-18480 Consumer Financial Protection Bureau of Consumer Financial Protection RULES Truth in Lending Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages), 43503-43508 2018-18209 Centers Disease Centers for Disease Control and Prevention NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43688-43689 2018-18445 Final National Occupational Research Agenda for Traumatic Injury Prevention, 43687-43688 2018-18514 Centers Medicare Centers for Medicare & Medicaid Services NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43689-43691 2018-18437 2018-18523 Children Children and Families Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43691-43692 2018-18495 Coast Guard Coast Guard RULES Safety Zones: Upper Mississippi River, Mile Markers 751.2 to 751.8, Alma, WI, 43525-43527 2018-18453 Commerce Commerce Department See

International Trade Administration

See

National Institute of Standards and Technology

See

National Oceanic and Atmospheric Administration

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43638-43640 2018-18443
Commodity Futures Commodity Futures Trading Commission RULES Chief Compliance Officer Duties and Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap Participants, 43510-43524 2018-18432 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43663-43664 2018-18532 Comptroller Comptroller of the Currency NOTICES Requests for Nominations: Mutual Savings Association Advisory Committee and Minority Depository Institutions Advisory Committee, 43735 2018-18493 Defense Department Defense Department See

Army Department

NOTICES Meetings: Defense Advisory Committee on Investigation, Prosecution, and Defense of Sexual Assault in the Armed Forces; Cancellation, 43664 2018-18522 Reserve Forces Policy Board, 43664-43665 2018-18501
Energy Department Energy Department See

Federal Energy Regulatory Commission

Environmental Protection Environmental Protection Agency RULES Significant New Use Rules on Certain Chemical Substances, 43527-43556 2018-18403 2018-18534 PROPOSED RULES Air Quality State Implementation Plans; Approvals and Promulgations: California, 43576-43586 2018-18408 Maryland; Regional Haze Five-Year Progress Report, 43571-43576 2018-18526 Texas; Regional Haze and Interstate Visibility Transport Federal Implementation Plan: Proposal of Best Available Retrofit Technology and Interstate Transport Provisions, 43586-43606 2018-18497 Significant New Use Rules on Certain Chemical Substances, 43606-43607 2018-18528 2018-18606 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43675-43676 2018-18530 Meetings: Local Government Advisory Committee and Small Communities Advisory Subcommittee, 43674 2018-18409 Per- and Polyfluoroalkyl Substances Heartland Community Engagement, 43676-43677 2018-18521 Federal Aviation Federal Aviation Administration RULES Restricted Areas: Townsend, GA; Establishment and Modification, 43508-43509 2018-18510 PROPOSED RULES Airworthiness Directives: Airbus Helicopters Deutschland GmbH Helicopters, 43559-43560 2018-18346 Leonardo S.p.A. Helicopters, 43561-43563 2018-18472 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Certification of Airmen for Operation of Light-Sport Aircraft, 43725 2018-18505 Procedures for Non-Federal Navigation Facilities, 43724-43725 2018-18504 Airport Property Disposals: Houlton International Airport, Houlton, ME, 43724 2018-18512 Federal Communications Federal Communications Commission RULES LPTV, TV Translator, and FM Broadcast Station Reimbursement: Expanding Economic and Innovation Opportunities of Spectrum through Incentive Auctions, 43556-43557 2018-17945 PROPOSED RULES LPTV, TV Translator, and FM Broadcast Station Reimbursement, Expanding Economic and Innovation Opportunities of Spectrum through Incentive Auctions, 43613-43633 2018-17844 Federal Energy Federal Energy Regulatory Commission NOTICES Combined Filings, 43666-43667, 43671, 43673-43674 2018-18420 2018-18468 2018-18469 Environmental Assessments; Availability, etc.: Dominion Energy Transmission, Inc., Sweden Valley Project, 43667-43668 2018-18464 Empire Pipeline, Inc., Empire North Project, 43668-43669 2018-18421 Initial Market-Based Rate Filings Including Requests for Blanket Section 204 Authorizations: MC Project Co., LLC, 43665 2018-18466 Intent To Revoke Market-Based Rate Authority: Electric Quarterly Reports; L and L Energy, LLC; Bartram Lane, LLC; et al., 43665-43666 2018-18462 License Applications: AEP Generation Resources, Inc., 43669-43671 2018-18463 Meetings: Topsham Hydro Partners, LP Pejepscot Hydroelectric Project, 43668 2018-18467 Petitions for Declaratory Orders: Magellan Pipeline Co., LP, 43674 2018-18422 Records Governing Off-the-Record Communications, 43671-43672 2018-18470 Small Conduit Exemptions by Implied Surrender; Terminations: San Luis Obispo, 43672-43673 2018-18465 Federal Highway Federal Highway Administration NOTICES Surface Transportation Project Delivery Program: Florida DOT Audit No. 1 Report, 43726-43730 2018-18476 Federal Housing Finance Agency Federal Housing Finance Agency NOTICES Privacy Act; Systems of Records, 43677-43680 2018-18411 Federal Railroad Federal Railroad Administration NOTICES Compliance Waivers; Petitions, 43730-43731 2018-18494 2018-18496 2018-18499 Federal Reserve Federal Reserve System NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43680-43683 2018-18430 Federal Trade Federal Trade Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43683-43685 2018-18448 Fish Fish and Wildlife Service NOTICES Meetings: North American Wetlands Conservation Council; Neotropical Migratory Bird Conservation Advisory Group, 43702-43703 2018-18461 Foreign Agricultural Foreign Agricultural Service NOTICES Appendices Adjustments: Dairy Tariff-Rate Import Quota Licensing for 2018 Tariff-Rate Quota Year, 43635-43637 2018-18568 Fee Assessments: Dairy Import Licenses for 2019 Tariff-Rate Import Quota Year, 43637 2018-18567 Health and Human Health and Human Services Department See

Agency for Toxic Substances and Disease Registry

See

Centers for Disease Control and Prevention

See

Centers for Medicare & Medicaid Services

See

Children and Families Administration

See

Inspector General Office, Health and Human Services Department

See

National Institutes of Health

NOTICES Meetings: Presidential Advisory Council on Combating Antibiotic-Resistant Bacteria, 43692-43693 2018-18483
Homeland Homeland Security Department See

Coast Guard

See

U.S. Citizenship and Immigration Services

Housing Housing and Urban Development Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Community Development Block Grant-Disaster Recovery 2 Year Expenditure Deadline Extension Request, 43702 2018-18516 Neighborhood Stabilization Program 2 Reporting, 43700-43701 2018-18515 Indian Affairs Indian Affairs Bureau NOTICES Indian Gaming: Approval of Tribal-State Class III Gaming Compact Amendments in State of Oklahoma, 43703-43704 2018-18424 2018-18425 Inspector General Health Inspector General Office, Health and Human Services Department PROPOSED RULES Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding Anti-Kickback Statute and Beneficiary Inducements CMP, 43607-43611 2018-18519 Interior Interior Department See

Fish and Wildlife Service

See

Indian Affairs Bureau

See

Land Management Bureau

See

National Park Service

PROPOSED RULES Natural Resource Damages for Hazardous Substances, 43611-43613 2018-18498
Internal Revenue Internal Revenue Service PROPOSED RULES Contributions in Exchange for State or Local Tax Credits, 43563-43571 2018-18377 International Trade Adm International Trade Administration NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Fresh Tomatoes from Mexico:, 43642-43644 2018-18436 Determinations of Sales at Less Than Fair Value: Large Diameter Welded Pipe from Canada, 43649-43651 2018-18488 Large Diameter Welded Pipe from Greece, 43640-43642 2018-18487 Large Diameter Welded Pipe from India, 43653-43656 2018-18485 Large Diameter Welded Pipe from Republic of Korea, 43651-43653 2018-18486 Large Diameter Welded Pipe from Republic of Turkey, 43646-43649 2018-18490 Large Diameter Welded Pipe from the People's Republic of China, 43644-43646 2018-18489 Labor Department Labor Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: American Apprenticeship Initiative; Evaluation, 43708-43709 2018-18478 Meetings: Advisory Committee on Veterans' Employment, Training and Employer Outreach, 43709-43710 2018-18477 Land Land Management Bureau NOTICES Realty Actions: Non-Competitive (Direct) Sale of Public Land in Esmeralda County, NV, 43704-43705 2018-18520 Maritime Maritime Administration NOTICES Meetings: U.S. Maritime Transportation System National Advisory Committee, 43731-43732 2018-18491 National Endowment for the Arts National Endowment for the Arts NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Funding Reporting Requirements—Final Descriptive Reports FY2019 and Later, 43710 2018-18438 National Foundation National Foundation on the Arts and the Humanities See

National Endowment for the Arts

National Highway National Highway Traffic Safety Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43732-43733 2018-18423 Denial of Motor Vehicle Defect Petition, 43733-43735 2018-18506 National Institute Food National Institute of Food and Agriculture NOTICES Meetings: Stakeholder Listening Opportunity for Priorities in Research, Education and Extension, 43637-43638 2018-18535 National Institute National Institute of Standards and Technology NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43656 2018-18513 Meetings: Visiting Committee on Advanced Technology, 43657-43658 2018-18434 National Institute of Standards and Technology Performance Review Board Membership, 43657 2018-18435 Requests for Nominations: Lightweight Cryptographic Algorithms, 43656-43657 2018-18433 National Institute National Institutes of Health NOTICES Meetings: National Cancer Institute, 43693 2018-18399 National Cancer Institute; Cancellation, 43694 2018-18400 National Institute of Mental Health, 43694 2018-18398 2018-18401 National Oceanic National Oceanic and Atmospheric Administration RULES Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic: 2018 Commercial Accountability Measures and Closure for Atlantic Migratory Group Cobia, 43557-43558 2018-18500 NOTICES Meetings: Fisheries of the Caribbean; Southeast Data, Assessment, and Review, 43661-43662 2018-18449 Mid-Atlantic Fishery Management Council, 43659-43662 2018-18447 2018-18456 2018-18458 2018-18474 New England Fishery Management Council, 43658-43661 2018-18450 2018-18454 2018-18455 2018-18457 North Pacific Fishery Management Council, 43662 2018-18459 National Park National Park Service NOTICES National Register of Historic Places: Pending Nominations and Related Actions, 43705-43708 2018-18452 2018-18460 National Science National Science Foundation NOTICES Meetings; Sunshine Act, 43710 2018-18582 Postal Regulatory Postal Regulatory Commission NOTICES New Postal Products, 43710-43711 2018-18475 Securities Securities and Exchange Commission NOTICES Applications: Cushing Asset Management, LP et al., 43713-43715 2018-18419 Tortoise Capital Advisors, LLC, et al., 43715-43720 2018-18427 Self-Regulatory Organizations; Proposed Rule Changes: BOX Options Exchange, LLC, 43711-43713 2018-18426 New York Stock Exchange, LLC, 43720-43722 2018-18428 Small Business Small Business Administration NOTICES Disaster Declarations: New Mexico, 43722-43723 2018-18451 State Department State Department NOTICES Determinations Regarding Use of Chemical Weapons by Russia under the Chemical and Biological Weapons Control and Warfare Elimination Act of 1991, 43723-43724 2018-18503 Transportation Department Transportation Department See

Federal Aviation Administration

See

Federal Highway Administration

See

Federal Railroad Administration

See

Maritime Administration

See

National Highway Traffic Safety Administration

Treasury Treasury Department See

Comptroller of the Currency

See

Internal Revenue Service

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 43736-43737 2018-18492 Multiemployer Pension Plan Application to Reduce Benefits, 43735-43736 2018-18413
U.S. Citizenship U.S. Citizenship and Immigration Services NOTICES Temporary Protected Status; Extensions and Designations: Somalia, 43695-43700 2018-18444 Veteran Affairs Veterans Affairs Department NOTICES Meetings: Advisory Committee on Structural Safety of Department of Veterans Affairs Facilities, 43737 2018-18518 Reader Aids

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83 166 Monday, August 27, 2018 Rules and Regulations DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 948 [Doc. No. AMS-SC-18-0022; SC18-948-1 FR] Irish Potatoes Grown in Colorado; Increased Assessment Rate for Area No. 2 AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

This rule implements a recommendation from the Colorado Potato Administrative Committee (Committee) to increase the assessment rate established for Area No. 2 for the 2018-2019 and subsequent fiscal periods. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.

DATES:

Effective September 26, 2018.

FOR FURTHER INFORMATION CONTACT:

Barry Broadbent, Senior Marketing Specialist, or Gary Olson, Regional Director, Northwest Marketing Field Office, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or email: [email protected] or [email protected]

Small businesses may request information on complying with this regulation by contacting Richard Lower, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202)720-8938, or email: [email protected]

SUPPLEMENTARY INFORMATION:

This action, pursuant to 5 U.S.C. 553, amends regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This rule is issued under Marketing Agreement No. 97 and Order No. 948, as amended (7 CFR part 948), regulating the handling of Irish potatoes grown in Colorado. Part 948, (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 operating within the area of production.

The Department of Agriculture (USDA) is issuing this final rule in conformance with Executive Orders 13563 and 13175. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this 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 rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order, Colorado Area No. 2 potato handlers are subject to assessments. Funds to administer the Order are derived from such assessments. It is intended that the assessment rate as established herein will be applicable to all assessable potatoes in Area No. 2 for the 2018-2019 fiscal period, 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 each area 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 in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting and all directly affected persons have an opportunity to participate and provide input.

This rule increases the assessment rate for Area No. 2 from $0.0033 to $0.006 per hundredweight of potatoes handled for the 2018-2019 and subsequent fiscal periods. The Committee established the current rate in 2013-2014 fiscal period to reduce the Committee's monetary reserve to a level that it determined to be appropriate under the Order. Since that action, the reserve fund has been drawn down to approximately 15 percent of annual budgeted expenditures. The $0.006 per hundredweight assessment rate realigns annual assessment revenue with expected administrative expenses moving forward and will no longer require the utilization of the monetary reserve to fund a portion of the Committee's budgeted expenditures.

The Committee met on March 15, 2018 to consider the Committee's projected 2018-2019 financial requirements, the size of the Committee's operating reserve, and the Order's continuing assessment rate. The Committee unanimously recommended an assessment rate of $0.006 per hundredweight of potatoes for the 2018-2019 fiscal period. The $0.006 assessment rate is $0.0027 higher than the rate previously in effect. Without the increase, anticipated assessment revenue would not have been sufficient to fund the Committee's ongoing administrative function, and the balance in the Committee's monetary reserve would not have been enough to cover the deficit. The assessment rate increase is necessary to maintain the Committee's oversight activities at current levels and avoid a reduction in the program's effectiveness.

For the 2017-2018 fiscal period, the Committee adopted a budget of $79,623. The Committee recommended a similar level of budgeted expenditures for the 2018-2019 fiscal period at its meeting in May 2018. The Committee anticipates its expenditures for the 2018-2019 fiscal period to be close to the amounts for the 2017-2018 fiscal period. Budgeted expenditures for the 2017-2018 fiscal period included $66,110 for administrative expenses, $6,138 for office expenses, and $7,375 for facilities/utilities. The Committee's annual budget has been relatively stable over the past five years, with average growth of approximately 2.7 percent. The Committee's budget five years ago for the 2013-2014 fiscal period was $71,227, compared to the 2017-2018 fiscal period budget of $79,623.

The assessment rate recommended by the Committee was derived by considering anticipated expenses, expected shipments, and the amount of funds available in the authorized reserve. Expected income derived from handler assessments of $84,000 (estimated 14,000,000 hundredweight times $0.006 per hundredweight) should be adequate to cover budgeted expenses of between $81,000 and $83,000 and put a small amount back into the Committee's monetary reserve fund. Funds in the reserve (currently expected to be $11,848 at the end of the 2017-2018 fiscal period) would be kept within the maximum permitted by § 948.78.

The assessment rate established by this rule will 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 will 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 will 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 budget for subsequent fiscal periods will be reviewed and, as appropriate, approved by USDA.

Final Regulatory Flexibility Analysis

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 rule on small entities. Accordingly, AMS has prepared this final 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 160 producers of Colorado Area No. 2 potatoes in the production area and approximately 60 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 data from USDA's Market News, the 2016-2017 season weighted average f.o.b. price for Colorado potatoes was approximately $12.06 per hundredweight. The Committee reported that shipments for the 2016-2017 fiscal period were 13.9 million hundredweight. Using the number of handlers, and assuming a normal distribution, the majority of handlers would have average annual receipts of less than $7,500,000 ($12.06 times 13.9 million equals $167,634,000 divided by 60 handlers equals $2,793,900 per handler).

In addition, based on data from USDA's National Agricultural Statistics Service, the season average producer price for Colorado potatoes for the 2016-2017 crop year was approximately $9.60 per hundredweight. Based on producer price, shipment data, and the total number of Colorado Area No. 2 potato producers, and assuming a normal distribution, the average annual producer revenue is above $750,000 ($9.60 times 13.9 million hundredweight equals $133,440,000 divided by 160 producers equals $834,000 per producer). Thus, the majority of Colorado Area No. 2 potato handlers may be classified as small entities, while many of the Colorado Area No. 2 potato producers may be classified as large entities.

This rule increases the assessment rate collected from handlers for the 2018-2019 and subsequent fiscal periods from $0.0033 to $0.006 per hundredweight of Colorado Area No. 2 potatoes. The Committee unanimously recommended the increase. The $0.006 per hundredweight assessment rate established by this rule is $0.0027 higher than the 2017-2018 rate. The quantity of assessable potatoes for the 2018-2019 fiscal period is estimated at 14 million hundredweight. Thus, the $0.006 rate is expected to provide $84,000 in assessment income. Income derived from handler assessments is expected to be adequate to cover budgeted expenses.

The Committee adopted a budget of $79,623 for the 2017-2018 fiscal period and recommended a similar amount of budgeted expenditures for the 2018-2019 fiscal period at its scheduled May 2018 meeting. The major budgeted expenditures for the 2017-2018 year included $66,110 for administrative expenses, $6,138 for office expenses, and $7,375 for facilities/utilities. Budgeted expenses for these items in 2016-2017 were $65,894, $6,587, and $6,313, respectively.

Prior to arriving at the recommended assessment rate, the Committee considered the benefits and costs related to establishing other assessment rates. However, the Committee determined that any assessment rate other than the $0.006 per hundredweight rate would either generate insufficient revenue to meet the Committee's expected expenses for the 2018-2019 fiscal period or would result in a larger than desired addition to the Committee's reserve. Based on estimated shipments, the established assessment rate of $0.006 should provide $84,000 in assessment income. The Committee determined that this level of assessment revenue would be adequate to cover budgeted expenses for the 2018-2019 fiscal period without unduly increasing reserve funds.

A review of historical information and preliminary information pertaining to the upcoming fiscal year indicates that the average producer price for the 2018-2019 season should be approximately $9.26 per hundredweight of potatoes. Therefore, the estimated assessment revenue for the 2018-2019 fiscal period as a percentage of total producer revenue would be about 0.06 percent.

This action increases the assessment obligation imposed on handlers. While assessments impose some additional costs, such costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs are offset by the benefits derived by the operation of the Order.

In addition, the Committee's meeting was widely publicized throughout the Colorado potato industry. All interested persons were invited to attend the meetings and participate in Committee deliberations on all issues. Like all Committee meetings, the March 15, 2018, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

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. 0581-0178, Vegetable and Specialty Crops. No changes in those requirements are necessary as a result of this action. Should any changes become necessary, they would be submitted to OMB for approval.

This rule imposes no additional reporting or recordkeeping requirements on either small or large Colorado potato 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. As mentioned in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this final rule.

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.

A proposed rule concerning this action was published in the Federal Register on May 24, 2018 (83 FR 24045). A copy of the proposed rule was provided to the handlers by the Committee. Finally, the proposal was made available through the internet by USDA and the Office of the Federal Register. A 30-day comment period ending June 25, 2018, was provided for interested persons to respond to the proposal. No comments were received.

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.

After consideration of all relevant material presented, including the information and recommendation submitted by the Committee and other available information, it is hereby found that this rule will tend to effectuate the declared policy of the Act.

List of Subjects in 7 CFR Part 948

Marketing agreements, Potatoes, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, 7 CFR part 948 is amended as follows:

PART 948—IRISH POTATOES GROWN IN COLORADO 1. The authority citation for 7 CFR part 948 continues to read as follows: Authority:

7 U.S.C. 601-674.

2. Section 948.216 is revised to read as follows:
§ 948.216 Assessment rate.

On and after September 1, 2018, an assessment rate of $0.006 per hundredweight is established for Colorado Area No. 2 potatoes.

Dated: August 22, 2018 Bruce Summers, Administrator, Agricultural Marketing Service.
[FR Doc. 2018-18560 Filed 8-24-18; 8:45 am] BILLING CODE 3410-02-P
BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages) AGENCY:

Bureau of Consumer Financial Protection.

ACTION:

Final rule; official interpretation.

SUMMARY:

The Bureau of Consumer Financial Protection (Bureau) is issuing this final rule amending the regulation text and official interpretations for Regulation Z, which implements the Truth in Lending Act (TILA). The Bureau is required to calculate annually the dollar amounts for several provisions in Regulation Z; this final rule revises, as applicable, the dollar amounts for provisions implementing TILA and amendments to TILA, including under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), the Home Ownership and Equity Protection Act of 1994 (HOEPA), and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Bureau is adjusting these amounts, where appropriate, based on the annual percentage change reflected in the Consumer Price Index (CPI) in effect on June 1, 2018.

DATES:

This final rule is effective January 1, 2019.

FOR FURTHER INFORMATION CONTACT:

Monique Chenault, Paralegal, and Shelley Thompson, Counsel, Office of Regulations, at (202) 435-7700. If you require this document in an alternative electronic format, please contact [email protected]

SUPPLEMENTARY INFORMATION:

The Bureau is amending the regulation text and official interpretations for Regulation Z, which implements TILA, to update the dollar amounts of various thresholds that are adjusted annually based on the annual percentage change in the CPI as published by the Bureau of Labor Statistics (BLS). Specifically, for open-end consumer credit plans under TILA, the threshold that triggers requirements to disclose minimum interest charges will remain unchanged at $1.00 in 2019. For open-end consumer credit plans under the CARD Act amendments to TILA, the adjusted dollar amount in 2019 for the safe harbor for a first violation penalty fee will increase by $1 to $28 and the adjusted dollar amount for the safe harbor for a subsequent violation penalty fee will increase by $1 to $39. For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2019 will be $21,549. The adjusted points-and-fees dollar trigger for high-cost mortgages in 2019 will be $1,077. For qualified mortgages, which receive certain protections from liability under the ability-to-repay rule, the maximum thresholds for total points and fees in 2019 will be 3 percent of the total loan amount for a loan greater than or equal to $107,747; $3,232 for a loan amount greater than or equal to $64,648 but less than $107,747; 5 percent of the total loan amount for a loan greater than or equal to $21,549 but less than $64,648; $1,077 for a loan amount greater than or equal to $13,468 but less than $21,549; and 8 percent of the total loan amount for a loan amount less than $13,468.

I. Background A. Credit Card Annual Adjustments Minimum Interest Charge Disclosure Thresholds

Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) of Regulation Z implement sections 127(a)(3) and 127(c)(1)(A)(ii)(II) of TILA. Sections 1026.6(b)(2)(iii) and 1026.60(b)(3) require the disclosure of any minimum interest charge exceeding $1.00 that could be imposed during a billing cycle and provide that, for open-end consumer credit plans, the minimum interest charge thresholds will be re-calculated annually using the CPI that was in effect on the preceding June 1; the Bureau uses the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for this adjustment. When the cumulative change in the adjusted minimum value derived from applying the annual CPI-W level to the current amounts in §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) has risen by a whole dollar, the minimum interest charge amounts set forth in the regulation will be increased by $1.00. The BLS publishes consumer-based indices monthly but does not report a CPI change on June 1; adjustments are reported in the middle of the month. This adjustment analysis is based on the CPI-W index in effect on June 1, 2018, which was reported by BLS on May 10, 2018, and reflects the percentage change from April 2017 to April 2018. The CPI-W is a subset of the Consumer Price Index for All Urban Consumers (CPI-U) index and represents approximately 29 percent of the U.S. population. The adjustment analysis accounts for a 2.6 percent increase in the CPI-W from April 2017 to April 2018. This increase in the CPI-W when applied to the current amounts in §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) did not trigger an increase in the minimum interest charge threshold of at least $1.00, and the Bureau is therefore not amending §§ 1026.6(b)(2)(iii) and 1026.60(b)(3).

Safe Harbor Penalty Fees

Section 1026.52(b)(1)(ii)(A) and (B) of Regulation Z implements section 149(e) of TILA, established by the CARD Act.1 Section 1026.52(b)(1)(ii)(D) provides that the safe harbor provision, which establishes the permissible penalty fee thresholds in § 1026.52(b)(1)(ii)(A) and (B), will be re-calculated annually using the CPI that was in effect on the preceding June 1; the Bureau uses the CPI-W for this adjustment. When the cumulative change in the adjusted value derived from applying the annual CPI-W level to the current amounts in § 1026.52(b)(1)(ii)(A) and (B) has risen by a whole dollar, those amounts will be increased by $1.00. Similarly, when the cumulative change in the adjusted value derived from applying the annual CPI-W level to the current amounts in § 1026.52(b)(1)(ii)(A) and (B) has decreased by a whole dollar, those amounts will be decreased by $1.00. See comment 52(b)(1)(ii)-2. The 2019 adjustment analysis is based on the CPI-W index in effect on June 1, 2018, which was reported by BLS on May 10, 2018, and reflects the percentage change from April 2017 to April 2018. The adjustment to the permissible fee thresholds being adopted here reflects a 2.6 percent increase in the CPI-W from April 2017 to April 2018 and is rounded to the nearest $1 increment.

1 Credit Card Accountability Responsibility and Disclosure Act of 2009, Public Law 111-24, 123 Stat. 1734 (2009).

B. HOEPA Annual Threshold Adjustments

Section 1026.32(a)(1)(ii) of Regulation Z implements section 1431 of the Dodd-Frank Act,2 which amended the HOEPA points-and-fees coverage test. Under § 1026.32(a)(1)(ii)(A) and (B), when determining whether a transaction is a high-cost mortgage, the determination of the applicable points-and-fees coverage test depends on whether the total loan amount is for $20,000 or more, or for less than $20,000. Section 1026.32(a)(1)(ii) provides that this threshold amount be recalculated annually using the CPI index in effect on June 1; the Bureau uses the CPI-U for this adjustment. The CPI-U is based on all urban consumers and represents approximately 93 percent of the U.S. population. The 2019 adjustment is based on the CPI-U index in effect on June 1, which was reported by BLS on May 10, 2018, and reflects the percentage change from April 2017 to April 2018. The adjustment to the $20,000 figure being adopted here reflects a 2.5 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance.

2 Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, 124 Stat. 1376 (2010).

Under § 1026.32(a)(1)(ii)(B) the HOEPA points-and-fees dollar trigger is $1,000. Section 1026.32(a)(1)(ii)(B) provides that this threshold amount will be recalculated annually using the CPI index in effect on June 1; the Bureau uses the CPI-U for this adjustment. The 2019 adjustment is based on the CPI-U index in effect on June 1, 2018, which was reported by BLS on May 10, 2018, and reflects the percentage change from April 2017 to April 2018. The adjustment to the $1,000 figure being adopted here reflects a 2.5 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance.

C. Qualified Mortgages Annual Threshold Adjustments

The Bureau's Regulation Z implements sections 1411 and 1412 of the Dodd-Frank Act, which generally require creditors to make a reasonable, good-faith determination of a consumer's ability to repay any consumer credit transaction secured by a dwelling and establishes certain protections from liability under this requirement for qualified mortgages. Under § 1026.43(e)(3)(i), a covered transaction is not a qualified mortgage if the transaction's total points and fees exceed: 3 percent of the total loan amount for a loan amount greater than or equal to $100,000; $3,000 for a loan amount greater than or equal to $60,000 but less than $100,000; 5 percent of the total loan amount for loans greater than or equal to $20,000 but less than $60,000; $1,000 for a loan amount greater than or equal to $12,500 but less than $20,000; or 8 percent of the total loan amount for loans less than $12,500. Section 1026.43(e)(3)(ii) provides that the limits and loan amounts in § 1026.43(e)(3)(i) are recalculated annually for inflation using the CPI-U index in effect on June 1. The 2019 adjustment is based on the CPI-U index in effect on June 1, 2018, which was reported by BLS on May 10, 2018, and reflects the percentage change from April 2017 to April 2018. The adjustment to the 2018 figures being adopted here reflects a 2.5 percent increase in the CPI-U index for this period and is rounded to whole dollars for ease of compliance.

II. Adjustment and Commentary Revision A. Credit Card Annual Adjustments Minimum Interest Charge Disclosure Thresholds—§§ 1026.6(b)(2)(iii) and 1026.60(b)(3)

The minimum interest charge amounts for §§ 1026.6(b)(2)(iii) and 1026.60(b)(3) will remain unchanged at $1.00 for the year 2019. Accordingly, the Bureau is not amending these sections of Regulation Z.

Safe Harbor Penalty Fees—§ 1026.52(b)(1)(ii)(A) and (B)

Effective January 1, 2019, the permissible fee threshold amounts increased by $1 and are $28 for § 1026.52(b)(1)(ii)(A) and $39 for § 1026.52(b)(1)(ii)(B). Accordingly, the Bureau is revising § 1026.52(b)(1)(ii)(A) and (B) to state that the fee imposed for violating the terms or other requirements of an account shall not exceed $28 and $39 respectively. The Bureau is also amending comment 52(b)(1)(ii)-2.i to preserve a list of the historical thresholds for this provision.

B. HOEPA Annual Threshold Adjustment—Comments 32(a)(1)(ii)-1 and -3

Effective January 1, 2019, for purposes of determining under § 1026.32(a)(1)(ii) the points-and-fees coverage test under HOEPA to which a transaction is subject, the total loan amount threshold is $21,549, and the adjusted points-and-fees dollar trigger under § 1026.32(a)(1)(ii)(B) is $1,077. When the total loan amount for a transaction is $21,549 or more, and the points-and-fees amount exceeds 5 percent of the total loan amount, the transaction is a high-cost mortgage. When the total loan amount for a transaction is less than $21,549, and the points-and-fees amount exceeds the lesser of the adjusted points-and-fees dollar trigger of $1,077 or 8 percent of the total loan amount, the transaction is a high-cost mortgage. The Bureau is amending comments 32(a)(1)(ii)-1 and -3, which list the adjustments for each year, to reflect for 2019 the new loan amount dollar threshold and the new points-and-fees dollar trigger, respectively.

C. Qualified Mortgages Annual Threshold Adjustments

Effective January 1, 2019, a covered transaction is not a qualified mortgage if, pursuant to § 1026.43(e)(3), the transaction's total points and fees exceed 3 percent of the total loan amount for a loan amount greater than or equal to $107,747; $3,232 for a loan amount greater than or equal to $64,648 but less than $107,747; 5 percent of the total loan amount for loans greater than or equal to $21,549 but less than $64,648; $1,077 for a loan amount greater than or equal to $13,468 but less than $21,549; or 8 percent of the total loan amount for loans less than $13,468. The Bureau is amending comment 43(e)(3)(ii)-1, which lists the adjustments for each year, to reflect the new dollar threshold amounts for 2019.

III. Procedural Requirements A. Administrative Procedure Act

Under the Administrative Procedure Act, notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final rule, in Regulation Z, § 1026.52(b)(1)(ii)(A) and (B) in subpart G is amended and comments 32(a)(1)(ii)-1.v and -3.v, 43(e)(3)(ii)-1.v, and 52(b)(1)(ii)-2.i.F in Supplement I are added to update the exemption thresholds. The amendments in this final rule are technical and non-discretionary, as they merely apply the method previously established in Regulation Z for determining adjustments to the thresholds. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. The amendments therefore are adopted in final form.

B. Regulatory Flexibility Act

Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a).

C. Paperwork Reduction Act

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR part 1320), the Bureau reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.

D. Congressional Review Act

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Bureau will submit a report containing this rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the United States prior to the rule taking effect. The Office of Information and Regulatory Affairs (OIRA) has designated this rule as not a “major rule” as defined by 5 U.S.C. 804(2).

List of Subjects in 12 CFR Part 1026

Advertising, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.

Authority and Issuance

For the reasons set forth in the preamble, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below:

PART 1026—TRUTH IN LENDING (REGULATION Z) 1. The authority citation for part 1026 continues to read as follows: Authority:

12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.

Subpart G—Special Rules Applicable to Credit Card Accounts and Open End Credit Offered to College Students 2. Amend § 1026.52 by revising paragraphs (b)(1)(ii)(A) and (B) to read as follows:
§ 1026.52 Limitations on fees.

(b) * * *

(1) * * *

(ii) * * *

(A) $28

(B) $39 if the card issuer previously imposed a fee pursuant to paragraph (b)(1)(ii)(A) of this section for a violation of the same type that occurred during the same billing cycle or one of the next six billing cycles; or

3. In Supplement I to Part 1026: a. Under Section 1026.32—Requirements for High-Cost Mortgages, Paragraph 32(a)(1)(ii) is revised. b. Under Section 1026.43—Minimum Standards for Transactions Secured by a Dwelling, Paragraph 43(e)(3)(ii) is revised. c. Under Section 1026.52—Limitations on Fees, 52(b)(1)(ii) Safe harbors is revised.

The revisions read as follows:

SUPPLEMENT I TO PART 1026—OFFICIAL INTERPRETATIONS Section 1026.32—Requirements for High-Cost Mortgages

Paragraph 32(a)(1)(ii).

1. Annual adjustment of $1,000 amount. The $1,000 figure in § 1026.32(a)(1)(ii)(B) is adjusted annually on January 1 by the annual percentage change in the CPI that was in effect on the preceding June 1. The Bureau will publish adjustments after the June figures become available each year.

i. For 2015, $1,020, reflecting a 2 percent increase in the CPI-U from June 2013 to June 2014, rounded to the nearest whole dollar.

ii. For 2016, $1,017, reflecting a .2 percent decrease in the CPI-U from June 2014 to June 2015, rounded to the nearest whole dollar.

iii. For 2017, $1,029, reflecting a 1.1 percent increase in the CPI-U from June 2015 to June 2016, rounded to the nearest whole dollar.

iv. For 2018, $1,052, reflecting a 2.2 percent increase in the CPI-U from June 2016 to June 2017, rounded to the nearest whole dollar.

v. For 2019, $1,077, reflecting a 2.5 percent increase in the CPI-U from June 2017 to June 2018, rounded to the nearest whole dollar.

2. Historical adjustment of $400 amount. Prior to January 10, 2014, a mortgage loan was covered by § 1026.32 if the total points and fees payable by the consumer at or before loan consummation exceeded the greater of $400 or 8 percent of the total loan amount. The $400 figure was adjusted annually on January 1 by the annual percentage change in the CPI that was in effect on the preceding June 1, as follows:

i. For 1996, $412, reflecting a 3.00 percent increase in the CPI-U from June 1994 to June 1995, rounded to the nearest whole dollar.

ii. For 1997, $424, reflecting a 2.9 percent increase in the CPI-U from June 1995 to June 1996, rounded to the nearest whole dollar.

iii. For 1998, $435, reflecting a 2.5 percent increase in the CPI-U from June 1996 to June 1997, rounded to the nearest whole dollar.

iv. For 1999, $441, reflecting a 1.4 percent increase in the CPI-U from June 1997 to June 1998, rounded to the nearest whole dollar.

v. For 2000, $451, reflecting a 2.3 percent increase in the CPI-U from June 1998 to June 1999, rounded to the nearest whole dollar.

vi. For 2001, $465, reflecting a 3.1 percent increase in the CPI-U from June 1999 to June 2000, rounded to the nearest whole dollar.

vii. For 2002, $480, reflecting a 3.27 percent increase in the CPI-U from June 2000 to June 2001, rounded to the nearest whole dollar.

viii. For 2003, $488, reflecting a 1.64 percent increase in the CPI-U from June 2001 to June 2002, rounded to the nearest whole dollar.

ix. For 2004, $499, reflecting a 2.22 percent increase in the CPI-U from June 2002 to June 2003, rounded to the nearest whole dollar.

x. For 2005, $510, reflecting a 2.29 percent increase in the CPI-U from June 2003 to June 2004, rounded to the nearest whole dollar.

xi. For 2006, $528, reflecting a 3.51 percent increase in the CPI-U from June 2004 to June 2005, rounded to the nearest whole dollar.

xii. For 2007, $547, reflecting a 3.55 percent increase in the CPI-U from June 2005 to June 2006, rounded to the nearest whole dollar.

xiii. For 2008, $561, reflecting a 2.56 percent increase in the CPI-U from June 2006 to June 2007, rounded to the nearest whole dollar.

xiv. For 2009, $583, reflecting a 3.94 percent increase in the CPI-U from June 2007 to June 2008, rounded to the nearest whole dollar.

xv. For 2010, $579, reflecting a 0.74 percent decrease in the CPI-U from June 2008 to June 2009, rounded to the nearest whole dollar.

xvi. For 2011, $592, reflecting a 2.2 percent increase in the CPI-U from June 2009 to June 2010, rounded to the nearest whole dollar.

xvii. For 2012, $611, reflecting a 3.2 percent increase in the CPI-U from June 2010 to June 2011, rounded to the nearest whole dollar.

xviii. For 2013, $625, reflecting a 2.3 percent increase in the CPI-U from June 2011 to June 2012, rounded to the nearest whole dollar.

xix. For 2014, $632, reflecting a 1.1 percent increase in the CPI-U from June 2012 to June 2013, rounded to the nearest whole dollar.

3. Applicable threshold. For purposes of § 1026.32(a)(1)(ii), a creditor must determine the applicable points and fees threshold based on the face amount of the note (or, in the case of an open-end credit plan, the credit limit for the plan when the account is opened). However, the creditor must apply the allowable points and fees percentage to the “total loan amount,” as defined in § 1026.32(b)(4). For closed-end credit transactions, the total loan amount may be different than the face amount of the note. The $20,000 amount in § 1026.32(a)(1)(ii)(A) and (B) is adjusted annually on January 1 by the annual percentage change in the CPI that was in effect on the preceding June 1.

i. For 2015, $20,391, reflecting a 2 percent increase in the CPI-U from June 2013 to June 2014, rounded to the nearest whole dollar.

ii. For 2016, $20,350, reflecting a .2 percent decrease in the CPI-U from June 2014 to June 2015, rounded to the nearest whole dollar.

iii. For 2017, $20,579, reflecting a 1.1 percent increase in the CPI-U from June 2015 to June 2016, rounded to the nearest whole dollar.

iv. For 2018, $21,032, reflecting a 2.2 percent increase in the CPI-U from June 2016 to June 2017, rounded to the nearest whole dollar.

v. For 2019, $21,549, reflecting a 2.5 percent increase in the CPI-U from June 2017 to June 2018, rounded to the nearest whole dollar.

Section 1026.43—Minimum Standards for Transactions Secured by a Dwelling

Paragraph 43(e)(3)(ii).

1. Annual adjustment for inflation. The dollar amounts, including the loan amounts, in § 1026.43(e)(3)(i) will be adjusted annually on January 1 by the annual percentage change in the CPI-U that was in effect on the preceding June 1. The Bureau will publish adjustments after the June figures become available each year.

i. For 2015, reflecting a 2 percent increase in the CPI-U that was reported on the preceding June 1, a covered transaction is not a qualified mortgage unless the transactions total points and fees do not exceed;

A. For a loan amount greater than or equal to $101,953: 3 percent of the total loan amount;

B. For a loan amount greater than or equal to $61,172 but less than $101,953: $3,059;

C. For a loan amount greater than or equal to $20,391 but less than $61,172: 5 percent of the total loan amount;

D. For a loan amount greater than or equal to $12,744 but less than $20,391; $1,020;

E. For a loan amount less than $12,744: 8 percent of the total loan amount.

ii. For 2016, reflecting a .2 percent decrease in the CPI-U that was reported on the preceding June 1, a covered transaction is not a qualified mortgage unless the transactions total points and fees do not exceed;

A. For a loan amount greater than or equal to $101,749: 3 percent of the total loan amount;

B. For a loan amount greater than or equal to $61,050 but less than $101,749: $3,052;

C. For a loan amount greater than or equal to $20,350 but less than $61,050: 5 percent of the total loan amount;

D. For a loan amount greater than or equal to $12,719 but less than $20,350; $1,017;

E. For a loan amount less than $12,719: 8 percent of the total loan amount.

iii. For 2017, reflecting a 1.1 percent increase in the CPI-U that was reported on the preceding June 1, a covered transaction is not a qualified mortgage unless the transactions total points and fees do not exceed:

A. For a loan amount greater than or equal to $102,894: 3 percent of the total loan amount;

B. For a loan amount greater than or equal to $61,737 but less than $102,894: $3,087;

C. For a loan amount greater than or equal to $20,579 but less than $61,737: 5 percent of the total loan amount;

D. For a loan amount greater than or equal to $12,862 but less than $20,579: $1,029;

E. For a loan amount less than $12,862: 8 percent of the total loan amount.

iv. For 2018, reflecting a 2.2 percent increase in the CPI-U that was reported on the preceding June 1, a covered transaction is not a qualified mortgage unless the transaction's total points and fees do not exceed:

A. For a loan amount greater than or equal to $105,158: 3 percent of the total loan amount;

B. For a loan amount greater than or equal to $63,095 but less than $105,158: $3,155;

C. For a loan amount greater than or equal to $21,032 but less than $63,095: 5 percent of the total loan amount;

D. For a loan amount greater than or equal to $13,145 but less than $21,032: $1,052;

E. For a loan amount less than $13,145: 8 percent of the total loan amount.

v. For 2019, reflecting a 2.5 percent increase in the CPI-U that was reported on the preceding June 1, a covered transaction is not a qualified mortgage unless the transaction's total points and fees do not exceed:

A. For a loan amount greater than or equal to $107,747: 3 percent of the total loan amount;

B. For a loan amount greater than or equal to $64,648 but less than $107,747: $3,232;

C. For a loan amount greater than or equal to $21,549 but less than $64,648: 5 percent of the total loan amount;

D. For a loan amount greater than or equal to $13,468 but less than $21,549: $1,077;

E. For a loan amount less than $13,468: 8 percent of the total loan amount.

Section 1026.52—Limitations on Fees

52(b)(1)(ii) Safe harbors

1. Multiple violations of same type. i. Same billing cycle or next six billing cycles. A card issuer cannot impose a fee for a violation pursuant to § 1026.52(b)(1)(ii)(B) unless a fee has previously been imposed for the same type of violation pursuant to § 1026.52(b)(1)(ii)(A). Once a fee has been imposed for a violation pursuant to § 1026.52(b)(1)(ii)(A), the card issuer may impose a fee pursuant to § 1026.52(b)(1)(ii)(B) for any subsequent violation of the same type until that type of violation has not occurred for a period of six consecutive complete billing cycles. A fee has been imposed for purposes of § 1026.52(b)(1)(ii) even if the card issuer waives or rebates all or part of the fee.

A. Late payments. For purposes of § 1026.52(b)(1)(ii), a late payment occurs during the billing cycle in which the payment may first be treated as late consistent with the requirements of this part and the terms or other requirements of the account.

B. Returned payments. For purposes of § 1026.52(b)(1)(ii), a returned payment occurs during the billing cycle in which the payment is returned to the card issuer.

C. Transactions that exceed the credit limit. For purposes of § 1026.52(b)(1)(ii), a transaction that exceeds the credit limit for an account occurs during the billing cycle in which the transaction occurs or is authorized by the card issuer.

D. Declined access checks. For purposes of § 1026.52(b)(1)(ii), a check that accesses a credit card account is declined during the billing cycle in which the card issuer declines payment on the check.

ii. Relationship to §§ 1026.52(b)(2)(ii) and 1026.56(j)(1). If multiple violations are based on the same event or transaction such that § 1026.52(b)(2)(ii) prohibits the card issuer from imposing more than one fee, the event or transaction constitutes a single violation for purposes of § 1026.52(b)(1)(ii). Furthermore, consistent with § 1026.56(j)(1)(i), no more than one violation for exceeding an account's credit limit can occur during a single billing cycle for purposes of § 1026.52(b)(1)(ii). However, § 1026.52(b)(2)(ii) does not prohibit a card issuer from imposing fees for exceeding the credit limit in consecutive billing cycles based on the same over-the-limit transaction to the extent permitted by § 1026.56(j)(1). In these circumstances, the second and third over-the-limit fees permitted by § 1026.56(j)(1) may be imposed pursuant to § 1026.52(b)(1)(ii)(B). See comment 52(b)(2)(ii)-1.

iii. Examples. The following examples illustrate the application of § 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B) with respect to credit card accounts under an open-end (not home-secured) consumer credit plan that are not charge card accounts. For purposes of these examples, assume that the billing cycles for the account begin on the first day of the month and end on the last day of the month and that the payment due date for the account is the twenty-fifth day of the month.

A. Violations of same type (late payments). A required minimum periodic payment of $50 is due on March 25. On March 26, a late payment has occurred because no payment has been received. Accordingly, consistent with § 1026.52(b)(1)(ii)(A), the card issuer imposes a $25 late payment fee on March 26. In order for the card issuer to impose a $35 late payment fee pursuant to § 1026.52(b)(1)(ii)(B), a second late payment must occur during the April, May, June, July, August, or September billing cycles.

1. The card issuer does not receive any payment during the March billing cycle. A required minimum periodic payment of $100 is due on April 25. On April 20, the card issuer receives a $50 payment. No further payment is received during the April billing cycle. Accordingly, consistent with § 1026.52(b)(1)(ii)(B), the card issuer may impose a $35 late payment fee on April 26. Furthermore, the card issuer may impose a $35 late payment fee for any late payment that occurs during the May, June, July, August, September, or October billing cycles.

2. Same facts as in paragraph A above. On March 30, the card issuer receives a $50 payment and the required minimum periodic payments for the April, May, June, July, August, and September billing cycles are received on or before the payment due date. A required minimum periodic payment of $60 is due on October 25. On October 26, a late payment has occurred because the required minimum periodic payment due on October 25 has not been received. However, because this late payment did not occur during the six billing cycles following the March billing cycle, § 1026.52(b)(1)(ii) only permits the card issuer to impose a late payment fee of $25.

B. Violations of different types (late payment and over the credit limit). The credit limit for an account is $1,000. Consistent with § 1026.56, the consumer has affirmatively consented to the payment of transactions that exceed the credit limit. A required minimum periodic payment of $30 is due on August 25. On August 26, a late payment has occurred because no payment has been received. Accordingly, consistent with § 1026.52(b)(1)(ii)(A), the card issuer imposes a $25 late payment fee on August 26. On August 30, the card issuer receives a $30 payment. On September 10, a transaction causes the account balance to increase to $1,150, which exceeds the account's $1,000 credit limit. On September 11, a second transaction increases the account balance to $1,350. On September 23, the card issuer receives the $50 required minimum periodic payment due on September 25, which reduces the account balance to $1,300. On September 30, the card issuer imposes a $25 over-the-limit fee, consistent with § 1026.52(b)(1)(ii)(A). On October 26, a late payment has occurred because the $60 required minimum periodic payment due on October 25 has not been received. Accordingly, consistent with § 1026.52(b)(1)(ii)(B), the card issuer imposes a $35 late payment fee on October 26.

C. Violations of different types (late payment and returned payment). A required minimum periodic payment of $50 is due on July 25. On July 26, a late payment has occurred because no payment has been received. Accordingly, consistent with § 1026.52(b)(1)(ii)(A), the card issuer imposes a $25 late payment fee on July 26. On July 30, the card issuer receives a $50 payment. A required minimum periodic payment of $50 is due on August 25. On August 24, a $50 payment is received. On August 27, the $50 payment is returned to the card issuer for insufficient funds. In these circumstances, § 1026.52(b)(2)(ii) permits the card issuer to impose either a late payment fee or a returned payment fee but not both because the late payment and the returned payment result from the same event or transaction. Accordingly, for purposes of § 1026.52(b)(1)(ii), the event or transaction constitutes a single violation. However, if the card issuer imposes a late payment fee, § 1026.52(b)(1)(ii)(B) permits the issuer to impose a fee of $35 because the late payment occurred during the six billing cycles following the July billing cycle. In contrast, if the card issuer imposes a returned payment fee, the amount of the fee may be no more than $25 pursuant to § 1026.52(b)(1)(ii)(A).

2. Adjustments based on Consumer Price Index. For purposes of § 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B), the Bureau shall calculate each year price level adjusted amounts using the Consumer Price Index in effect on June 1 of that year. When the cumulative change in the adjusted minimum value derived from applying the annual Consumer Price level to the current amounts in § 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B) has risen by a whole dollar, those amounts will be increased by $1.00. Similarly, when the cumulative change in the adjusted minimum value derived from applying the annual Consumer Price level to the current amounts in § 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B) has decreased by a whole dollar, those amounts will be decreased by $1.00. The Bureau will publish adjustments to the amounts in § 1026.52(b)(1)(ii)(A) and (b)(1)(ii)(B).

i. Historical thresholds.

A. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $25 under § 1026.52(b)(1)(ii)(A) and $35 under § 1026.52(b)(1)(ii)(B), through December 31, 2013.

B. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $26 under § 1026.52(b)(1)(ii)(A) and $37 under § 1026.52(b)(1)(ii)(B), through December 31, 2014.

C. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $27 under § 1026.52(b)(1)(ii)(A) and $38 under § 1026.52(b)(1)(ii)(B), through December 31, 2015.

D. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $27 under § 1026.52(b)(1)(ii)(A), through December 31, 2016. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $37 under § 1026.52(b)(1)(ii)(B), through June 26, 2016, and $38 under § 1026.52(b)(1)(ii)(B) from June 27, 2016 through December 31, 2016.

E. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $27 under § 1026.52(b)(1)(ii)(A) and $38 under § 1026.52(b)(1)(ii)(B), through December 31, 2017.

F. Card issuers were permitted to impose a fee for violating the terms of an agreement if the fee did not exceed $27 under § 1026.52(b)(1)(ii)(A) and $38 under § 1026.52(b)(1)(ii)(B), through December 31, 2018.

3. Delinquent balance for charge card accounts. Section 1026.52(b)(1)(ii)(C) provides that, when a charge card issuer that requires payment of outstanding balances in full at the end of each billing cycle has not received the required payment for two or more consecutive billing cycles, the card issuer may impose a late payment fee that does not exceed three percent of the delinquent balance. For purposes of § 1026.52(b)(1)(ii)(C), the delinquent balance is any previously billed amount that remains unpaid at the time the late payment fee is imposed pursuant to § 1026.52(b)(1)(ii)(C). Consistent with § 1026.52(b)(2)(ii), a charge card issuer that imposes a fee pursuant to § 1026.52(b)(1)(ii)(C) with respect to a late payment may not impose a fee pursuant to § 1026.52(b)(1)(ii)(B) with respect to the same late payment. The following examples illustrate the application of § 1026.52(b)(1)(ii)(C):

i. Assume that a charge card issuer requires payment of outstanding balances in full at the end of each billing cycle and that the billing cycles for the account begin on the first day of the month and end on the last day of the month. At the end of the June billing cycle, the account has a balance of $1,000. On July 5, the card issuer provides a periodic statement disclosing the $1,000 balance consistent with § 1026.7. During the July billing cycle, the account is used for $300 in transactions, increasing the balance to $1,300. At the end of the July billing cycle, no payment has been received and the card issuer imposes a $25 late payment fee consistent with § 1026.52(b)(1)(ii)(A). On August 5, the card issuer provides a periodic statement disclosing the $1,325 balance consistent with § 1026.7. During the August billing cycle, the account is used for $200 in transactions, increasing the balance to $1,525. At the end of the August billing cycle, no payment has been received. Consistent with § 1026.52(b)(1)(ii)(C), the card issuer may impose a late payment fee of $40, which is 3% of the $1,325 balance that was due at the end of the August billing cycle. Section 1026.52(b)(1)(ii)(C) does not permit the card issuer to include the $200 in transactions that occurred during the August billing cycle.

ii. Same facts as above except that, on August 25, a $100 payment is received. Consistent with § 1026.52(b)(1)(ii)(C), the card issuer may impose a late payment fee of $37, which is 3% of the unpaid portion of the $1,325 balance that was due at the end of the August billing cycle ($1,225).

iii. Same facts as in paragraph A above except that, on August 25, a $200 payment is received. Consistent with § 1026.52(b)(1)(ii)(C), the card issuer may impose a late payment fee of $34, which is 3% of the unpaid portion of the $1,325 balance that was due at the end of the August billing cycle ($1,125). In the alternative, the card issuer may impose a late payment fee of $35 consistent with § 1026.52(b)(1)(ii)(B). However, § 1026.52(b)(2)(ii) prohibits the card issuer from imposing both fees.

Dated: August 16, 2018. Mick Mulvaney, Acting Director, Bureau of Consumer Financial Protection.
[FR Doc. 2018-18209 Filed 8-24-18; 8:45 am] BILLING CODE 4810-AM-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 73 [Docket No. FAA-2015-3338; Airspace Docket No. 15-ASO-7] RIN 2120-AA66 Modification and Establishment of Restricted Areas; Townsend, GA AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final rule.

SUMMARY:

This action modifies the restricted airspace at the Townsend Bombing Range, GA (Range), by expanding the lateral limits of R-3007A to allow construction of additional targets and impact areas. The modification is needed so that precision guided munitions (PGM) can be used on the range. The changes are completely contained within the existing outer boundaries of the R-3007 complex.

DATES:

Effective date 0901 UTC, November 8, 2018.

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

Authority for This Rulemaking

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

History

The FAA published a notice of proposed rulemaking for Docket No. FAA-2015-3338 in the Federal Register (80 FR 60573; October 7, 2015), to expand the lateral limits of restricted area R-3007A, Townsend, GA. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal. The comment period closed November 23, 2015. One comment was received from a member of the public.

Discussion of Comment

The commenter suggested that the floor of the proposed R-3007E be lowered from 100 feet above ground level (AGL); to the surface in order to allow the opportunity to add more targets in the future. To designate the surface as the floor of a restricted area, the proponent must own, or otherwise control, the underlying land. The expansion of R-3007A, which extends to the surface, encompasses land purchased by the proponent for that purpose. R-3007E is outside the land purchase area, therefore it is not possible to lower the floor below 100 feet AGL at this time.

Differences From NPRM

The NPRM contained an error in the 15th coordinate listed for R-3007A. The longitude for that point was listed as “91°36′32″ W.” The correct point is “81°36′32″ W.”

The NPRM listed the “Air National Guard (ANG), Savannah Combat Readiness Training Center (CRTC),” as the using agency in the description of R-3007E. Since the publication of the NPRM, using agency responsibilities for the Range were transferred from the ANG to the U.S. Marine Corps (USMC). On June 28, 2017, the FAA published in the Federal Register a final rule that changed the using agency for the restricted areas to the USMC, Marine Corps Air Station Beaufort, SC (82 FR 29229), Docket No. FAA-2017-0585. The USMC has assumed responsibility for management and operation of the Townsend Range. This change is reflected in the description of R-3007E, below.

The Rule

The FAA is amending 14 CFR part 73 to expand restricted area R-3007A by merging the part of R-3007C that overlies a land parcel acquired by the U.S. Marine Corps into R-3007A. The floor of R-3007C is 100 feet AGL. By adding the airspace over this land parcel into R-3007A, the restricted area floor in that area will be lowered from 100 feet AGL down to ground level. The small slice of restricted airspace, with a 100-foot AGL floor, between the east boundary of the expanded R-3007A, and the west boundary of R-3007B, is redesignated as R-3007E. R-3007E extends from 100 feet AGL up to, but not including, 13,000 feet MSL.

Minor corrections are made to several boundary coordinates for R-3007B, R-3007C, and R-3007D to match the current National Hydrology Dataset that defines the Altamaha River boundary where that river forms the boundary of the restricted areas.

This rule provides the additional ground-level restricted airspace needed for the construction of targets and impact areas so that PGM can safely be employed at the Range.

Regulatory Notices and Analyses

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

Environmental Review

The FAA has determined that the USMC's Environmental Impact Statement (EIS) analyzing the modification of restricted airspace at the Townsend Bombing Range, GA, by expanding the lateral limits of R-3007A to allow construction of additional targets and impact areas so that PGM can be used on the Range, qualifies for FAA adoption in accordance with FAA Order 1050.1F, paragraphs 8-2 and 9-2, Adoption of Other Agencies' National Environmental Policy Act Documents, and Written Re-evaluations, and 7400.2L, paragraph 32-2-3, Environmental Processing of Special Use Airspace Actions. The FAA, after conducting an independent review and written re-evaluation of the USMC's January 14, 2014 “Final EIS and Record of Decision for the Proposed Modernization and Expansion of Townsend Bombing Range, Georgia,” has determined that the USMC's Final EIS and supporting documentation adequately assess and disclose the environmental impacts of the proposed action. Based on the evaluation for potential environmental impact in the USMC's EIS, the FAA, as the Cooperating Agency, concluded that adoption of the EIS is authorized in accordance with 40 CFR 1506.3, Adoption. Accordingly, FAA adopts the USMC's EIS via the FAA's June 12, 2018 Adoption EIS, FAA Adoption of Environmental Impact Statement, Written Re-Evaluation, and Record of Decision for the Modernization of the Existing Special Use Airspace and Amendment of R-3007 A/C/E at Townsend Bombing Range, Georgia, and takes full responsibility for the scope and content that address the FAA's airspace action. The FAA finds that this action will not significantly affect the quality of the human environment or otherwise include any condition requiring consultation pursuant to Section 102(2)(C) of NEPA.

List of Subjects in 14 CFR Part 73

Airspace, Prohibited areas, Restricted areas.

The Amendment

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 73 as follows:

PART 73—SPECIAL USE AIRSPACE 1. The authority citation for part 73 continues to read as follows: Authority:

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

§ 73.30 [Amended]
2. Section 73.30 is amended as follows: R-3007A Townsend, GA [Amended]

By removing the current boundaries and inserting the following:

Boundaries. Beginning at lat. 31°41′52″ N, long. 81°35′53″ W; to lat. 31°42′31″ N, long. 81°33′59″ W; to lat. 31°39′24″ N, long. 81°30′31″ W; to lat. 31°37′49″ N, long. 81°30′56″ W; to lat. 31°36′35″ N, long. 81°31′15″ W; to lat. 31°34′17″ N, long. 81°31′56″ W; to lat. 31°33′07″ N, long. 81°32′41″ W; thence counterclockwise along a 1-NM radius arc from a point centered at lat. 31°32′26″ N, long. 81°31′49″ W; to lat. 31°32′37″ N, long. 81°32′58″ W; to lat. 31°30′59″ N, long. 81°33′57″ W; to lat. 31°30′45″ N, long. 81°34′19″ W; to lat. 31°30′29″ N, long. 81°34′41″ W; to lat. 31°30′38″ N, long. 81°35′06″ W; to lat. 31°31′13″ N, long. 81°35′02″ W; to lat. 31°31′35″ N, long. 81°36′32″ W; to lat. 31°33′04″ N, long. 81°37′27″ W; to lat. 31°33′30″ N, long. 81°36′32″ W; to lat. 31°34′25″ N, long. 81°36′13″ W; to lat. 31°35′32″ N, long. 81°35′59″ W; to lat. 31°35′55″ N, long. 81°35′19″ W; to lat. 31°36′38″ N, long. 81°35′18″ W; to lat. 31°36′43″ N, long. 81°35′41″ W; to lat. 31°37′20″ N, long. 81°35′37″ W; to lat. 31°37′23″ N, long. 81°35′47″ W; to lat. 31°40′29″ N, long. 81°36′13″ W; to lat. 31°40′48″ N, long. 81°35′33″ W; to the point of beginning.

R-3007B Townsend, GA [Amended]

By removing the current boundaries and inserting the following:

Boundaries. Beginning at lat. 31°38′01″ N, long. 81°28′59″ W; to lat. 31°37′31″ N, long. 81°28′14″ W; to lat. 31°32′31″ N, long. 81°27′29″ W; to lat. 31°26′16″ N, long. 81°31′29″ W; to lat. 31°25′26″ N, long. 81°36′05″ W; to lat. 31°27′26″ N, long. 81°33′39″ W; to lat. 31°31′26″ N, long. 81°31′58″ W; thence clockwise along a 1-NM radius arc from a point centered at lat. 31°32′26″ N, long. 81°31′49″ W; to lat. 31°33′18″ N, long. 81°31′13″ W; to the point of beginning.

R-3007C Townsend, GA [Amended]

By removing the current boundaries and inserting the following:

Boundaries. Beginning at lat. 31°37′55″ N, long. 81°47′20″ W; to lat. 31°41′52″ N, long. 81°35′53″ W; to lat. 31°40′48″ N, long. 81°35′33″ W; to lat. 31°40′29″ N, long. 81°36′13″ W; to lat. 31°37′23″ N, long. 81°35′47″ W; to lat. 31°37′20″ N, long. 81°35′37″ W; to lat. 31°36′43″ N, long. 81°35′41″ W; to lat. 31°36′38″ N, long. 81°35′18″ W; to lat. 31°35′55″ N, long. 81°35′19″ W; to lat. 31°35′32″ N, long. 81°35′59″ W; to lat. 31°34′25″ N, long. 81°36′13″ W; to lat. 31°33′30″ N, long. 81°36′32″ W; to lat. 31°33′04″ N, long. 81°37′27″ W; to lat. 31°31′35″ N, long. 81°36′32″ W; to lat. 31°31′13″ N, long. 81°35′02″ W; to lat. 31°30′38″ N, long. 81°35′06″ W; to lat. 31°30′29″ N, long. 81°34′41″ W; to lat. 31°30′45″ N, long. 81°34′19″ W; to lat. 31°30′59″ N, long. 81°33′57″ W; to lat. 31°32′37″ N, long. 81°32′58″ W; thence counterclockwise along a 1-NM radius arc from a point centered at lat. 31°32′26″ N, long. 81°31′49″ W; to lat. 31°31′26″ N, long. 81°31′58″ W; to lat. 31°27′26″ N, long. 81°33′39″ W; to lat. 31°25′26″ N, long. 81°36′05″ W; thence west along the Altamaha River to the point of beginning.

R-3007D Townsend, GA [Amended]

By removing the current boundaries and inserting the following:

Boundaries. Beginning at lat. 31°37′55″ N, long. 81°47′20″ W; to lat. 31°41′52″ N, long. 81°35′53″ W; to lat. 31°42′31″ N, long. 81°33′59″ W; to lat. 31°39′24″ N, long. 81°30′31″ W; to lat. 31°38′01″ N, long. 81°28′59″ W; to lat. 31°37′31″ N, long. 81°28′14″ W; to lat. 31°32′31″ N, long. 81°27′29″ W; to lat. 31°26′16″ N, long. 81°31′29″ W; to lat. 31°25′26″ N, long. 81°36′05″ W; thence northwest along the Altamaha River to the point of beginning.

R-3007E Townsend, GA [New]

Boundaries. Beginning at lat. 31°39′24″ N, long. 81°30′31′ W; to lat. 31°38′01″ N, long. 81°28′59″ W; to lat. 31°33′18″ N, long. 81°31′13″ W; thence counterclockwise along a 1-NM radius arc from a point centered at lat. 31°32′26″ N, long. 81°31′49″ W; to lat. 31°33′07″ N, long. 81°32′41″ W; to lat. 31°34′17″ N, long. 81°31′56″ W; to lat. 31°36′35″ N, long. 81°31′15″ W; to lat. 31°37′49″ N; long. 81°30′56″ W; to the point of beginning.

Designated altitudes. 100 feet AGL to but not including 13,000 feet MSL.

Time of designation. 0700-2200 local time, Monday-Friday; other times by NOTAM at least 24 hours in advance.

Controlling agency. FAA, Jacksonville ARTCC.

Using agency. USMC, Marine Corps Air Station Beaufort, SC.

Issued in Washington, DC, on August 20, 2018. Rodger A. Dean, Jr., Manager, Airspace Policy Group.
[FR Doc. 2018-18510 Filed 8-24-18; 8:45 am] BILLING CODE 4910-13-P
COMMODITY FUTURES TRADING COMMISSION 17 CFR Part 3 RIN 3038-AE56 Chief Compliance Officer Duties and Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap Participants AGENCY:

Commodity Futures Trading Commission.

ACTION:

Final rule.

SUMMARY:

The Commodity Futures Trading Commission (“Commission” or “CFTC”) is amending its regulations regarding certain duties of chief compliance officers (“CCOs”) of swap dealers (“SDs”), major swap participants (“MSPs”), and futures commission merchants (“FCMs”) (collectively, “Registrants”); and certain requirements for preparing, certifying, and furnishing to the Commission an annual report containing an assessment of the Registrant's compliance activities.

DATES:

This rule is effective September 26, 2018.

FOR FURTHER INFORMATION CONTACT:

Matthew Kulkin, Director, 202-418-5213, [email protected]; Erik Remmler, Deputy Director, 202-418-7630, [email protected]; Pamela M. Geraghty, Special Counsel, 202-418-5634, [email protected]; or Fern B. Simmons, Special Counsel, 202-418-5901, [email protected], Division of Swap Dealer and Intermediary Oversight, Commodity Futures Trading Commission, Three Lafayette Centre, 1155 21st Street NW, Washington, DC 20581.

SUPPLEMENTARY INFORMATION: I. Background A. Statutory and Regulatory Background

As amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”),1 sections 4d(d) and 4s(k) of the Commodity Exchange Act (“CEA” or “Act”) require each Registrant to designate an individual to serve as its CCO.2 Sections 4s(k)(2) and (3) set forth certain requirements and duties for CCOs of SDs and MSPs, including the requirement to prepare and sign an annual compliance report (“CCO Annual Report”).3 CEA section 4d(d) requires CCOs of FCMs to “perform such duties and responsibilities” as are established by Commission regulation or the rules of a registered futures association.4 On November 19, 2010, the Commission proposed regulations implementing the CCO requirements,5 and in April 2012, the Commission adopted the final CCO regulations (“CCO Rules Adopting Release”).6 For purposes of this release, § 3.3 7 and the related definitions in § 3.1 of the Commission's regulations are herein referred to as the “CCO Rules.”

1See Dodd-Frank Act, Public Law 111-203, 124 Stat. 1376 (2010).

2 7 U.S.C. 6d(d) and 6s(k)(1).

3 7 U.S.C. 6s(k)(2) and (3).

4 7 U.S.C. 6d(d).

5See Designation of a Chief Compliance Officer; Required Compliance Policies; and Annual Report of a Futures Commission Merchant, Swap Dealer, or Major Swap Participant, 75 FR 70881 (proposed Nov. 19, 2010).

6 17 CFR 3.3(d)-(f). See Swap Dealer and Major Swap Participant Recordkeeping, Reporting, and Duties Rules, 77 FR 20128 (Apr. 3, 2012).

7 17 CFR 3.3 (2017). Commission regulations are found at 17 CFR chapter I, and may be accessed through the Commission's website, www.cftc.gov.

B. The Proposal

On May 8, 2017, the Commission published for public comment a Notice of Proposed Rulemaking (“Proposal”) 8 to amend the CCO Rules. In particular, the Proposal addressed certain CCO duties and requirements for preparing and furnishing the CCO Annual Report. The Proposal sought to incorporate knowledge gained through Commission staff's experience in administering the implementation of § 3.3 and to more closely harmonize certain provisions with corresponding Securities and Exchange Commission (“SEC”) rules for CCOs of security-based swap dealers and major security-based swap participants (collectively, “SEC Registrants”).9

8 Chief Compliance Officer Duties and Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap Participants; Amendments, 82 FR 21330 (proposed May 8, 2017).

9See Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants, 81 FR 29960 (May 13, 2016) (“SEC Adopting Release”).

To provide greater clarity regarding the CCO reporting line required by section 4s(k)(2)(A) of the Act and § 3.3(a)(1), the Commission proposed to define “senior officer” in § 3.1 as “the chief executive officer or other equivalent officer of a registrant.” With regard to CCO duties, the Proposal would include additional language in § 3.3(d)(1) to clarify that the CCO's duty with respect to administering policies and procedures would be specific to the Registrant's business as an SD, MSP, or FCM, as applicable.10 The Proposal would also modify the language in § 3.3(d)(2) to clarify that the CCO must take “reasonable steps” to resolve conflicts of interest, and to require in § 3.3(d)(3) that a CCO take reasonable steps to ensure compliance with the Act and Commission regulations by, among other things, “ensuring the registrant establishes, maintains, and reviews written policies and procedures reasonably designed to achieve compliance.” The Commission further proposed to amend § 3.3(d)(4) and (5) to remove the requirement in each provision that the CCO consult with the board of directors or senior officer in connection with establishing procedures for addressing noncompliance issues. The Proposal also would clarify that policies and procedures are to be “reasonably designed” to achieve their stated purpose, and would amend § 3.3(d)(4) to include remediating matters identified “through any means.”

10 As noted in the Proposal, the change to referencing the Registrant's business as an SD or MSP is not intended to affect the scope of the duties of the CCO. 82 FR at 21332 (Citing the CCO Rules Adopting Release, 77 FR 20158 (“[T]he Commission is clarifying in the final rules that the CCO's duties extend only to the activities of the registrant that are regulated by the Commission, namely swaps activities of SDs and MSPs and the derivatives activities included in the definition of FCM under section 1(a)(28) of the CEA.”)).

Regarding the CCO Annual Report requirements, the Proposal would clarify § 3.3(e) by eliminating the requirement that a Registrant address “each” applicable CFTC regulatory requirement to which it is subject when assessing its written policies and procedures (“WPPs”). Additionally, the Commission proposed to clarify that the CCO Annual Report's discussion of compliance resources be limited to a discussion of resources for the specific activities for which the Registrant is registered. Finally, the Proposal would amend § 3.3(f)(1) to add the Registrant's audit committee (or equivalent body) as a required recipient of the CCO Annual Report in addition to the board of directors and the senior officer.

C. Harmonization With SEC Regulations

Using language identical to CEA section 4s(k), the Dodd-Frank Act amended the Securities Exchange Act of 1934 by adding section 15F(k) to establish CCO requirements for SEC Registrants.11 In compliance with sections 712(a)(1)-(2) of the Dodd-Frank Act, the Commission and SEC staffs consulted and coordinated together, and with prudential regulators, in developing the respective CCO rules for purposes of regulatory consistency.12

11 15 U.S.C. 78o-10(k).

12 Public Law 111-203, 124 Stat. 1376, 1641-1642 (codified at 15 U.S.C. 8302(a)(1)-(2)).

The SEC initially proposed rule 15Fk-1 to implement CCO requirements and duties for SEC Registrants in July 2011.13 In May 2013, after the CFTC adopted the CCO Rules, the SEC re-opened the comment period for its outstanding Dodd-Frank Act Title VII rulemakings, including rule 15Fk-1.14 SEC staff continued to consult with CFTC staff leading up to the adoption of rule 15Fk-1 in May 2016.15

13See Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants, 76 FR 42396 (proposed Jul. 18, 2011).

14See Reopening of Comment Periods for Certain Rulemaking Releases and Policy Statement Applicable to Security-Based Swaps, 78 FR 30800 (May 23, 2013).

15 17 CFR 240.15Fk-1. See SEC Adopting Release, 81 FR 29960.

While the CFTC regulates derivatives markets and the SEC regulates securities markets, many of the participants in these markets are the same. Similar activities in these markets are often regulated by each agency in similar ways under similar statutory mandates.16 In this regard, the CFTC and SEC have taken steps through ongoing communication and coordination to harmonize similar regulations, including the regulations addressed in this release.

16 For example, the provisions of the Dodd-Frank Act that provide for establishing regulations for swap dealers by the CFTC are nearly identical to most of the provisions of the Dodd-Frank Act that provide for establishing regulations for security-based swap dealers by the SEC. See Dodd-Frank Act, Public Law 111-203, 124 Stat. 1376, 1711-1712, 1793 (2010) (codified at 7 U.S.C. 6s and 15 U.S.C. 78o-10).

Several of the proposed amendments would further harmonize CFTC and SEC regulations. More specifically, the following provisions in the Proposal align the CFTC CCO regulations with the corresponding SEC CCO regulations:

• Including a definition of “senior officer” in § 3.1 that is identical to the SEC's definition;

• Including additional language in § 3.3(d)(1) to clarify that the CCO's duty with respect to administering policies and procedures would be specific to the Registrant's business as an SD, MSP, or FCM, as applicable;

• Modifying the language in § 3.3(d)(2) to require reasonable steps be taken to resolve conflicts of interest;

• Requiring the CCO to identify noncompliance issues “through any means”;

• Removing the additional requirement in § 3.3(d)(4) and (5) that the CCO consult with the board of directors or senior officer in connection with establishing procedures for addressing noncompliance issues; and

• Replacing the requirement in § 3.3(e) that a Registrant address “each” applicable CFTC regulatory requirement to which it is subject when assessing its WPPs with a requirement to address the applicable regulations generally.

Furthermore, in the Proposal, the Commission solicited comments regarding potential additional rule changes that would further harmonize the CFTC and SEC regulations. After careful review of the comments received, the final rule includes the following additional harmonizing amendments:

• In § 3.3(d)(2), the CCO must take reasonable steps to resolve any “material” conflicts of interest;

• In § 3.3(d)(4), the CCO must “take reasonable steps to ensure the registrant” establishes, maintains, and reviews written policies and procedures for the remediation of noncompliance issues;

• In § 3.3(d)(5), the CCO must “take reasonable steps to ensure the registrant” establishes written procedures for the handling of noncompliance issues; and

• In § 3.3(f)(3), the CCO Annual Report certification includes language from the certifying individual that the CCO Annual Report is accurate and complete “in all material respects.”

II. Summary of Comments

The Commission received eleven comment letters and Commission staff participated in one ex parte teleconference concerning the Proposal.17 The majority of commenters generally supported the Commission's efforts to clarify the role and duties of the CCO, reduce burdens associated with preparing the CCO Annual Report, and further harmonize the CCO Rules with parallel SEC rules. One commenter expressed general support for the proposed modifications and recognition of the Commission's efforts as a meaningful step towards increasing regulatory certainty.18 Another commenter expressed concern that a number of the proposals weaken the CCO regulatory regime (by, among other things, reducing CCO accountability).19 Two comments exclusively sought clarity on the Proposal's impact on the continued ability of non-U.S. SDs to benefit from the Commission's substituted compliance determinations that pertain to § 3.3.20 Some commenters cautioned against complete harmonization with the SEC regarding the requirement to furnish the CCO Annual Report, but requested more complete alignment in other areas addressing the role and duties of the CCO.21 As outlined below, several commenters suggested modifications to the rule text and requested further interpretive guidance regarding the role and duties of the CCO and CCO Annual Report content.22 Additionally, several commenters suggested modifications to the rule text to add a materiality qualifier to the CCO Annual Report certification.23 For the reasons provided below, the Commission accepted some of these recommendations in the amendments, as adopted, and accompanying guidance, and declined to accept certain other recommendations.

17 Comment letters were submitted by the following entities: Allen & Overy LLP; Automated Compliance Management, LLC (“ACM”); Better Markets; Chris Barnard; Futures Industry Association and Securities Industry and Financial Markets Association (“FIA/SIFMA”); International Swaps and Derivatives Association (ISDA); Japanese Bankers Association (“JBA”); National Futures Association (“NFA”); the Natural Gas Supply Association (“NGSA”); Paws Nutritional Org.; and TD Ameritrade Futures and Forex LLC (“TD Ameritrade”). All comment letters are available on the Commission's website at http://comments.cftc.gov/PublicComments/CommentList.aspx?id=1811.

18See NGSA comment letter.

19See Better Markets comment letter.

20See Allen & Overy and JBA comment letters.

21See, e.g., FIA/SIFMA and ISDA comment letters.

22See, e.g., Better Markets, FIA/SIFMA, ISDA, NFA, and TD Ameritrade comment letters.

23See FIA/SIFMA, ISDA, and NFA comment letters.

III. Final Rule A. Regulation 3.1—Definitions 1. Regulation 3.1(j)—“Senior Officer”

The Commission proposed to define “senior officer” in § 3.1 as “the chief executive officer or other equivalent officer of a registrant.” The Commission received four comments addressing the proposed definition.24 Chris Barnard and Better Markets supported the proposed definition. FIA/SIFMA requested that the Commission address the variety of organizational structures present among Registrants and define “senior officer” to include “a more senior officer within the Registrant's group-wide compliance, risk, legal or other control function who in turn reports to the holding company's board of directors or CEO (or equivalent officer).” 25 FIA/SIFMA further requested that the Commission expand its interpretation of the phrase “other equivalent officer” to include the most senior officer of a Registrant with supervisory responsibility for all of the Registrant's business as an FCM, SD, or MSP. ISDA expressed support for the Commission's proposed definition, but requested the Commission provide Registrants the ability to determine individually who would qualify as an “equivalent officer.”

24See Chris Barnard, Better Markets, ISDA, and FIA/SIFMA comment letters.

25See FIA/SIFMA comment letter. Similarly, while TD Ameritrade did not comment directly on the proposed definition, it requested that the Commission consider including a variety of senior roles at a Registrant for inclusion in the definition of “other equivalent officer” for purposes of allowing the CCO to report to someone other than the CEO.

Upon consideration of the comments, the Commission is adopting the definition as proposed. This definition of “senior officer” clarifies the Commission's long-standing interpretation that compliance with the statutory requirement to have the CCO “report directly to the board or to the senior officer” 26 requires a CCO to have a direct reporting line to the board of directors or the highest executive officer in the legal entity that is the Registrant.27

26 7 U.S.C. 6s(k)(2)(A) (emphasis added).

27See CCO Rules Adopting Release, 77 FR at 20188. This concept was incorporated in § 3.3 and therefore applies to FCMs equally.

As stated in the Proposal, the “chief executive officer” is typically the highest executive level, but the Commission is including in the definition the phrase “other equivalent officer” to address Registrants who may have a different title for the highest executive officer.28 This approach is also consistent with the SEC's definition of “senior officer” in SEC rule 15Fk-1(e)(2), and is intended to ensure the CCO's independence from influence, interference, or retaliation.29 The Commission is also declining to broaden its definition of “senior officer” or expand its interpretation of “other equivalent officer.” The Commission notes that the definition of “senior officer,” as adopted, does not preclude additional CCO reporting lines that Registrants may wish to implement for practical day-to-day oversight.30

28 Proposal, 82 FR at 21331. For example, some firms do not have a chief executive officer, but instead give the highest level executive the title of “president,” “member,” or “general partner.”

29Id. See also CCO Rules Adopting Release, 77 FR at 20188.

30See CFTC Staff Advisory No. 16-62 (Jul. 25, 2016), available at https://www.cftc.gov/idc/groups/public/%40lrlettergeneral/documents/letter/16-62.pdf.

In response to ISDA's comment, the Commission believes that the definition and guidance provide sufficient flexibility. Registrants should be able to ensure that regardless of a firm's chosen nomenclature, the CCO has a direct reporting line to the highest executive-level individual at the Registrant.

2. Other Definitions

In response to the Commission's request for comment regarding whether other definitions should be added to § 3.1, FIA/SIFMA requested that the Commission define “material noncompliance issue” as it relates to the requirement in § 3.3(e)(5) to describe in the CCO Annual Report “any material noncompliance issues identified and the corresponding action taken.” The Commission is declining to define “material noncompliance issue” at this time. Since the adoption of the CCO Rules, Registrants have defined and implemented their own materiality standards when categorizing non-compliance issues. Given the variation in size and nature of businesses among Registrants required to submit CCO Annual Reports, it is the Commission's view that materiality is dependent upon many factors that impact Registrants to varying degrees. While some factors ought to be considered by all Registrants, e.g., whether the issue may involve a violation of the CEA or a Commission regulation, there is no “one size fits all” approach. Indeed, setting forth a standard of materiality could result in an overly prescriptive model for many Registrants. Based on experience in overseeing the implementation of § 3.3(e), Commission staff believes that Registrants have generally developed and applied adequate internal materiality standards for purposes of the CCO Annual Report.

B. Regulation 3.3(d)—Chief Compliance Officer Duties 1. Regulation 3.3(d)(1)—Duty To Administer Compliance Policies and Procedures

The Commission proposed to amend § 3.3(d)(1) to require that a CCO's duties include administering each of the registrant's policies and procedures relating to its business as a futures commission merchant, swap dealer, or major swap participant that are required to be established pursuant to the Act and Commission regulations.

ISDA and FIA/SIFMA generally supported the Commission's proposed changes 31 and recommended that the Commission further harmonize § 3.3(d)(1) with the SEC's CCO rules. Specifically, ISDA and FIA/SIFMA recommended that the Commission should clarify in guidance that the duty to administer policies and procedures means reviewing, evaluating, and advising the Registrant on its compliance policies and procedures.32 Alternatively, ISDA proposed that the Commission strike the term “administering each” from § 3.3(d)(1), and replace it with “reviewing, evaluating, and advising the registrant on the development, implementation, and monitoring” of the Registrant's compliance policies and procedures. ISDA asserted that the current proposed language creates an undue burden on CCOs who do not necessarily “administer” or execute each policy and/or procedure relating to an applicable CFTC rule. Rather, ISDA explained, various business units and control functions within a firm establish policies and procedures for their respective areas, with the ultimate supervisory authority residing with the CEO or other senior officer.

31 NFA also endorsed the proposed amendment to § 3.3(d)(1). See NFA comment letter.

32See SEC Adopting Release, 81 FR at 30057.

After considering the comments received, the Commission is adopting § 3.3(d)(1) as proposed. As the Commission has previously stated, and as discussed below, the role of the CCO, under the Dodd-Frank Act, goes beyond the customary and traditional advisory role of a CCO and requires more active engagement.33 The Commission expects the CCO to be actively engaged in administering a firm's compliance policies and procedures, as described further below.

33See CCO Rules Adopting Release, 77 FR at 20162. (“In response to comments advocating a purely advisory role for the CCO, the Commission observes that the role of the CCO required under the CEA, as amended by the Dodd-Frank Act, goes beyond what has been represented by commenters as the customary and traditional role of a compliance officer.”)

The language of § 3.3(d)(1), however, is not intended to diminish the role and direct involvement of other senior officers, supervisors and other employees with more direct knowledge, expertise, and responsibilities for various regulated activities within their business lines. Thus, while the CCO plays a central role in administering a firm's policies and procedures, other personnel may implement the procedures on a day-to-day basis when undertaking related activities in the normal course of business.

Furthermore, the Commission reiterates that the Registrant is ultimately responsible for the effective implementation of the policies and procedures.34 In response to ISDA and FIA/SIFMA's request for clarification on the CCO's duty to administer policies and procedures, it is the Commission's view that a CCO may, in many circumstances, be able to fulfill his or her role through actively engaging in processes involving “reviewing, evaluating, and advising” on policies and procedures and compliance matters, while others in the organization are responsible for the daily implementation thereof. However, if, in the normal course, the CCO becomes aware (or reasonably should have been aware) of significant issues that are not being addressed in a reasonably satisfactory manner, the CCO is expected to take further action to address those issues. Importantly, for such circumstances, CEA section 4s(k)(2)(A) provides the CCO with a reporting line directly to the board or the senior officer. Accordingly, it may be appropriate for the CCO, depending on the facts and circumstances, to use that reporting line to elevate any such significant issues that have not been otherwise addressed satisfactorily. Through this active engagement and, if appropriate, utilizing the available escalation measures described above, the CCO may be able to demonstrate that he or she has fulfilled the role assigned to him or her under the regulation.

34See 75 FR 70881, 70883 (proposed Nov. 19, 2010). The CCO's duty to administer policies and procedures does not “otherwise contradict well-established tenets of law regarding the allocation of responsibility within a business association.”

2. Regulation 3.3(d)(2)—Duty To Resolve Conflicts of Interest

Proposed § 3.3(d)(2) would require the CCO, in consultation with the board of directors or the senior officer, to take reasonable steps to resolve any conflicts of interest that may arise. ISDA and FIA/SIFMA supported the proposed revisions to § 3.3(d)(2) and provided additional recommendations. Both commenters recommended that the CCO's duty to resolve conflicts of interest should be limited to “material” conflicts of interest and should apply only to issues that arise in connection with the Registrant's business as an FCM, SD, or MSP. ISDA suggested that, consistent with the SEC's view, the Commission should explicitly state that the primary responsibility to resolve conflicts of interest falls on the Registrant and that the CCO's role would include identifying, advising, and escalating, as appropriate, to senior officers matters involving conflicts of interest. ISDA further suggested that the Commission replace “resolve” with “minimize” in the rule text. Similarly, FIA/SIFMA recommended that the Commission clarify that “resolution” involves either negation or mitigation of the conflict of interest.

Better Markets generally did not support the Commission's proposed changes to § 3.3(d)(2). Among other reasons, Better Markets is of the view that the proposed changes are not consistent with applicable statutory language to “resolve any conflicts” and will dilute the CCO's duty to address conflicts of interest.

Having considered these comments, the Commission is adopting § 3.3(d)(2) as proposed but with further modifications to provide that CCOs have a duty to take reasonable steps to resolve “material” conflicts of interest “relating to the registrant's business as a futures commission merchant, swap dealer, or major swap participant.” The additional language refines the Commission's view that CCOs cannot reasonably be expected to personally resolve every potential conflict of interest that may arise, and the Commission affirms that “routinely encountered conflicts could be resolved in the normal course of business . . .” consistent with the CCO's general administration of internal policies and procedures, which must include conflicts of interest policies.35 Requiring the CCO to resolve every conflict of interest, including non-material conflicts, in consultation with the board of directors or the senior officer would potentially take too much of the CCO's and senior management's time away from other necessary activities when non-material conflicts can usually be resolved effectively by other staff in the normal course of business. The Commission believes that this is consistent with the underlying objective of this provision, which imposes a duty on CCOs to resolve matters under the Act and Commission regulations within the practical limits of their position at the Registrant. The Commission believes that the additional language does not dilute the CCO's duty to address conflicts of interest, and that the rule as amended fulfills the purposes of CEA section 4s(k).36 Rather than spreading time and resources over many conflict issues—both material and non-material—the changes will allow the CCO to focus his or her time and resources on the material conflict issues, and more broadly, the other important compliance duties required by regulation. The Commission is also of the view that amending § 3.3(d)(2) to limit the scope of the CCO's responsibility to conflicts relating to the Registrant's business as an FCM, SD, or MSP clarifies that CCOs have a duty to resolve matters under the Act and Commission regulations, rather than any conflict that “may arise.”

35See Proposal, 82 FR at 21332. The addition of a materiality qualifier also further harmonizes § 3.3(d)(2) with the SEC's parallel CCO rule. See 17 CFR 240.15Fk-1(b)(3).

36See 77 FR at 21332 (“If strictly interpreted, the current rule text creates an undue burden on CCOs, likely taking them away from more important compliance activities.”)

The Commission declines to implement comments suggesting that CCOs have a duty to simply minimize, rather than “resolve” conflicts of interest. CEA section 4s(k)(2)(C) explicitly requires conflict resolution.37 While resolution can include the mitigation of conflicts to the point where they are no longer material, resolution also encompasses the elimination of conflicts if reasonably practicable.38

37See 7 U.S.C. 6s(k)(2)(C).

38See CCO Rules Adopting Release, 77 FR at 20161.

In response to ISDA's request that the Commission state that a CCO's role in resolving conflicts would involve identifying, advising on, and escalating to management conflicts of interest, the Commission is declining to incorporate that language into the regulatory text. However, the Commission believes that such an approach provides a reasonable framework for CCOs to use in fulfilling their duty to take reasonable steps to resolve material conflicts of interest. As the Commission has previously acknowledged, active engagement “may involve actions other than making the final decision.” 39

39Id.

Should CCOs choose to incorporate the “identify, advise and escalate” framework into their conflict resolution procedures, however, a passive implementation of that framework should not be viewed as fulfilling the CCO's duties for conflict resolution. The requirement to “take reasonable steps” requires an active role in the conflict resolution process, including, for example: (1) Direct involvement of the CCO in developing and implementing active processes for conflict identification, evaluation, and resolution; (2) advising on the effectiveness of alternatives to mitigate or eliminate conflicts; and (3) escalating conflict issues if the conflicts are not otherwise resolved or mitigated as required by § 3.3(d)(2), including through the CCO's direct reporting line to the board of directors or the senior officer if necessary or appropriate.

The Commission believes that the determination of what is a “material” conflict for a particular Registrant should be assessed based on the facts and circumstances relevant to that Registrant and the conflict. Although the Commission notes that there are some conflicts that are typically treated as material,40 the Commission declines at this time to define materiality in this context to avoid creating an unintentionally prescriptive model. The Commission expects each Registrant to develop its own appropriate standard or procedure for determining if a conflict is “material” for purposes of the rule.

40 For example, similar to the SEC's approach, conflicts between the business interests of a Registrant and its regulatory requirements, and conflicts between or with associated persons of a Registrant are often material. See SEC Adopting Release, 81 FR 29960 at 30056-30057 (“Such conflicts of interest could include conflicts between the commercial interests of an SBS Entity and its statutory and regulatory responsibilities, and conflicts between, among, or with associated persons of the SBS Entity.”).

3. Regulation 3.3(d)(3)—Duty To Ensure Compliance

The Proposal would make a wording change to § 3.3(d)(3) to simplify the text 41 and to add that a CCO's duty in § 3.3(d)(3) to ensure compliance with the Act and the Commission's regulations includes “ensuring the registrant establishes, maintains, and reviews WPPs reasonably designed to achieve compliance.”

41 The Proposal would change the words “. . . relating to the swap dealer's or major swap participant's activities, or to the future commission merchant's business as a futures commission merchant” to “. . . relating to the registrant's business as a futures commission merchant, swap dealer or major swap participant.”

ISDA and FIA/SIFMA recommended that the Commission further harmonize paragraph (d)(3) with the SEC's corresponding rule by removing the existing general duty for the CCO to take reasonable steps to ensure compliance and only require the CCO to ensure that the Registrant establishes, maintains, and reviews policies and procedures as the CCO's duty.42 ISDA and FIA/SIFMA also asserted that the change would address uncertainty regarding the breadth of a CCO's supervisory authority and concerns that ensuring compliance is an impracticable requirement for CCOs.

42See FIA/SIFMA and ISDA comment letters (emphasis added). See also 17 CFR 240.15Fk-1(b)(2).

TD Ameritrade commented that the Commission should align paragraph (d)(3) with FINRA Rule 3130 by clarifying that the CCO is required to “have processes in place” for the Registrant to establish, maintain, and review WPPs reasonably designed to achieve compliance. TD Ameritrade contended that the proposed language in paragraph (d)(3), which requires CCOs to ensure compliance, rather than simply have processes in place, is cumbersome and perhaps places a higher burden on CCOs than intended by the Commission.

Better Markets commented that the proposed amendment to paragraph (d)(3) could be viewed as defining the full scope of the CCO's duty to ensure compliance, rather than merely clarifying the extent of the duty. Better Markets noted that the duty to ensure compliance is broad and cannot be equated with a CCO's obligation to administer policies and procedures. To eliminate uncertainty, Better Markets recommended further clarifying that the additional language is “without limitation.” 43

43 Better Markets comment letter.

Having considered the totality of the responses received, the Commission believes that the proposed amendment to § 3.3(d)(3) adding that the duty includes “ensuring the registrant establishes, maintains, and reviews WPPs reasonably designed to achieve compliance” creates ambiguity, rather than clarity, with respect to the scope of a CCO's duty to ensure compliance. Therefore, the Commission is declining to adopt that proposed amendment to § 3.3(d)(3).44 A CCO's duty in § 3.3(d)(3) to ensure compliance with the Act and Commission regulations therefore remains the same as adopted in the CCO Rules Adopting Release.

44 The proposed non-substantive change that simplifies the wording of § 3.3(d)(3) is being adopted for the reasons stated in the Proposal.

Current § 3.3(d)(3) implements CEA section 4s(k)(2)(E). CEA section 4s(k)(2)(E) requires that the CCO shall ensure compliance with the Act (including regulations) relating to swaps, including each rule prescribed by the Commission under that section. Thus, the Commission believes § 3.3(d)(3) requires more than, as suggested by some commenters, simply taking reasonable steps to ensure the Registrant establishes, maintains, and reviews written compliance policies and procedures.45 The Commission, however, acknowledges commenters' concerns regarding the uncertainty as to the breadth of a CCO's responsibility and the practicality of broad expectations for the CCO in this regard given the wide variety of swap dealing and other activities undertaken by different Registrants. When finalizing § 3.3(d)(3), the Commission recognized that requiring a CCO to “ensure compliance” could be an impracticable standard and limited the CCO's duty to “taking reasonable steps to ensure compliance.” 46 At the time, however, the Commission did not provide guidance on what “taking reasonable steps to ensure compliance” means. Accordingly, the Commission is taking this opportunity, with the benefit of several years of experience implementing the CCO Rules, to provide further guidance as to the breadth of the CCO obligations under § 3.3(d)(3) and the practical expectations for fulfilling those obligations.

45See 7 U.S.C. 6s(k)(2)(E) (requiring the CCO to ensure compliance with the Act (including regulations) relating to swaps, including each rule prescribed by the Commission under that section).

46See CCO Rules Adopting Release, 77 FR at 20162.

As stated by the Commission previously, the CCO's duty to take reasonable steps to ensure compliance includes active engagement in the day-to-day implementation of compliance policies and procedures.47 This engagement would likely include a reasonable level of involvement in compliance monitoring, identifying non-compliance or potential non-compliance events, advising on the mitigation and correction of compliance activities, and, where necessary, escalating significant matters that require senior management attention.48 Whether the CCO's activities constitute “reasonable steps” depends on the facts and circumstances of the Registrant's related business activities, such as the size of the business, the diversity and complexity of the swaps or FCM activities, and the overlap with other compliance activities in the firm (e.g., where swap dealing activities may be contained within business lines that are subject to additional regulation outside the CEA).

47See supra at note 33.

48 For example, escalation could be to the board or the senior officer to whom the CCO reports either through the CCO Annual Report, annual or more frequent meetings, or other mechanisms.

In taking reasonable steps to ensure compliance, the Commission believes that a CCO cannot reasonably be expected to have sole and complete responsibility for ensuring compliance with the Act and the relevant regulations.49 As such, § 3.3(d)(3) does not require the CCO to guarantee compliance or be granted final supervisory authority.50 The regulation does not diminish the role and direct involvement of other senior officers, supervisors, and employees with more direct knowledge, expertise, and responsibilities for the regulated business activities to effect compliance. As such, the Commission is of the view that a CCO may reasonably rely on these personnel to implement many of the policies and procedures needed to ensure compliance as part of their regular business activities (in this regard, such personnel are sometimes referred to as the “first line” of compliance).51 The Commission also notes that, pursuant to § 3.3(a)(1), the CCO has a direct reporting line to the board or the senior officer of the Registrant. To the extent the CCO determines that he or she cannot fulfill the duty established in § 3.3(d)(3) because of the actions or inaction of others, a lack of resources, or otherwise, the CCO has an avenue for escalating these issues to the highest level of management within the Registrant. In doing so, the CCO may be able to demonstrate that he or she has taken reasonable steps to fulfill the duty created in § 3.3(d)(3).

49See 75 FR at 70883 (“The chief compliance officer can only ensure the registrant's compliance to the full capacity of an individual person . . .”).

50See CCO Rules Adopting Release, 77 FR at 20162 (“[T]he Commission does not believe . . . that the CCO's duties under the CEA or § 3.3 requires that the CCO be granted ultimate supervisory authority by a registrant.”).

51 For example, in working with other personnel at the Registrant, it would be reasonable to expect that a CCO would participate in (though not necessarily have sole or principal responsibility for implementing) the development and implementation of compliance training, monitoring and spot checking of first line compliance activities, the identification of possible compliance weaknesses, and the escalation to supervisors and senior management of the remediation or mitigation of weaknesses identified, as appropriate.

4. Regulation 3.3(d)(4) and (5)—Duty To Remediate Noncompliance Issues

The Commission proposed to amend § 3.3(d)(4) by adding language that the duty to remediate noncompliance issues identified by the CCO encompasses maintaining and reviewing, in addition to establishing, written policies and procedures. The Commission also proposed to amend § 3.3(d)(4) and (5) by removing the requirement that the CCO consult with the board of directors or senior officer in establishing: (1) Policies and procedures for the remediation of noncompliance issues identified by the CCO; and (2) procedures for the handling, management response, remediation, retesting, and closing of noncompliance issues. The Proposal would also clarify that the policies and procedures should be “reasonably designed” to remediate noncompliance issues. Lastly, the Commission proposed to amend paragraph (d)(4) to include the remediation of matters identified “through any means” by the CCO, including the specific discovery methods already listed in § 3.3(d)(4). FIA/SIFMA generally supported the Commission's proposed amendments to paragraphs (d)(4) and (5), and requested that the Commission further add to paragraphs (d)(4) and (5) that the CCO's duty is to take “reasonable steps to ensure that the registrant” establishes the required policies and procedures for the remediation of noncompliance issues, rather than to be directly responsible for establishing the policies and procedures. FIA/SIFMA noted that this change, consistent with the SEC's CCO rules, reflects the fact that it is the responsibility of the Registrant, not the CCO in his or her personal capacity, to establish the specified policies and procedures.

Better Markets disagreed with the Commission's proposed changes. Better Markets contended that the removal of the board of directors and senior officer consultation requirement could marginalize the board of directors' role and send the message that the board of directors needs to be only occasionally involved in the remediation of noncompliance issues. Better Markets further asserted that the proposed change that policies and procedures be “reasonably designed” makes it easier for Registrants to meet their legal obligations without actually realizing the underlying regulatory goal of remediating noncompliance issues.

With respect to the specific noncompliance discovery methods listed in paragraph (d)(4), ISDA recommended that the Commission provide legal certainty to Registrants by clarifying that the term “complaint that can be validated” means “a written complaint that can be supported upon a reasonable investigation.” 52 ISDA noted that this clarification would further harmonize the Commission's CCO Rules with the SEC's, and would provide legal certainty with respect to which kinds of noncompliance issues need to be escalated to the CCO.

52 ISDA comment letter.

In light of the comments received, the Commission is adopting proposed paragraphs (d)(4) and (5) with additional modifications to clarify the Commission's position that the CCO's duty with respect to establishing the Registrant's noncompliance remediation policies and procedures is to take reasonable steps to ensure that the registrant fulfills that responsibility. Accordingly, § 3.3(d)(4) and (5), as adopted, require a CCO to take “reasonable steps to ensure the registrant” establishes, maintains and reviews the applicable policies and procedures. With respect to the other proposed amendments to paragraphs (d)(4) and (5), the Commission is adopting those amendments for the reasons discussed in the Proposal.

In response to the concern raised by Better Markets that removing the consultation clause will diminish the board of directors and senior officer role, the Commission believes that there are two reasons to maintain the proposed changes to § 3.3(d)(4) and (5). As discussed in the Proposal, the CCO should manage and remediate noncompliance issues in consultation, as appropriate, with personnel that are experts in these matters, including, if appropriate, senior management and the board of directors. Requiring further consultation with the board of directors or the senior officer on these procedures in the ordinary course would be an unnecessary burden on the Registrants. Furthermore, the Commission notes that, under § 3.3(a)(1), the CCO must report to the board of directors or the senior officer. Accordingly, to the extent the CCO is of the view that the policies and procedures being established do not meet the requirements of the Commission's regulations and is unable to effect the necessary changes through other means, it would be appropriate for the CCO, as a reasonable step for ensuring that the appropriate policies and procedures are established, to elevate the issue to the board of directors or the senior officer to whom the CCO reports. Thus, an appropriate avenue for consultation with the board of directors or the senior officer is already part of the regulatory requirements in the CCO Rules.

With respect to ISDA's recommendation that the Commission clarify the “complaint that can be validated” standard, the Commission declines to clarify the standard in the manner requested. The Commission believes that noncompliance should be a focus for CCOs, and accordingly, all noncompliance complaints, whether written or verbal, should be investigated using reasonable means. The Commission further notes that the CCO may identify noncompliance issues “through any means” and “a complaint that can be validated” is one of many ways in which a CCO may identify such issues.

C. Regulation 3.3(e)—CCO Annual Report

Below is a subsection-by-subsection review of the comments received on the proposed changes to the CCO Annual Report requirements and a description of the changes being adopted.53 On December 22, 2014, CFTC staff issued Advisory No. 14-153 providing guidance to Registrants on the form and content requirements of the CCO Annual Reports (“CCO Annual Report Advisory”). In their comment letter, FIA/SIFMA requested that the Commission address the effect of the rule amendments on the guidance in the CCO Annual Report Advisory.

53 In connection with the proposed amendments, the Proposal also would renumber the paragraphs within § 3.3(e) and make other non-substantive changes related to the renumbering. Those changes are being adopted for the reasons stated in the Proposal.

The Commission believes that providing updated guidance in concert with adopting the amendments to § 3.3(e) will help to increase the final rule's efficiency and clarity. Accordingly, the Commission is providing guidance regarding the CCO Annual Report in new Appendix C to Part 3, “Guidance on the Application of Rule 3.3(e), Chief Compliance Officer Annual Report Form and Content.” The CCO Annual Report Advisory is hereby superseded by this final release including the new Appendix C to Part 3. The Commission or its staff may issue updated guidance regarding the CCO Annual Report in the future based on experience gained as Registrants implement the amended content requirements.

1. Regulation 3.3(e)(1)—Description of the Registrant's WPPs

Section 3.3(e)(1) requires a CCO to describe the Registrant's WPPs, including its code of ethics and conflicts of interest (“COI”) policies. Proposed § 3.3(e)(1) sought to clarify that only the WPPs that relate to a Registrant's business as an FCM, SD, or MSP must be described in the CCO Annual Report by adding text referring to the policies and procedures described in § 3.3(d). The Commission did not receive any comments specific to proposed § 3.3(e)(1),54 and is adopting amended § 3.3(e)(1) as proposed.55

54 Three commenters expressed general support of the proposed amendments to § 3.3(e). See TD Ameritrade, FIA/SIFMA, and ISDA comment letters.

55 The Commission notes that § 3.3(e)(1) retains the statutory requirement in CEA section 4s(k)(3)(A)(ii), 7 U.S.C. 6s(k)(3)(A)(ii), to describe the Registrant's Conflict of Interest and Code of Ethics policies (if the Registrant had previously adopted a Code of Ethics).

2. Regulation 3.3(e)(2)—Assessment of the Effectiveness of the Policies and Procedures

Proposed § 3.3(e)(2) would eliminate the express mandate to identify and assess the effectiveness of each WPP for each regulatory requirement under the CEA and Commission regulations in the CCO Annual Report. The Commission received six comments regarding this proposed amendment. FIA/SIFMA, ISDA, NFA, and TD Ameritrade generally supported the change. Specifically, ISDA noted that the proposed revisions “would strike a proper balance between providing the Commission with meaningful analyses of firms' compliance programs and conserving the time and resources of both the Commission and firms.” 56 Similarly, NFA stated, “NFA believes it will improve the quality of the report by allowing firms to focus on providing meaningful summaries of their WPPs, together with a detailed discussion of the annual assessment and recommended improvements.” 57

56See ISDA comment letter.

57See NFA comment letter.

Better Markets opposed the proposed amendment and expressed its belief that the “detailed assessment of the policies and procedures, relative to each specific regulatory requirement, is a valuable exercise that brings rigor to the process.” 58 ACM explained that Registrants, using ACM's product, often obtain sub-certifications from subject matter experts within the firm for each applicable requirement. ACM sought clarification regarding whether the proposed amendment is intended to eliminate the requirement-by-requirement review.

58See Better Markets comment letter.

The Commission has considered the comments and is adopting amended § 3.3(e)(2) as proposed. As adopted, the rule requires the CCO Annual Report to contain, among other things, a description of the CCO's assessment of the effectiveness of the Registrant's WPPs relating to its business as an FCM, SD, or MSP. In response to Better Markets and ACM, the Commission affirms that the rule, as amended, does not require the CCO Annual Report to contain an assessment of the WPPs' effectiveness with respect to each applicable requirement under the Act and regulations. However, the CCO must still conduct an underlying assessment of the policies and procedures to meet the requirements of the rule. The Commission affirms that Registrants may still rely on the use of sub-certifications or any other methodology they have previously employed to conduct the assessment of their compliance programs pursuant to § 3.3(d) and (e).

In further response to Better Markets' concern that removing the requirement-by-requirement assessment from the CCO Annual Report would weaken the self-assessment process, the Commission notes that the final rule does not remove a CCO's duty to undertake the review. The Commission believes that a robust and meaningful self-assessment process is maintained through the affirmative CCO duties to ensure review of the WPPs and to describe the CCO's assessment in the CCO Annual Report. Furthermore, as described in the Proposal, the Commission believes that reducing the burden associated with preparing the CCO Annual Report will permit CCOs and Registrants to both improve their compliance assessment processes and allocate more time and resources to more critical areas within the firm.

3. Regulation 3.3(e)(4)—Resources Set Aside for Compliance

Proposed § 3.3(e)(4) would clarify that the discussion of resources only need address those resources set aside for compliance activities that relate to the Registrant's business as an FCM, SD, or MSP. The Commission received comments from FIA/SIFMA, NFA, and ISDA generally supporting the proposed amendment. ISDA suggested that the Commission rescind related guidance in the CCO Annual Report Advisory regarding quantification of resources and allow Registrants to provide a narrative assessment of the sufficiency of compliance resources.59 Similarly, FIA/SIFMA requested that the Commission state that Rule 3.3(e)(4) does not require specific numerical estimates.60

59See ISDA comment letter.

60See FIA/SIFMA comment letter.

The Commission is adopting amended § 3.3(e)(4) as proposed. Regarding the description of compliance resources, the Commission previously addressed the issues raised by ISDA, FIA, and SIFMA in the CCO Rules Adopting Release. At the outset, the Commission has recognized that a primary purpose of the CCO Annual Report is to provide “an efficient means to focus the registrant's board and senior management on areas requiring additional compliance resources.” 61 A detailed discussion of the current state of compliance resources, including as appropriate, quantitative information, forms an integral part of a CCO Annual Report that, as the Commission stated, “will help FCMs, SDs, MSPs and the Commission to assess whether the registrant has mechanisms in place to address adequately compliance problems that could lead to a failure of the registrant.” 62 In requiring a description of the compliance resources in the CCO Annual Report, but not prescribing the description's form or manner (which is left to the Registrant's reasonable discretion) the Commission is balancing the need for context and critical information, and the potential burdens on the CCO in performing the underlying resources identification and analysis.63

61See CCO Rules Adopting Release, 77 FR at 20190.

62Id. at 20193.

63Id. at 20164.

The description of resources required by § 3.3(e)(4) is intended to inform the Registrant and the Commission as to the sufficiency of resources dedicated to compliance. Moreover, by requiring inclusion in the CCO Annual Report, the Commission recognizes that the usefulness of this information may lie in the trends and impacts of isolated events that can be observed over time regarding staffing levels, financial resources devoted to compliance, or the addition or subtraction of operational or technological resources. Some of the categories of resources CCOs are required to describe under § 3.3(e)(4) are, by their nature, quantitative (e.g., number of compliance personnel and budgetary information). However, the Commission also recognizes that, depending on a Registrant's structure and the nature of its business, a quantitative description may include approximations and estimates. It is the Commission's view that, in complying with § 3.3(e)(4), each Registrant should focus on whether its CCO Annual Report is effectively providing its senior leadership and the Commission with the ability to reasonably assess the state of the Registrant's compliance resources, irrespective of how it expresses the quantitative information.

D. Regulation 3.3(f)—Furnishing the CCO Annual Report and Related Matters

In view of the comments received on proposed § 3.3(f) and related matters, the Commission is making a number of changes described below. As a general matter, to provide the reader greater clarity, the Commission is adding descriptive paragraph headings to § 3.3(f)(1) through (6) for the final rule.

1. Regulation 3.3(f)(1)—Furnishing the CCO Annual Report

Proposed § 3.3(f)(1) would harmonize the requirements under the SEC and CFTC CCO Rules to require that the CCO Annual Report be furnished to all members of the board of directors, senior officer, and audit committee (or equivalent body) prior to being furnished to the Commission.

The Commission received three comments addressing the proposed amendment. Better Markets supported the proposed amendment as a means to strengthen the CCO framework. ISDA and FIA/SIFMA opposed the amendment and asserted that it is burdensome and unnecessary in light of the variability among Registrants. Specifically, ISDA and FIA/SIFMA commented that the proposed amendment would add burdens and costs given that the audit committees and boards of directors do not necessarily meet prior to the deadline to file the CCO Annual Report with the Commission.64 FIA/SIFMA also contended that harmonization with the SEC is not appropriate for this rule because there is greater variety of corporate forms and organizational structures among FCMs, SDs, and MSPs than SEC-regulated entities and the change may raise questions for those Registrants that do not have a board of directors or audit committee. Additionally, FIA/SIFMA asserted the board of directors of an SD that is part of a large, diversified commercial bank may already have full meeting agendas that do not warrant the addition of another board obligation. Alternatively, ISDA and FIA/SIFMA commented that if the Commission decided to adopt the proposed amendment, it should make appropriate modifications to accommodate existing board and audit committee meeting schedules. FIA/SIFMA also sought further clarification that the rule would not require a Registrant to establish a board of directors or audit committee, and that it could be satisfied through submission to certain other equivalent personnel.

64See ISDA and FIA/SIFMA comment letters.

After considering commenters' concerns, the Commission has determined to retain the current approach in § 3.3(f)(1) to require the CCO to provide the annual report to the board of directors or the senior officer prior to furnishing it to the Commission.65 The Commission, however, is also adopting a modified version of proposed § 3.3(f)(1) with respect to furnishing the CCO Annual Report to the audit committee (or equivalent body). In response to comments, § 3.3(f)(1)(ii), as adopted, requires that the CCO Annual Report must be furnished to the audit committee (or equivalent body), if the Registrant has such a committee. In addition, if the Registrant has an audit committee (or equivalent body), then the CCO Annual Report must be furnished to that committee not later than its next scheduled meeting after the date on which the CCO Annual Report is furnished to the Commission, but in no event more than 90 days after the Registrant's CCO Annual Report is furnished to the Commission. The Commission is adding the 90 day time frame to ensure that the audit committee receives the report in a timely manner in furtherance of this provision, but without causing unnecessary disruption to its operation.

65 A conforming change was made to § 3.3(f)(1)(iii) regarding making and maintaining a record of furnishing the report to the board of directors or the senior officer, and the audit committee.

The Commission believes that a flexible approach to the timing of furnishing the CCO Annual Report to the audit committee (or equivalent body) addresses commenters' concerns about meeting schedules and the CCO Annual Report submission deadline and better serves the underlying purpose of furnishing the report to the appropriate representatives of senior management at a time that allows for appropriate review by them. The Commission further believes that although the rule as adopted is not identical to the SEC's approach, the two approaches both preserve the goal of ensuring that management with overall responsibility for governance and internal controls is informed of the Registrant's state of compliance in a timely manner while recognizing the inherent differences between CFTC and SEC Registrants. The SEC's CCO rules apply to security-based swap dealers and major security-based swap participants, which are likely to consist of a smaller number of large financial entities or affiliates thereof, most of which are likely required by regulation to have audit committees.66 By contrast, the CFTC's CCO Rules apply to SDs that range from large financial enterprises to regional banks to commodity dealers to limited purpose affiliates, as well as FCMs. In light of this greater variety of firms subject to the CFTC CCO Rules, the Commission believes a more flexible approach is appropriate.

66See SEC Adopting Release, 81 FR at 30105 (estimating that approximately 55 entities might register as security-based swap dealers or major security-based swap participants).

Similarly, in response to FIA/SIFMA's comment that some Registrants may not have a board of directors or audit committee, the Commission acknowledges that some types of entities that are Registrants are not required to have such bodies, particularly audit committees, and therefor may not have established such a body. The Commission affirms that the rule was not intended to require Registrants to establish either type of body. Accordingly, the final rule text provides that furnishment to the audit committee or equivalent body is required only if such a committee or body has been established. If not, compliance with § 3.3(f)(1) may be met by furnishing the CCO Annual Report to the senior officer or board members only, as applicable.

2. Regulation 3.3(f)(3)—Certification

In response to the Commission's request for comment on additional changes to further harmonize with the SEC regulations that correspond to § 3.3(f), the Commission received four comments regarding the CCO Annual Report certification language in § 3.3(f)(3). Citing the Commission's stated goal of harmonizing § 3.3 with SEC rule 15Fk-1(c)(2)(ii)(D) and concerns regarding potential excess CCO liability, NFA, FIA/SIFMA, and ISDA urged the Commission to include a materiality qualifier. FIA/SIFMA and ISDA recommended that the phrase “in all material respects” be added. TD Ameritrade requested that the Commission assess whether the “under the penalty of law” standard is the correct standard for CCOs.

The Commission is adopting § 3.3(f) as proposed with one change. The Commission is adding qualifying language, “in all material respects” to the requirement to certify that the information contained in the CCO Annual Report is accurate and complete. Consistent with the SEC's approach, this modification provides a reasonable standard and additional clarity regarding the obligations and potential liability of the certifying official. When the Commission adopted the CCO Rules in 2012, it was of the view that limiting the certification language with the qualification “to the best of his or her knowledge and reasonable belief” would address concerns of overbroad liability.67 The rule, the Commission reasoned, “would not impose liability for compliance matters that are beyond the certifying officer's knowledge and reasonable belief at the time of the certification.” 68 This language, however, as noted by FIA/SIFMA, ISDA, and TD Ameritrade, may not completely address concerns regarding immaterial inaccuracies or omissions in the CCO Annual Report, notwithstanding the certifying official's good faith efforts to exercise appropriate due diligence.

67 CCO Rules Adopting Release, 77 FR at 20163.

68Id.

As noted in the CCO Rules Adopting Release, the Commission appreciates that, for many Registrants, the breadth and complexity of the information contained in the CCO Annual Report inherently requires reliance on many individuals to gather the information for, and prepare, the report.69 The Commission understands that immaterial inaccuracies or omissions rarely undermine the compliance information contained in the CCO Annual Report. Accordingly, it is reasonable and appropriate to expect that the CCO or chief executive officer would, “to the best of his or her knowledge and reasonable belief” certify that “the information in in the annual report is accurate and complete in all material respects” (emphasis added).70

69Id. at 20162-3.

70 The Commission also notes that adding “in all material respects” to § 3.3(f)(3) is consistent with the related duty under § 3.3(f)(4) to promptly amend and recertify the CCO Annual Report if “material errors or omissions” in the report are identified (emphasis added).

3. Regulation 3.3(f)(6)—Incorporation by Reference and Treatment of Affiliated Registrants

FIA/SIFMA commented that, because affiliated SDs often share a common SD compliance program, much of the information in the CCO Annual Reports is the same. FIA/SIFMA therefore requested that the Commission permit flexibility in how reports from affiliated registrants address common matters.

The Commission believes that, as a procedural matter within the scope of this rulemaking, it is appropriate to provide the requested flexibility. Permitting the consolidation of all relevant information concerning Registrants that control, are controlled by, or are under common control with, other Registrants (“Affiliated Registrants”) into one cohesive report could lead to greater efficiency for those Registrants and improved regulatory oversight. In addition, the request is consistent with provisions in § 3.3(f)(6) permitting individual Registrants and Registrants that are registered in more than one capacity, e.g., as an SD and FCM (“Dual Registrants”), to incorporate by reference sections of a CCO Annual Report furnished to the Commission within the current or immediately preceding reporting period. Accordingly, the Commission is amending § 3.3(f)(6) to permit Affiliated Registrants to incorporate within their CCO Annual Reports information shared across related Registrants.

More broadly, the Commission believes that the annual compliance reporting requirement should not be subject to restrictive formatting requirements that do not serve the purpose of the reports. To the extent that the same information can be presented once for multiple reporting requirements (e.g., for a Dual Registrant or Affiliated Registrants) thereby creating efficiencies without undermining the purpose and utility of the CCO Annual Report, the Commission believes it is appropriate to permit the practice. In view of the foregoing, the Commission is reorganizing § 3.3(f)(6) into three subparagraphs to more clearly set forth the different scenarios in which Affiliated Registrants or Dual Registrants can present the same information used in multiple reports or file one combined report addressing multiple reporting requirements.

New subparagraph (i) incorporates without modification the current language in § 3.3(f)(6). Subparagraph (i) permits an individual Registrant to incorporate by reference sections in a CCO Annual Report that it furnished to the Commission within the current or immediately preceding reporting period.

Like § 3.3(f)(6) as originally adopted, new subparagraph (ii) permits Dual Registrants to cross-reference sections in CCO Annual Reports submitted on behalf of either of its registrations within the current or immediately preceding reporting period. To address ambiguity regarding whether incorporation by reference can be achieved through the annual preparation and submission of a single CCO Annual Report by a Dual Registrant, the Commission is adding clarifying language to § 3.3(f)(6)(ii). Under new § 3.3(f)(6)(ii), a Dual Registrant may submit a single CCO Annual Report covering the annual reporting requirements relevant to each registration category, provided that: (1) The requirements of § 3.3(e) are clearly addressed and identifiable as they apply to the Dual Registrant in each of its registration capacities; (2) to the extent a section of the CCO Annual Report addresses shared compliance programs, resources, or other elements related to compliance, there is a clear description of the commonality and delineation of any differences; and (3) the Registrant complies with the requirements of § 3.3(f)(1) and (3) to certify and furnish the CCO Annual Report for each of its registrations. Regarding this last requirement, the Commission would expect the Dual Registrant to separately certify the CCO Annual Report with respect to each registration category, even if the same CCO or CEO serves as the certifying officer for each registration.

Subparagraph 3.3(f)(6)(iii) permits Affiliated Registrants to use incorporation by reference within their individually required CCO Annual Reports to address matters shared across related registered legal entities. The Commission believes that providing greater flexibility to Affiliated Registrants may provide a more efficient process in achieving the goals of the CCO Annual Report by leveraging current structures and expertise. Regarding the extent of incorporation by reference, consistent with the Commission's view that a flexible approach as to form is warranted, the Commission is not prescribing a strict requirement. For example, Affiliated Registrants could submit two separate reports, one of which incorporates by reference listed sections of the other. As another example, Affiliated Registrants could create a master report covering multiple affiliates in a manner similar to that described above for Dual Registrants in which information common to the affiliates is provided once in the report and identified as such and then other sections or appendices provide information specific to each affiliate separately. To the extent Affiliated Registrants choose to combine the contents of their individual CCO Annual Reports, the Commission would require the CCO or CEO for each Registrant to certify the applicable contents of the report consistent with § 3.3(f)(3).

The Commission expects that CCOs of Affiliated Registrants who share common compliance program elements be actively engaged in evaluating, assessing, and advising senior management with regard to those elements within their respective duties to a particular Registrant. Accordingly, how a CCO determines to address such common compliance program elements should not undermine the content or representations made in the CCO Annual Report so long as the references are clear and the information is fully accessible to senior management and the Commission.

E. Other Comments 1. Volcker Rule

The Commission received two comments regarding the compliance requirements of subpart D of part 75 of the Commission's regulations and their relation to § 3.3. Specifically, FIA/SIFMA requested that the Commission revisit the footnote in the part 75 adopting release that includes the compliance requirements under subpart D of part 75 among the regulations covered by § 3.3(d) and (e).71 Similarly, ISDA requested that the Commission remove the requirement for an applicable FCM or SD to address Volcker compliance program requirements in its CCO Annual Report.

71See Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds, 79 FR 5808, 6020 n. 2521 (Jan. 31, 2014).

At this time, the Commission is declining to address the Volcker Rule compliance program requirements issue, as it was not considered in the Proposal. However, the Commission notes that the issue that commenters are raising requires serious consideration, and it may address the issue in future guidance or rulemakings.

2. Substituted Compliance

The Commission received three comments regarding the applicability of the Proposal to its outstanding comparability determinations for non-U.S. SDs and MSPs. ISDA, the JBA, and Allen & Overy requested clarification from the Commission that the proposed amendments will not have any impact on the current substituted compliance determinations that pertain to § 3.3. The Commission confirms that any existing substituted compliance determinations with respect to § 3.3 are not affected by this rulemaking.

IV. Related Matters A. Regulatory Flexibility Act

The Regulatory Flexibility Act (“RFA”) 72 requires that agencies consider whether a proposed rule will have a significant economic impact on a substantial number of small entities and, if so, provide a regulatory flexibility analysis of the impact. As noted in the Proposal, the regulations adopted herein would affect FCMs, SDs, and MSPs that are required to be registered with the Commission. The Commission has previously determined that FCMs, SDs, and MSPs are not small entities for purposes of the RFA. The Commission received no comments on the Proposal's RFA discussion. Accordingly, the Chairman, on behalf of the Commission, certifies, pursuant to 5 U.S.C. 605(b), that these regulations will not have a significant economic impact on a substantial number of small entities.

72 5 U.S.C. 601 et seq.

B. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (“PRA”) 73 provides that a federal agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number issued by the Office of Management and Budget (“OMB”). As discussed in the Proposal, the final rules contain a collection of information for which the Commission has previously received a control number from OMB. The title for this collection of information is OMB control number 3038-0080—Annual Report for Chief Compliance Officer of Registrants. As a general matter, the rules, as adopted: (1) Define the term “senior officer”; (2) clarify the scope of the CCO duties and the content requirements of the CCO Annual Report; (3) add the Registrant's audit committee as a party that must receive the CCO Annual Report; (4) add a materiality qualifier to the CCO Annual Report certification language; and (5) provide procedural instruction for Dual and Affiliated Registrants in the preparation and submission of CCO Annual Reports that address common information across the same or related legal entities. As discussed in the Proposal and herein, the Commission believes that these regulations, as adopted, will not impose any new information collection requirements that require approval of OMB under the PRA. As such, the final rules do not impose any new burden or any new information collection requirements in addition to those that already exist in connection with the preparation and delivery of the CCO Annual Report pursuant to the Commission's regulations.

73 44 U.S.C. 3501 et seq.

C. Cost-Benefit Considerations 1. General Considerations

Section 15(a) of the CEA requires the Commission to consider the costs and benefits of its actions before promulgating a regulation under the CEA or issuing certain orders. Section 15(a) further specifies that the costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations. The Commission considers the costs and benefits resulting from its discretionary determinations with respect to the section 15(a) factors relative to the status quo baseline—that is existing § 3.3—and how various regulated entities comply with existing § 3.3 today.

The Commission notes that the consideration of costs and benefits below is based on the understanding that the markets function internationally, with many transactions involving U.S. firms taking place across international boundaries; with some Commission registrants being organized outside of the United States; with leading industry members typically conducting operations both within and outside the United States; and with industry members commonly following substantially similar business practices wherever located. While the Commission does not specifically refer to matters of location, the below discussion of costs and benefits refers to the effects of the final rule on all activity subject to the final regulation, whether by virtue of the activity's physical location in the United States or by virtue of the activity's connection with or effect on U.S. commerce under CEA section 2(i).74 In particular, the Commission notes that some registrants subject to § 3.3 are located outside of the United States.

74 7 U.S.C. 2(i).

The Commission is adopting amendments to the CCO Rules that: (1) Define the term “senior officer”; (2) clarify the scope of the CCO duties and the content requirements of the CCO Annual Report; (3) add the Registrant's audit committee as a party that must receive the CCO Annual Report; (4) add a materiality qualifier to the CCO Annual Report certification language; and (5) clarify and permit additional procedural methods for Dual and Affiliated Registrants in the preparation and submission of CCO Annual Reports that address common information across the same or related legal entities.

The Proposal requested public comment on the costs and benefits of the proposed regulations, and specifically invited comments on: (1) The extent to which the proposed amendments reduce burdens and costs for Registrants, if at all; (2) whether any of the proposed amendments create any additional burdens or costs for Registrants; (3) whether the nature of, and the extent to which, costs associated with the CCO duties described in § 3.3(d) could change as a result of the adoption of the Proposal, including monetary estimates; (4) what, if any, transition or ongoing costs or savings would result from the adoption of the proposed amendments; (5) whether the proposed amendments to the CCO Annual Report's submission requirements in § 3.3(f)(1) would cause undue burden; and (6) the Commission's preliminary consideration of the costs and benefits associated with the proposed amendments.

Several commenters indirectly addressed the qualitative costs and benefits of the Proposal; however, none included quantitative data or other information in support of a measurable analysis. As such, the Commission is unable to quantify reliably the costs and benefits of this rulemaking. Instead, the Commission gives a qualitative discussion.

As described in the sections above, in support of their comments, several commenters proposed alternative rule text and suggested the Commission provide additional clarification or guidance. In response to certain comments, the Commission adopted alternatives—particularly with respect to the furnishing and certification requirements of the CCO Annual Report—that the Commission believes will further reduce costs and burdens to Registrants while still providing the Commission with the information it needs to monitor the state of compliance by Registrants.

Informed by commenters, the discussion below considers the rule's costs and benefits generally and in light of the five factors specified in section 15(a) of the CEA.75

75 The final rules add a definition of “senior officer” to § 3.1. As stated in the Proposal, the Commission believes this addition in and of itself had no impact for purposes of determining the costs and benefits of the proposal. Nevertheless, the Commission sought public comment on whether the definition of “senior officer” has any cost and benefit considerations. The Commission received no comments on any cost and benefit considerations of the proposed definition, and, therefore, the analysis of the costs and benefits of the final rules is restricted to the amendments to § 3.3.

2. Regulation 3.3(d)—Chief Compliance Officer Duties

As discussed above, the Commission amended § 3.3(d) to clarify certain CCO duties. Specifically, the Commission added language to § 3.3(d)(1) to clarify that the CCO's duty with respect to administering policies and procedures is specific to the Registrant's business as an FCM, SD, or MSP, as applicable. As amended, § 3.3(d)(2) incorporates an implied reasonableness standard regarding the duty to resolve conflicts of interest and limits the duty to material conflicts that relate to the Registrant's business as an FCM, SD, or MSP. The Commission amended § 3.3(d)(4) to include the remediation of matters identified “through any means” by the CCO, including the specific discovery methods listed in § 3.3(d)(4). Lastly, the Commission amended § 3.3(d)(4) and (5) to remove the requirement in each provision that the CCO consult with the board of directors or senior officer in connection with resolving noncompliance issues and to clarify that the CCO's duty is to take “reasonable steps to ensure that the registrant” establishes policies and procedures for the remediation and resolution by management of noncompliance issues.

The Commission did not receive any specific comments regarding whether any costs associated with CCO duties would change as a result of the amendments to § 3.3(d). Better Markets opposed several of the proposed amendments to § 3.3(d) that it viewed as “likely to weaken the CCO regime.” 76 The Commission considered Better Markets views and does not believe that the final rules will reduce CCO accountability or marginalize the CCO role. Because the amendments to § 3.3(d) provide greater specificity regarding the role of the CCO and the scope of the CCO's duties while further harmonizing with parallel SEC rules, the Commission believes that the final rule does not impose any additional costs to Registrants, market participants, the markets, or the general public.

76 Better Markets comment letter.

The Commission expects the greater clarity provided in the amended rule will reduce burdens on CCOs and improve overall compliance by applying a reasonableness standard to CCO responsibilities rather than deterring effective CCO activities due to concerns of uncertain liability. This greater clarity should also encourage a greater willingness of potential CCOs to vie for and take positions with Registrants. As noted by one commenter, clarifying the CCO's role within a Registrant's overall organization fosters accountability for senior business management and supervisors, and reduces obstacles in attracting and retaining highly qualified professionals to serve as CCOs.77 Additionally, by further harmonizing the CFTC's and SEC's CCO duties, CCOs of dual SEC-CFTC registrants should be able to fulfill their duties more efficiently and cost effectively.

77See FIA/SIFMA comment letter.

3. Regulation 3.3(e)—Annual Report

In adopting amendments to § 3.3(e), the Commission eliminated the requirement to address “each” applicable CFTC regulatory requirement to which a Registrant is subject in the assessment of the WPPs, since the CCO must still conduct an underlying assessment of the effectiveness of the policies and procedures to meet the requirements of the rule. The Commission further removed the requirement to identify each WPP with respect to each applicable requirement, given that the WPPs are already required to be described in § 3.3(e)(1). Lastly, the Commission clarified that the scope of the resources devoted to compliance that need to be described under § 3.3(e)(4) should be limited to a discussion of resources for the specific activities for which the Registrant is registered.

The comments received for these proposed amendments were generally supportive. For example, one commenter stated that “this Proposal will increase efficiencies by streamlining the obligations for market participants that are regulated by both the CFTC and SEC and eliminate unnecessary duplicative policies related to the CCO Annual Report.” 78 One commenter stated that the removal of the requirement-by-requirement assessment from the rule will “allow for more effective conversations to occur between its business partners and the Compliance Department, creating for a more holistic assessment of the Firm's compliance.” 79 Similarly, another commenter highlighted the benefit to overall compliance of focusing the CCO and compliance personnel on WPPs holistically.80 Only one commenter expressed a concern that the proposed changes equated to a weakening of the process.81

78See NGSA comment letter.

79See TD Ameritrade comment letter. See also NFA comment letter.

80See FIA/SIFMA comment letter.

81See Better Markets comment letter.

As discussed in the Proposal, in implementing § 3.3(e), the Commission received consistent feedback from Registrants that the exercise of documenting their assessment on a requirement-by-requirement basis was creating a significant economic burden in time and resources. Eliminating the requirement-by-requirement assessment is intended to reduce the burdens on Registrants of producing the CCO Annual Report while maintaining its primary purpose. It is the Commission's view, supported by commenters, that by reducing the burden associated with this aspect of the CCO Annual Report, CCO and other compliance resources may be better focused on other compliance functions. As discussed in section II.C.2, the final rule does not remove or lessen the CCO's duties to, among other things, ensure the Registrant is reviewing and assessing the continued soundness of its WPPs. In addition, the amendments harmonize certain CFTC and SEC CCO Annual Report content requirements in an effort to reduce the costs to dual registrants of complying with two regulatory regimes. The Commission believes that the final rule also provides relief for Registrants from resource and time pressures in preparing their CCO Annual Reports.

4. Regulation 3.3(f)—Furnishing the Annual Report and Related Matters

The Commission amended § 3.3(f)(1) to require the CCO to provide the CCO Annual Report to the audit committee or a functionally equivalent body not later than the committee's next scheduled meeting, but in no event more than 90 days following the furnishing of the report to the Commission. The Commission also amended the CCO Annual Report's certification requirement by adding a materiality qualifier to the certification language in § 3.3(f)(3). Lastly, the Commission amended § 3.3(f)(6) to provide procedures for Dual and Affiliated Registrants in the preparation and submission of CCO Annual Reports that address common information across the same or related legal entities.

As discussed above, the Commission received comments from ISDA and FIA/SIFMA asserting that the proposal requiring the senior officer, board of directors, and audit committee to receive the CCO Annual Report would increase operational and regulatory burdens. FIA/SIFMA noted that requiring the boards of directors of SDs that are large, diversified commercial banks to receive the CCO Annual Report would exacerbate current problems associated with the volume of review they must already undertake, further reducing the amount of time they should be allocating to overseeing enterprise risk and strategy. Both commenters believed that the Proposal would add costs, complexities, and possibly, conflicts for Registrants because the deadline to submit the CCO Annual Report to the Commission may not align with board of directors and audit committee meetings, impeding their ability to ensure proper review.

Advocates of adding a materiality qualifier to the CCO Annual Report certification language identified several benefits, including reducing burdens by further harmonizing the Commission's rule with the SEC's parallel rule, providing a measure of clarity to CCOs and potential CCOs regarding their own personal liability, and reducing deterrence of highly qualified people from taking or staying in the CCO role.82 In support of its request for greater flexibility in the preparation of CCO Annual Reports by Affiliated Registrants, FIA/SIFMA noted the benefits of streamlining the overall process.

82See FIA/SIFMA, ISDA, and NFA comment letters.

In response to concerns regarding the proposed CCO Annual Report submission requirements, the Commission has modified § 3.3(f)(1) to accommodate the practicality of audit committee and board meeting schedules. Because the final rule maintains the requirement that either the senior officer or the board of directors receive the CCO Annual Report prior to its submission to the Commission, Registrants should not have to change existing internal document submission processes for board meetings to comply. As adopted, the final rule adds the audit committee (or equivalent body) as a recipient of the report, but allows for the report to be furnished to the audit committee not later than the next scheduled meeting, but in no event more than 90 days after submission of the report to the Commission is required. Since the rule does not set a timeline for the review of the CCO Annual Report by any of its internal recipients—leaving such matters to the discretion of each Registrant, the Commission believes that any additional costs arising out of the requirement to submit the report to the audit committee should be minimal. The Commission does not believe the final amendments to § 3.3(f)(1), (3) and (6) impose any new costs or burdens since they do not require Registrants to affirmatively undertake new duties or requirements.

As described above and in the Proposal, the Commission believes that the amendments to § 3.3(f) will ensure that the CCO's findings and recommendations will be distributed to the groups within each Registrant with responsibility for governance and internal controls. Further, the Commission believes the amendments provide greater flexibility and opportunity for Dual and Affiliated Registrants to streamline their CCO Annual Report preparation processes, which may result in a less costly CCO Annual Report.

D. Section 15(a) Factors

As noted above, section 15(a) of the CEA specifies that the costs and benefits shall be evaluated in light of five broad areas of market and public concern: (1) Protection of market participants and the public; (2) efficiency, competitiveness, and financial integrity of futures markets; (3) price discovery; (4) sound risk management practices; and (5) other public interest considerations.

1. Protection of Market Participants and the Public

The final rules will continue to protect market participants and the public because they do not fundamentally alter the CCO duties or the annual compliance reporting requirements of § 3.3. While the amendment removing the requirement-by-requirement reporting may reduce the extent of reporting detail, the Commission believes that change will allow the CCO to focus more directly on identifying and describing in the CCO Annual Report material compliance issues and other related matters deserving of greater attention. Accordingly, the Commission believes that the reduction in content requirements will not affect the protection of market participants and the public.

2. Efficiency, Competitiveness, and Financial Integrity of Markets

The Commission believes that the amended CCO Rules will not negatively impact market efficiency, competitiveness, or integrity because each CCO Annual Report addresses internal compliance programs of each Registrant and are not publicly available. The amendments affecting CCO duties only clarify those duties and do not affect the performance of derivatives markets.

3. Price Discovery

The Commission did not identify a specific effect on price discovery as a result of the Proposal because the Proposal did not address any pricing issues. The Commission did not receive any comments on this issue. Thus, the Commission continues to believe that this rulemaking will not have an impact on price discovery.

4. Sound Risk Management Practices

The Commission believes that the final amendments to the CCO duties and CCO Annual Report requirements will not have a meaningful effect on Registrants' risk management practices. The final rules do not directly impact a Registrant's risk management practices because they clarify the scope of the CCO's duties and CCO Annual Report contents, and do not require changes to a Registrant's risk management program.83 Furthermore, the final amendments to the CCO Annual Report content requirements do not affect the Registrant's obligation to address material noncompliance issues relating to its risk management program in the CCO Annual Report. The Commission believes that including the audit committee and either the board of directors or the senior officer as recipients of the CCO Annual Report may benefit Registrants' overall risk management practices by ensuring that those with overall responsibility for governance and internal controls are informed of the report contents. Finally, the Commission does not believe that the addition of the materiality qualifier to the CCO Annual Report certification language, or the additional procedural mechanisms for addressing common matter across Dual and Affiliated Registrants impacts Registrants' risk management practices, as they do not impact the CCO Annual Report's content and underlying assessment.

83See, e.g., 17 CFR 23.600.

5. Other Public Interest Considerations

The Commission has not identified any other public interest considerations for this rulemaking.

E. Antitrust Considerations

Section 15(b) of the Act requires the Commission to take into consideration the public interest to be protected by the antitrust laws and endeavor to take the least anticompetitive means of achieving the purposes of the Act, in issuing any order or adopting any Commission rule or regulation (including any exemption under section 4(c) or 4c(b)), or in requiring or approving any bylaw, rule, or regulation of a contract market or registered futures association established pursuant to section 17 of the Act.84 The Commission believes that the public interest to be protected by the antitrust laws is generally to protect competition.

84 7 U.S.C. 19(b).

The Commission has reflected on the final rule to determine whether it is anticompetitive and has identified no anticompetitive effects. Because the Commission has determined that the final rulemaking has no anticompetitive effects, the Commission has not identified any less anticompetitive means of achieving the purposes of the Act.

List of Subjects in 17 CFR Part 3

Administrative practice and procedure, Chief compliance officer, Commodity futures, Futures commission merchants, Major swap participants, Registration, Swap dealers, Reporting and recordkeeping requirements.

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

PART 3—REGISTRATION 1. The authority citation for part 3 continues to read as follows: Authority:

5 U.S.C. 552, 552b; 7 U.S.C. 1a, 2, 6a, 6b, 6b-1, 6c, 6d, 6e, 6f, 6g, 6h, 6i, 6k, 6m, 6n, 6o, 6p, 6s, 8, 9, 9a, 12, 12a, 13b, 13c, 16a, 18, 19, 21, and 23.

2. In § 3.1, add paragraph (j) to read as follows:
§ 3.1 Definitions.

(j) Senior officer. Senior officer means the chief executive officer or other equivalent officer of a registrant.

3. In § 3.3, revise paragraphs (d), (e), and (f) to read as follows:
§ 3.3 Chief compliance officer.

(d) Chief compliance officer duties. The chief compliance officer's duties shall include, but are not limited to:

(1) Administering each of the registrant's policies and procedures relating to its business as a futures commission merchant, swap dealer, or major swap participant that are required to be established pursuant to the Act and Commission regulations;

(2) In consultation with the board of directors or the senior officer, taking reasonable steps to resolve material conflicts of interest relating to the registrant's business as a futures commission merchant, swap dealer, or major swap participant that may arise;

(3) Taking reasonable steps to ensure compliance with the Act and Commission regulations relating to the registrant's business as a futures commission merchant, swap dealer or major swap participant;

(4) Taking reasonable steps to ensure the registrant establishes, maintains, and reviews written policies and procedures reasonably designed to remediate noncompliance issues identified by the chief compliance officer through any means, including any compliance office review, look-back, internal or external audit finding, self-reporting to the Commission and other appropriate authorities, or complaint that can be validated;

(5) Taking reasonable steps to ensure the registrant establishes written procedures reasonably designed for the handling, management response, remediation, retesting, and resolution of noncompliance issues; and

(6) Preparing and signing the annual report required under paragraphs (e) and (f) of this section.

(e) Annual report. The chief compliance officer annually shall prepare a written report that covers the most recently completed fiscal year of the futures commission merchant, swap dealer, or major swap participant. The annual report shall, at a minimum, contain a description of:

(1) The written policies and procedures of the futures commission merchant, swap dealer, or major swap participant described in paragraph (d) of this section, including the code of ethics and conflicts of interest policies;

(2) The futures commission merchant's, swap dealer's, or major swap participant's assessment of the effectiveness of its policies and procedures relating to its business as a futures commission merchant, swap dealer or major swap participant;

(3) Areas for improvement, and recommended potential or prospective changes or improvements to its compliance program and resources devoted to compliance;

(4) The financial, managerial, operational, and staffing resources set aside for compliance with respect to the Act and Commission regulations relating to its business as a futures commission merchant, swap dealer or major swap participant, including any material deficiencies in such resources;

(5) Any material noncompliance issues identified and the corresponding action taken; and

(6) Any material changes to compliance policies and procedures during the coverage period for the report.

(f) Furnishing the annual report and related matters—(1) Furnishing the annual report. (i) Prior to furnishing the annual report to the Commission, the chief compliance officer shall provide the annual report to the board of directors or senior officer of the futures commission merchant, swap dealer, or major swap participant for its review.

(ii) If the futures commission merchant, swap dealer, or major swap participant has established an audit committee (or an equivalent body), then the chief compliance officer shall furnish the annual report to the audit committee (or equivalent body) not later than its next scheduled meeting after the annual report is furnished to the Commission, but in no event more than 90 days after the applicable date specified in paragraph (f)(2) of this section for furnishing the annual report to the Commission.

(iii) A written record of transmittal of the annual report to the board of directors or the senior officer, and audit committee, if applicable, shall be made and maintained in accordance with § 1.31 of this chapter.

(2) Furnishing the annual report to the Commission. (i) Except as provided in paragraph (f)(2)(ii) of this section, the annual report shall be furnished electronically to the Commission not more than 90 days after the end of the fiscal year of the futures commission merchant, swap dealer, or major swap participant.

(ii) The annual report of a swap dealer or major swap participant that is eligible to comply with a substituted compliance regime for paragraph (e) of this section pursuant to a comparability determination of the Commission may be furnished to the Commission electronically up to 15 days after the date on which the comparable annual report must be completed under the requirements of the applicable substituted compliance regime. If the substituted compliance regime does not specify a date by which the comparable annual report must be completed, then the annual report shall be furnished to the Commission by the date specified in paragraph (f)(2)(i) of this section.

(3) Certification. The report shall include a certification by the chief compliance officer or chief executive officer of the registrant that, to the best of his or her knowledge and reasonable belief, and under penalty of law, the information contained in the annual report is accurate and complete in all material respects.

(4) Amending the annual report. The futures commission merchant, swap dealer, or major swap participant shall promptly furnish an amended annual report if material errors or omissions in the report are identified. An amendment must contain the certification required under paragraph (f)(3) of this section.

(5) Extensions. A futures commission merchant, swap dealer, or major swap participant may request from the Commission an extension of time to furnish its annual report, provided the registrant's failure to timely furnish the report could not be eliminated by the registrant without unreasonable effort or expense. Extensions of the deadline will be granted at the discretion of the Commission.

(6) Incorporation by reference and related registrants—(i) Prior reports. A futures commission merchant, swap dealer, or major swap participant may incorporate by reference sections of an annual report that has been furnished within the current or immediately preceding reporting period to the Commission.

(ii) Dual registrants. If a futures commission merchant, swap dealer, or major swap participant is registered in more than one capacity with the Commission, an annual report submitted as one registrant may incorporate by reference sections in the annual report furnished within the current or immediately preceding reporting period as the other registrant. A dual registrant may submit one annual report that addresses the requirements set forth in paragraphs (e), (f)(1) and (f)(3) of this section with respect to each registration capacity.

(iii) Affiliated registrants. If a futures commission merchant, swap dealer, or major swap participant controls, is controlled by, or is under common control with, one or more other futures commission merchants, swap dealers, or major swap participants, and each of the affiliated registrants must submit an annual report, an affiliated registrant may incorporate by reference in its annual report sections from an annual report prepared by any of its affiliated registrants furnished within the current or immediately preceding reporting period. Affiliated registrants may submit one annual report that addresses the requirements set forth in paragraphs (e), (f)(1) and (f)(3) of this section with respect to each affiliated registrant.

4. Add appendix C to part 3 to read as follows: Appendix C to Part 3—Guidance on the Application of § 3.3(e), Chief Compliance Officer Annual Report Form and Content A. Description of the Registrant's WPPs (§ 3.3(e)(1))

In acknowledgment of the large number of WPPs that a Registrant implements to comply with CFTC regulations, the Commission understands that for purposes of the CCO Annual Report, specific WPP descriptions may be appropriately brief while still identifying the basic purpose of the policy or procedure and how the policy or procedure operates to achieve that purpose. The CCO Annual Report should include a summary overview that describes the general forms and types of WPPs the Registrant has, such as a compliance manual specific to the Registrant, global corporate manuals or policies, and/or business-unit-specific WPPs that support the applicable regulatory requirements. This summary overview would provide a narrative of the Registrant's system or program of WPPs, how they work as a whole, and how the Registrant generally puts the WPPs into practice as part of its compliance activities. With respect to the COI policy, it is the Commission's view that the CCO should describe the COI policy specific to the Registrant, addressing the specific requirements of § 1.71 or § 23.605 of this chapter, as applicable.

B. Assessment of the Effectiveness of the Policies and Procedures (§ 3.3(e)(2))

The Commission expects a CCO Annual Report to contain a comprehensive discussion of: the assessment process; and the results of the effectiveness assessment. The regulation does not dictate the form or manner for the effectiveness assessment. Rather, the Commission would expect each Registrant to follow a process and present the resulting assessment in a form and manner that is appropriate for the size and complexity of the Registrant's applicable business activities and structure. While § 3.3(e)(2) no longer has a “requirement-by-requirement” standard, the CCO Annual Report should address all of the general areas of regulation applicable to the Registrant.

C. Areas for Improvement and Recommended Changes (§ 3.3(e)(3))

1. Section 3.3(e)(3) requires two components in the CCO Annual Report: an identification and discussion of each area that needs improvement; and a discussion of what changes are recommended to address each area needing improvement. In addressing these two elements, the CCO Annual Report should include, as applicable: A discussion of why the particular area needs improvement; a discussion of the proposed improvements and the time frame for their implementation; and a cross-reference to the regulation that a recommended change would address.

2. In general, identifying areas in need of improvement and recommending steps to effect those improvements should be a core function of compliance. Accordingly, a CCO Annual Report that makes no recommendations for changes or improvements to the compliance program may raise concerns about the adequacy of the compliance program review intended by the CCO Annual Report process. Moreover, there should be continuity from one reporting cycle to the next, such that where a previous CCO Annual Report discussed future changes or improvements that were being considered or planned, subsequent CCO Annual Reports should discuss the outcomes of the changes that were implemented during the most recent scope period, any monitoring or testing of those changes, whether any compliance issues arose from the changes and, if there were any issues, how those issues were handled. While this section may address improvements to the compliance program that have already been completed, the Commission believes that this section primarily should discuss recommended improvements in process and/or future plans to improve the Registrant's compliance program or resources devoted to compliance.

D. Resources Set Aside for Compliance (§ 3.3(e)(4))

1. The resources description required by § 3.3(e)(4) should be appropriate for assisting the Registrant's senior management and the CFTC in assessing whether sufficient resources are dedicated to compliance. Accordingly, the description should include the following types of information: the budget allocated to the compliance department of the Registrant for compliance with the CEA and Commission regulations; full-time compliance staffing levels for such compliance activities; partially allocated staff counts (if applicable), with information on how much of such employees' time is devoted to the Registrant's compliance matters that are subject to CFTC oversight; an explanation of managerial resources (the explanation should clearly identify the division between staffing resources and management resources devoted to compliance); general infrastructure information (e.g., computers, compliance-oriented software, technology infrastructure, etc.); and if applicable, a description of the use of third party vendors or outsourcing for compliance activities. In most cases, to effectively inform the board of directors or senior officer and the Commission, the description should include quantifiable information for the financial, managerial, operational, and staffing resources allocated to compliance with the CEA and Commission regulations.

2. The Commission understands that a discussion of specific compliance budget allocations may not be as straightforward as described above depending on the size and complexity of the Registrant's compliance program and the extent to which the Registrant's compliance resources may be shared for other non-CFTC regulated business activities. The purpose of the CCO Annual Report requirement is to convey to senior management and the CFTC a clear understanding of the resources the Registrant has set aside for compliance with the CEA and Commission regulations. While some of the compliance resources used in a Registrant's CFTC compliance-related program may be used for compliance activities in other parts of a larger corporate enterprise, this sharing of resources does not negate the Registrant's obligation to discuss how the Registrant's compliance program is being resourced. For those instances where compliance resources are shared, it is recognized that the description of the shared resources may reasonably be more general in nature, providing approximations and estimates based on expected needs. However, the Commission expects that the CCO Annual Report will still address shared resources in as much detail as is necessary to convey the information needed to assess the overall compliance activities of the Registrant.

3. Section 3.3(e)(4) also requires that the CCO Annual Report include a discussion of any material deficiencies in compliance resources. If there have been reductions in the compliance program of the Registrant since the prior reporting period, for example, if there has been a reduction in compliance staff, a significant compliance budget decrease, or the Registrant initiated significant new business activities without a corresponding increase in compliance resources, the CCO Annual Report should include an explanation of why the compliance resources are not deficient in light of the changes. If there are no material deficiencies in the resources devoted to compliance, the Commission recommends that the CCO Annual Report contain an express statement to that effect so that the recipients of the report can see that the requirement was assessed.

E. Material Noncompliance Issues (§ 3.3(e)(5))

The CCO Annual Report should include an explanation of the standard the Registrant used to determine a non-compliance event's materiality. In addition, this section of the CCO Annual Report should contain a description of each material non-compliance issue identified either through self-assessment procedures conducted within the Registrant, or noted by any external entities which conducted a review of the Registrant (such as a designated self-regulatory organization). The description should also include the corresponding actions taken, described in reasonable detail, as well as specific references to the Commission regulation or regulations that are implicated by the non-compliance event. Specifically, the Commission recommends that the CCO Annual Report include a discussion of the Registrant's deliberations on a course of remediation, how the implementation of the remediation is being or was executed, any follow-up testing of the remediation, and any noteworthy results from such testing. Additionally, the Commission recommends that CCOs consider including an overview of how the CCO or compliance department handles and tracks non-compliance events in general.

F. Material Changes to WPPs (§ 3.3(e)(6))

When describing any material changes to the WPPs, a description of the standard of materiality used should be provided. This description will provide meaningful context for any reported changes to the WPPs.

Issued in Washington, DC, on August 21, 2018, by the Commission. Christopher Kirkpatrick, Secretary of the Commission. Note:

The following appendices will not appear in the Code of Federal Regulations.

Appendices to Chief Compliance Officer Duties and Annual Report Requirements for Futures Commission Merchants, Swap Dealers, and Major Swap Participants; Amendments—Commission Voting Summary and Chairman's Statement Appendix 1—Commission Voting Summary

On this matter, Chairman Giancarlo and Commissioners Quintenz and Behnam voted in the affirmative. No Commissioner voted in the negative.

Appendix 2—Statement of Chairman J. Christopher Giancarlo

As part of the CFTC's Project KISS efforts, this final rule will streamline and clarify a Chief Compliance Officer's (CCO) obligations, as well as harmonize certain provisions with the Securities and Exchange Commission's (SEC) rules. Clarifying the role and responsibilities of the CCO should enable greater accountability and improve overall compliance, as well as reduce burdens on CCOs and uncertainty for registrants. The rule continues to impose a duty on CCOs to resolve matters but within the practical limits of their position at the CFTC-registered entity. The rule also continues to impose a duty for the CCO to undertake an annual review but reduces the burdens associated with the review, which will allow the CCO to devote more time and resources to compliance activities at the registrant. In addition, further harmonizing definitions and CCO duties of dual CFTC-SEC registrants should improve efficiency and further reduce the burdens on CCOs.

I would like to thank CFTC staff for their efforts. I would also like to thank Commissioners Quintenz and Behnam for their support.

[FR Doc. 2018-18432 Filed 8-24-18; 8:45 am] BILLING CODE 6351-01-P
DEPARTMENT OF DEFENSE Department of the Army 32 CFR Part 508 [Docket ID: USA-2017-HQ-0010] RIN 0702-AA83 Competition With Civilian Bands AGENCY:

Department of the Army, DoD.

ACTION:

Final rule.

SUMMARY:

This final rule removes the Department of the Army's regulation concerning participation of Army bands on and off post. This part has been superseded by requirements which direct appropriate participation of U.S. military bands on and off post. This part conveys internal Army policy and procedures and is unnecessary. Therefore, this part should be removed from the CFR.

DATES:

This rule is effective on August 27, 2018.

FOR FURTHER INFORMATION CONTACT:

Jennifer Williams at 757-462-1060.

SUPPLEMENTARY INFORMATION:

Public comment on the removal of 32 CFR part 508 is not required because the regulation involves a matter relating to agency management and personnel, and because the regulation is a general statement of policy.

DoD internal guidance will continue to be published in Army Regulation 220-90, “Army Music,” available at https://armypubs.army.mil/ProductMaps/PubForm/AR.aspx.

This rule is not significant under Executive Order (E.O.) 12866, “Regulatory Planning and Review,” therefore, E.O. 13771, “Reducing Regulation and Controlling Regulatory Costs” does not apply.

List of Subjects in 32 CFR Part 508

Music, Utilization of Army bands.

PART 508—[REMOVED]

Accordingly, by the authority of 5 U.S.C. 301, 32 CFR part 508 is removed.

Brenda S. Bowen, Army Federal Register Liaison Officer.
[FR Doc. 2018-18480 Filed 8-24-18; 8:45 am] BILLING CODE 5001-03-P
DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 165 [Docket Number USCG-2018-0742] RIN 1625-AA00 Safety Zone; Upper Mississippi River, Mile Markers 751.2 to 751.8, Alma, WI AGENCY:

Coast Guard, DHS.

ACTION:

Temporary final rule.

SUMMARY:

The Coast Guard is establishing a temporary safety zone for certain navigable waters of the Upper Mississippi River. The safety zone is necessary to protect persons, vessels, and the marine environment from potential hazards created by a demolition project taking place on the bank of the Upper Mississippi River near Alma, WI. Entry of vessels or persons into this zone is prohibited unless specifically authorized by the Captain of the Port Sector Upper Mississippi River or a designated representative.

DATES:

This rule is effective from September 28, 2018, through October 15, 2018.

ADDRESSES:

To view documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov, type USCG-2018-0742 in the “SEARCH” box and click “SEARCH.” Click on Open Docket Folder on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT:

If you have questions on this rule, call or email Lieutenant Commander Christian Barger, Waterways Management Division, Sector Upper Mississippi River, U.S. Coast Guard; telephone 314-269-2560, email [email protected]

SUPPLEMENTARY INFORMATION:

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

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(3)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. It is impracticable because we must establish this safety zone by September 28, 2018, and we lack sufficient time to provide a reasonable comment period and then consider those comments before issuing the rule. The NPRM process would delay the establishment of the safety zone and compromise public safety.

III. Legal Authority and Need for Rule

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port Sector Upper Mississippi River (COTP) has determined that potential hazards associated with the equipment to be used in the demolition of a 700 foot tall chimney at the Dairyland Power Cooperative Station will be a safety concern for anyone on a six-tenths of a mile stretch of the Upper Mississippi River at the time the chimney is toppled. This rule is needed to protect persons, vessels, and the marine environment in the navigable waters within the safety zone before, during, and after the demolition.

IV. Discussion of the Rule

This rule establishes a temporary safety zone from September 28, 2018 through October 15, 2018. The safety zone will cover all navigable waters of the Upper Mississippi River between mile markers 751.2 and 751.8, adjacent to the eastern river bank, where the demolition of a 700-foot chimney will take place. The Coast Guard was informed that the demolition itself would take approximately 30 minutes on one day and that all debris should be contained and is not expected to enter the waterway. The period of enforcement of this safety zone will be two hours before, thirty minutes during, and thirty minutes after the demolition. The COTP or a designated representative will inform the public through Broadcast Notice to Mariners (BNM), Local Notices to Mariners (LNM), and/or Marine Safety Information Bulletins (MSIBs), or through other means of public notice, as appropriate, at least 3 hours in advance of the enforcement period. The duration of the zone is intended to protect persons, vessels, and the marine environment on these navigable waters during the chimney demolition.

No vessel or person will be permitted to enter the temporary safety zone without obtaining permission from the COTP or a designated representative. A designated representative is a commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to Sector Upper Mississippi River, U.S. Coast Guard. A designated representative may be a Patrol Commander (PATCOM). The PATCOM may be aboard either a Coast Guard or Coast Guard Auxiliary vessel. The Patrol Commander may be contacted on Channel 16 VHF-FM (156.8 MHz) by the call sign “PATCOM”. Vessels requiring entry into this safety zone must request permission from the COTP or a designated representative. They may be contacted on VHF-FM Channel 16 or by telephone at 314-269-2332. All persons and vessels permitted to enter this safety zone must transit at their slowest safe speed and comply with all lawful directions issued by the COTP or the designated representative. The COTP or a designated representative will inform the public of the enforcement times and dates for this safety zone through Broadcast Notices to Mariners (BNMs), Local Notices to Mariners (LNMs), and/or Safety Information Marine Broadcasts (SIMBs), as appropriate.

V. Regulatory Analyses

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

A. Regulatory Planning and Review

Executive Orders 13563 (“Improving Regulation and Regulatory Review”) and 12866 (“Regulatory Planning and Review”) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 13771 (“Reducing Regulation and Controlling Regulatory Costs”) directs agencies to reduce regulation and control regulatory costs and provides that “for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”

The Office of Management and Budget (OMB) has not designated this rule a “significant regulatory action,” under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. As this rule is not a significant regulatory action, this rule is exempt from the requirements of Executive Order 13771. See OMB's Memorandum “Guidance Implementing Executive Order 13771, Titled `Reducing Regulation and Controlling Regulatory Costs'” (April 5, 2017).

This regulatory action determination is based on the size, location, and duration of the safety zone. This safety zone impacts less than a one-mile stretch of the Upper Mississippi River for approximately three hours on one day. Moreover, the Coast Guard will issue a Safety Marine Information Broadcast (SMIB) via VHF-FM marine channel 16 about the zone and the rule would allow vessels to seek permission to enter the zone.

B. Impact on Small Entities

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

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

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

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

C. Collection of Information

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

D. Federalism and Indian Tribal Governments

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

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

E. Unfunded Mandates Reform Act

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

F. Environment

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

G. Protest Activities

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

List of Subjects in 33 CFR Part 165

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

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

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

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

2. Add § 165.T08-0724 to read as follows:
§ 165. T08-0742 Safety Zone; Mile Markers 751.2 to 751.8, Upper Mississippi River, Alma, WI.

(a) Location. The following area is a safety zone: All navigable waters of the Mississippi River between mile marker (MM) 751.2 and MM 751.8, Alma, WI.

(b) Effective period. This section will be enforced from September 28, 2018 through October 15, 2018.

(c) Enforcement period. This section will be enforced for three hours on one day, two hours prior to, thirty minutes during, and thirty minutes after the completion of demolition at the Dairyland Power Cooperative Station in Alma, WI. The Captain of the Port Sector Upper Mississippi River (COTP) or a designated representative will inform the public of the enforcement through Broadcast Notices to Mariners (BNMs), Local Notices to Mariners (LNMs) and/or Safety Marine Information Broadcasts (SMIBs) or other means of public notice at least three hours in advance of the enforcement of this safety zone.

(d) Regulations. (1) In accordance with the general regulations in § 165.23 of this part, persons and vessels are prohibited from entering the safety zone unless authorized by the COTP or a designated representative. A designated representative is a commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to units under the operational control of USCG Sector Upper Mississippi River. A designated representative may be a Patrol Commander (PATCOM). The PATCOM may be aboard either a Coast Guard or Coast Guard Auxiliary vessel. The Patrol Commander may be contacted on Channel 16 VHF-FM (156.8 MHz) by the call sign “PATCOM”.

(2) Persons or vessels desiring to enter into or pass through the zone must request permission from the COTP or a designated representative. They may be contacted on VHF-FM channel 16 or by telephone at 314-269-2332.

(3) If permission is granted, all persons and vessels shall comply with the instructions of the COTP or designated representative.

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

Dated: August 21, 2018. Stormer, Scott A., Captain, U.S. Coast Guard, Captain of the Port Sector Upper Mississippi River.
[FR Doc. 2018-18453 Filed 8-24-18; 8:45 am] BILLING CODE 9110-04-P
ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 9 and 721 [EPA-HQ-OPPT-2017-0560; FRL-9982-77] RIN 2070-AB27 Significant New Use Rules on Certain Chemical Substances AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Direct final rule.

SUMMARY:

EPA is promulgating significant new use rules (SNURs) under the Toxic Substances Control Act (TSCA) for 10 chemical substances which were the subject of premanufacture notices (PMNs). The chemical substances are subject to Orders issued by EPA pursuant to section 5(e) of TSCA. This action requires persons who intend to manufacture (defined by statute to include import) or process any of these 10 chemical substances for an activity that is designated as a significant new use by this rule to notify EPA at least 90 days before commencing that activity. The required notification initiates EPA's evaluation of the intended use within the applicable review period. Persons may not commence manufacture or processing for the significant new use until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.

DATES:

This rule is effective on October 26, 2018. For purposes of judicial review, this rule shall be promulgated at 1 p.m. (e.s.t.) on September 10, 2018.

Written adverse comments on one or more of these SNURs must be received on or before September 26, 2018 (see Unit VI. of the SUPPLEMENTARY INFORMATION). If EPA receives written adverse commentsts, on one or more of these SNURs before September 26, 2018, EPA will withdraw the relevant sections of this direct final rule before its effective date.

For additional information on related reporting requirement dates, see Units I.A., VI., and VII. of the SUPPLEMENTARY INFORMATION.

ADDRESSES:

Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2017-0560, by one of the following methods:

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

Mail: Document Control Office (7407M), Office of Pollution Prevention and Toxics (OPPT), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.

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

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

FOR FURTHER INFORMATION CONTACT:

For technical information contact: Kenneth Moss, Chemical Control Division (7405M), Office of Pollution Prevention and Toxics, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 564-9232; email address: [email protected]

For general information contact: The TSCA-Hotline, ABVI-Goodwill, 422 South Clinton Ave., Rochester, NY 14620; telephone number: (202) 554-1404; email address: [email protected]

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

You may be potentially affected by this action if you manufacture, process, or use the chemical substances contained in this rule. 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:

• Manufacturers or processors of one or more subject chemical substances (NAICS codes 325 and 324110), e.g., chemical manufacturing and petroleum refineries.

This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127 and 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and orders under TSCA. Importers of chemicals subject to these SNURs must certify their compliance with the SNUR requirements. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, any persons who export or intend to export a chemical substance that is the subject of this rule on or after September 26, 2018 are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) (see § 721.20), and must comply with the export notification requirements in 40 CFR part 707, subpart D.

B. What should I consider as I prepare my comments for EPA?

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.

II. Background A. What action is the Agency taking?

1. Direct Final Rule. EPA is promulgating these SNURs using direct final rule procedures. These SNURs will require persons to notify EPA at least 90 days before commencing the manufacture or processing of a chemical substance for any activity designated by these SNURs as a significant new use. Receipt of such notices obligates EPA to assess risks that may be associated with the significant new uses under the conditions of use and, if appropriate, to regulate the proposed uses before they occur.

2. Proposed Rule. In addition to this direct final rule, elsewhere in this issue of the Federal Register, EPA is issuing a notice of proposed rulemaking for this rule. If EPA receives no adverse comment, the Agency will not take further action on the proposed rule and the direct final rule will become effective as provided in this action. If EPA receives adverse comment on one or more of SNURs in this action by September 11, 2018 (see Unit VI. of the SUPPLEMENTARY INFORMATION), the Agency will publish in the Federal Register a timely withdrawal of the specific SNURs that the adverse comments pertain to, informing the public that the actions will not take effect. EPA would then address all adverse public comments in a response to comments document in a subsequent final rule, based on the proposed rule.

B. What is the Agency's authority for taking this action?

Section 5(a)(2) of TSCA (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the four bulleted TSCA section 5(a)(2) factors listed in Unit III. Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B) requires persons to submit a significant new use notice (SNUN) to EPA at least 90 days before they manufacture or process the chemical substance for that use (15 U.S.C. 2604(a)(1)(B)(i)). TSCA furthermore prohibits such manufacturing or processing from commencing until EPA has conducted a review of the notice, made an appropriate determination on the notice, and taken such actions as are required in association with that determination (15 U.S.C. 2604(a)(1)(B)(ii)). As described in Unit V., the general SNUR provisions are found at 40 CFR part 721, subpart A.

C. Applicability of General Provisions

General provisions for SNURs appear in 40 CFR part 721, subpart A. These provisions describe persons subject to the rule, recordkeeping requirements, exemptions to reporting requirements, and applicability of the rule to uses occurring before the effective date of the rule. Provisions relating to user fees appear at 40 CFR part 700. According to § 721.1(c), persons subject to these SNURs must comply with the same SNUN requirements and EPA regulatory procedures as submitters of PMNs under TSCA section 5(a)(1)(A). In particular, these requirements include the information submission requirements of TSCA section 5(b) and 5(d)(1), the exemptions authorized by TSCA section 5(h)(1), (h)(2), (h)(3), and (h)(5), and the regulations at 40 CFR part 720. Once EPA receives a SNUN, EPA must either determine that the significant new use is not likely to present an unreasonable risk of injury or take such regulatory action as is associated with an alternative determination before the manufacture or processing for the significant new use can commence. If EPA determines that the significant new use is not likely to present an unreasonable risk, EPA is required under TSCA section 5(g) to make public, and submit for publication in the Federal Register, a statement of EPA's findings.

III. Significant New Use Determination

Section 5(a)(2) of TSCA states that EPA's determination that a use of a chemical substance is a significant new use must be made after consideration of all relevant factors, including:

• The projected volume of manufacturing and processing of a chemical substance.

• The extent to which a use changes the type or form of exposure of human beings or the environment to a chemical substance.

• The extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance.

• The reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.

In addition to these factors enumerated in TSCA section 5(a)(2), the statute authorizes EPA to consider any other relevant factors.

To determine what would constitute a significant new use for the 10 chemical substances that are the subject of these SNURs, EPA considered relevant information about the toxicity of the chemical substances, likely human exposures and environmental releases associated with possible uses, and the four bulleted TSCA section 5(a)(2) factors listed in this unit.

IV. Substances Subject to This Rule

EPA is establishing significant new use and recordkeeping requirements for 10 chemical substances in 40 CFR part 721, subpart E. In this unit, EPA provides the following information for each chemical substance:

• PMN number.

• Chemical name (generic name, if the specific name is claimed as CBI).

• Chemical Abstracts Service (CAS) Registry number (if assigned for non-confidential chemical identities).

• Basis for the TSCA section 5(e) Order.

• Information identified by EPA that would help characterize the potential health and/or environmental effects of the chemical substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use designated by the SNUR.

This information may include testing required in a TSCA section 5(e) Order to be conducted by the PMN submitter, as well as testing not required to be conducted but which would also help characterize the potential health and/or environmental effects of the PMN substance. Any recommendation for information identified by EPA was made based on EPA's consideration of available screening-level data, if any, as well as other available information on appropriate testing for the chemical substance. Further, any such testing identified by EPA that includes testing on vertebrates was made after consideration of available toxicity information, computational toxicology and bioinformatics, and high-throughput screening methods and their prediction models. EPA also recognizes that whether testing/further information is needed will depend on the specific exposure and use scenario in the SNUN. EPA encourages all SNUN submitters to contact EPA to discuss any potential future testing. See Unit VIII. for more information.

• CFR citation assigned in the regulatory text section of this rule.

The regulatory text sections of these rules specify the activities designated as significant new uses. Certain new uses, including exceedance of production volume limits (i.e., limits on manufacture volume) and other uses designated in this rule, may be claimed as CBI. Unit IX. discusses a procedure companies may use to ascertain whether a proposed use constitutes a significant new use.

These rules include 10 PMN substances that are subject to Orders under TSCA section 5(e)(1)(A). Each Order is based on one or more of the findings in TSCA section 5(a)(3)(B): There is insufficient information to permit a reasoned evaluation; in the absence of sufficient information to permit a reasoned evaluation, the activities associated with the PMN substances may present unreasonable risk to human health or the environment; the substance is or will be produced in substantial quantities, and enters or may reasonably be anticipated to enter the environment in substantial quantities or there is or may be significant (substantial) human exposure to the substance. Those Orders require protective measures to limit exposures or otherwise mitigate the potential unreasonable risk. The SNURs identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).

Where EPA determines that the PMN substance may present an unreasonable risk of injury to human health via inhalation exposure, the underlying TSCA section 5(e) Order requires, among other things, that potentially exposed employees wear specified respirators unless actual measurements of the workplace air show that air-borne concentrations of the PMN substance are below a New Chemical Exposure Limit (NCEL) that is established by EPA to provide adequate protection to human health. In addition to the actual NCEL concentration, the comprehensive NCELs provisions in TSCA section 5(e) Orders, which are modeled after Occupational Safety and Health Administration (OSHA) Permissible Exposure Limits (PELs) provisions, include requirements addressing performance criteria for sampling and analytical methods, periodic monitoring, respiratory protection, and recordkeeping. However, no comparable NCEL provisions currently exist in 40 CFR part 721, subpart B, for SNURs. Therefore, for these cases, the individual SNURs in 40 CFR part 721, subpart E, will state that persons subject to the SNUR who wish to pursue NCELs as an alternative to the § 721.63 respirator requirements may request to do so under § 721.30. EPA expects that persons whose § 721.30 requests to use the NCELs approach for SNURs that are approved by EPA will be required to comply with NCELs provisions that are comparable to those contained in the corresponding TSCA section 5(e) Order for the same chemical substance.

PMN Number: P-13-307

Chemical name: Substituted carbocycle, N-[[[4-[[(4-substituted carbocyclic)amino]sulfonyl]carbocyclic]amino]carbonyl]-4-methyl-(generic).

CAS number: Not available.

Effective date of TSCA section 5(e) Order: July 31, 2017.

Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a component of manufactured consumer article—contained use. Based on SAR analysis of test data on analogous substances, EPA has identified concerns for systemic toxicity on the spleen, liver and thymus, blood effects, developmental toxicity and immunotoxicity. Based on SAR analysis for amides, EPA predicts toxicity to aquatic organisms may occur at concentrations that exceed 5 parts per billion (ppb) in surface waters. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that in the absence of sufficient information to permit a reasoned evaluation, the substance may present an unreasonable risk of injury to health and the environment. To protect against these risks, the Order requires:

1. Submission of certain toxicity testing prior to exceeding the confidential production volume limit specified in the Order;

2. Use of personal protective equipment, including impervious gloves, to prevent dermal exposure;

3. Use of NIOSH certified respirators with Assigned Protection Factor (APF) of 10 to prevent inhalation exposures or compliance with a NCEL of 4 mg/m3 as an 8-hour time-weighted average to prevent inhalation exposure;

4. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the Safety Data Sheet (SDS);

5. Refraining from manufacturing the PMN substance in the United States (i.e., import only);

6. Use of the PMN substance only for the confidential use specified in the Order; and

7. No release of the PMN substances resulting in surface water concentrations that exceed 30 ppb.

The SNUR designates as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the human health toxicity of the PMN substances may be potentially useful to characterize the effects of the PMN substances in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed a certain production volume limit without performing specific organ toxicity testing.

CFR citation: 40 CFR 721.11116.

PMN Numbers: P-16-316 and P-16-317

Chemical name: Aliphatic polyester (generic).

CAS numbers: Not available.

Effective date of TSCA section 5(e) Order: July 27, 2017.

Basis for TSCA section 5(e) Order: The PMNs state that the generic (non-confidential) use of the substances will be as drilling chemicals. Based on SAR analysis of test data on analogous substances, EPA has identified concerns for kidney toxicity. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that in the absence of sufficient information to permit a reasoned evaluation, the substances may present an unreasonable risk of injury to health and the environment. To protect against these risks, the Order requires:

1. Use of the PMN substances only for the confidential use specified in the Order; and

2. Manufacture (which under TSCA includes import) the PMN substances with a average molecular weight no lower than 22,000 for P-16-0316 and no lower than 14,000 for P-16-0317 and species with a molecular weight less than 500 present at a maximum of 2% by weight.

The SNUR designates as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the fate, environmental toxicity and human health toxicity of the PMN substances may be potentially useful to characterize the effects of the PMN substances in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of water solubility and log Kow testing, acute and chronic aquatic toxicity testing and developmental toxicity testing may be potentially useful in characterizing the health and environmental effects of the PMN substances. Although the Order does not require these tests, the Order's restrictions will remain in effect until the Order is modified or revoked by EPA based on submission of this or other relevant information.

CFR citations: 40 CFR 721.11117.

PMN Number: P-16-342

Chemical name: Modified acrylic polymer (generic).

CAS number: Not available.

Effective date of TSCA section 5(e) Order: August 7, 2017.

Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a dispersant for deflocculation of pigments in industrial paints and coatings. Based on SAR analysis of test data on analogous substances, EPA has identified concerns for lung toxicity. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that in the absence of sufficient information to permit a reasoned evaluation, the substance may present an unreasonable risk of injury to health and the environment. To protect against these risks, the Order requires:

1. Refrain from manufacturing the PMN substance in the United States (i.e., import only);

2. Use of the PMN substance only as a dispersant for deflocculation of pigments in industrial paints and coatings;

3. Use the PMN substance in the paint/coating formulation at a concentration not greater than 1 percent by weight or volume;

4. No modification of the processing method or use activities of the PMN substance that would allow inhalation exposure to the PMN substance by vapor, dust, mist or aerosols at concentrations greater than 1 percent by weight or volume; and

5. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the (SDS).

The SNUR designates as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the human health toxicity of the PMN substances may be potentially useful to characterize the effects of the PMN substances in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of pulmonary toxicity testing may be potentially useful in characterizing the health effects of the PMN substance. Although the Order does not require these tests, the Order's restrictions will remain in effect until the Order is modified or revoked by EPA based on submission of this or other relevant information.

CFR citation: 40 CFR 721.11118.

PMN Numbers: P-16-406 and P-16-407

Chemical names: Functionalized polyimide (generic).

CAS numbers: Not available.

Effective date of TSCA section 5(e) Order: July 27, 2017.

Basis for TSCA section 5(e) Order: The PMNs state that the generic (non-confidential) use of the substances will be as coating for solid substrates. Based on SAR analysis of test data on analogous substances, EPA has identified concerns for lung toxicity. The Order was issued under TSCA sections 5(a)(3)(B)(i) and 5(e)(1)(A)(i), based on a finding that the information available to the Agency is insufficient to permit a reasoned evaluation of the human health effects. To protect against any potential risks the Order requires:

1. Use of the PMN substances only as a coating for solid substrates;

2. No use of the PMN substances involving application methods that generate inhalation exposures to the PMN substance by vapor, dust, mist or aerosols; and

3. No modification of manufacturing process of the PMN substances such that workers would be exposed through inhalation.

The SNUR designates as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the human health toxicity of the PMN substances may be potentially useful to characterize the effects of the PMN substances in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of pulmonary toxicity testing may be potentially useful in characterizing the health effects of the PMN substances. Although the Order does not require these tests, the Order's restrictions will remain in effect until the Order is modified or revoked by EPA based on submission of this or other relevant information.

CFR citation: 40 CFR 721.11119.

PMN Number: P-16-413

Chemical name: Siloxanes and Silicones, di-Me, 3-hydroxypropyl Me, Me 3,3,4,4,5,5,6,6,6-nonafluorohexyl.

CAS number: 1610862-54-8.

Effective date of TSCA section 5(e) Order: July 13, 2017.

Basis for TSCA section 5(e) Order: The PMN states that the use of the PMN substance is as an anti-fingerprint material for a metal coating application. Based on SAR analysis of test data on analogous substances, EPA has identified concerns for lung toxicity based on waterproofing of the lung if inhaled. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that in the absence of sufficient information to permit a reasoned evaluation, the substance may present an unreasonable risk of injury to health and the environment. To protect against these risks, the Order requires:

1. Submission of certain fate testing on the PMN substance prior to exceeding the production volume limits specified in the Order;

2. No processing or use of the PMN substance in a manner that results in inhalation exposure due to spray, mist or aerosol;

3. Refraining from manufacturing the PMN substance in the United States (i.e., import only); and

4. No release of the PMN substance into the waters of the United States.

The SNUR designates as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the fate and human health toxicity of the PMN substance may be potentially useful to characterize the effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the confidential production limit without performing a UV/visible absorption test, a direct and indirect photolysis test, aerobic and anaerobic transformation in soil test and aerobic and anaerobic transformation in sediment test. In addition, EPA has determined that the results of pulmonary toxicity testing may be potentially useful in characterizing the human health effects of the PMN substance. Although the Order does not require these tests, the Order's restrictions will remain in effect until the Order is modified or revoked by EPA based on submission of this or other relevant information.

CFR citation: 40 CFR 721.11120.

PMN Number: P-16-455

Chemical name: Sodium Tungsten Oxide.

CAS number: 11120-01-7.

Effective date of TSCA section 5(e) Order: November 2, 2016.

Basis for TSCA section 5(e) Order: The PMN states that the use of the PMN substance will be as a component of infrared absorption material. Based on test data on an analog, EPA has identified concerns for lung toxicity and carcinogenicity. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that in the absence of sufficient information to permit a reasoned evaluation, the substance may present an unreasonable risk of injury to health and the environment. EPA assessed risks based on the disposal processes and engineering controls described in the PMN. To protect against these risks, the Order requires:

1. Submission of certain toxicity testing on the PMN substance prior to exceeding the confidential production volume limit specified in the Order;

2. Use of personal protective equipment, including impervious gloves, to prevent dermal exposure;

3. Use of NIOSH certified respirators with a minimum (APF) of 1000 to prevent inhalation exposure or compliance with a NCEL of 0.3 mg/m3 as an 8-hour time-weighted average to prevent inhalation exposure;

4. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the (SDS);

5. Use of the PMN substance only as a component of infrared absorption material;

6. No use of the PMN substance involving application methods that generate dust, mist or aerosol unless such application method occurs within an enclosed process;

7. No release of the PMN substance into the waters of the United States; and

8. The PMN substance and any waste streams from manufacture, processing, and use containing the PMN substance must be disposed of only by incineration or landfill.

The SNUR designates as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the human health and environmental toxicity of the PMN substance may be potentially useful to characterize the effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the confidential production limit without performing specific pulmonary toxicity and carcinogenicity testing. In addition, EPA has determined that the results of certain chronic aquatic toxicity testing may be potentially useful in characterizing the environmental effects of the PMN substance. Although the Order does not require these tests, the Order's restrictions will remain in effect until the Order is modified or revoked by EPA based on submission of this or other relevant information.

CFR citation: 40 CFR 721.11121.

PMN Number: P-16-503

Chemical name: Fatty acids, tall-oil, polymers with alkanoic acid, substituted carbomonocycle, alkyl peroxide-initiated (generic).

CAS number: Not available.

Effective date of TSCA section 5(e) Order: January 11, 2017.

Basis for TSCA section 5(e) Order: The PMN states that the non-confidential use of the PMN substance will be as a site-limited polymer intermediate for production of a deck stain coating resin additive. Based on physical-chemical properties of the PMN substance, EPA identified low concerns for human health and environmental effects. However if the PMN substance were manufactured differently, EPA identified concerns for developmental toxicity and aquatic toxicity. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that in the absence of sufficient information to permit a reasoned evaluation, the substance may present an unreasonable risk of injury to health and the environment. To protect against these risks, the Order requires:

1. Manufacture (including import) the PMN substance with a number average molecular weight no lower than 1500, and no more than 24% by weight of acid monomer in the polymer; and

2. Use of the PMN substance only as an intermediate

The SNUR designates as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the fate, human health and environmental toxicity of the PMN substance may be potentially useful to characterize the effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of physical-chemical property testing, chronic aquatic toxicity testing, and developmental toxicity testing may be potentially useful in characterizing the health and environmental effects of the PMN substance. Although the Order does not require these tests, the Order's restrictions will remain in effect until the Order is modified or revoked by EPA based on submission of this or other relevant information.

CFR citation: 40 CFR 721.11122.

PMN Number: P-16-570

Chemical name: Carboxylic acids, C6-18 and C8-15-di, polymers with diethylene glycol, glycerol, oleic acid, phthalic acid and sorbitol.

CAS number: 1877295-51-6.

Effective date of TSCA section 5(e) Order: August 5, 2017.

Basis for TSCA section 5(e) Order: The PMN states that the use of the PMN substance will be as an aromatic polyester polyol for manufacturing rigid foam. Based on test data on an analog, EPA has identified concerns for reproductive and developmental toxicity. Based on SAR analysis for esters, EPA predicts toxicity to aquatic organisms may occur at concentrations that exceed 610 parts per billion (ppb). The Order was issued under TSCA sections 5(a)(3)(B)(i) and 5(e)(1)(A)(i), based on a determination that “the information available is insufficient to permit a reasoned evaluation of the human health effects and the PMN substance, “stating that “because of the absence of sufficient information to permit EPA to make such a determination and in light of the potential risk of human health effects posed by the uncontrolled manufacture (which includes import), processing, distribution in commerce, use and disposal of the PMN substance. EPA has concluded that uncontrolled manufacture, processing, distribution in commerce use, and disposal of the PMN substance may present an unreasonable risk of injury to human health.” To protect against these risks, the Order requires:

1. Submission of certain toxicity testing prior to exceeding the confidential production volume limit specified in the Order;

2. Use of personal protective equipment to prevent dermal exposures;

3. Establishment and use of a hazard communication program, including human health precautionary statements on each label and in the (SDS);

4. Manufacture (including import) the PMN substance with residual phthalate not greater than 0.1% by weight;

5. Use of the PMN substance only as an aromatic polyester polyol for rigid foam;

6. No modification of manufacturing, processing or use activities of the PMN substance to result in the generation of a vapor, mist or aerosol; and

7. No release of the PMN substance into the waters of the United States.

The SNUR designates as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the environmental and human health toxicity of the PMN substance may be potentially useful to characterize the effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the confidential production limit without performing specific reproductive/developmental toxicity testing. In addition, EPA has determined that the results of acute aquatic toxicity testing may be potentially useful in characterizing the environmental effects of the PMN substance. Although the Order does not require these tests, the Order's restrictions will remain in effect until the Order is modified or revoked by EPA based on submission of this or other relevant information.

CFR citation: 40 CFR 721.11123.

V. Rationale and Objectives of the Rule A. Rationale

During review of the PMNs submitted for the chemical substances that are subject to these SNURs, EPA concluded that for all 10 chemical substances, regulation was warranted under TSCA section 5(e), pending the development of information sufficient to make reasoned evaluations of the health or environmental effects of the chemical substances. The basis for such findings is outlined in Unit IV. Based on these findings, TSCA section 5(e) Orders requiring the use of appropriate exposure controls were negotiated with the PMN submitters.

The SNURs identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).

B. Objectives

EPA is issuing these SNURs for specific chemical substances which have undergone premanufacture review because the Agency wants to achieve the following objectives with regard to the significant new uses designated in this rule:

• EPA will receive notice of any person's intent to manufacture or process a listed chemical substance for the described significant new use before that activity begins.

• EPA will have an opportunity to review and evaluate data submitted in a SNUN before the notice submitter begins manufacturing or processing a listed chemical substance for the described significant new use.

• EPA will be able to either determine that the prospective manufacture or processing is not likely to present an unreasonable risk, or to take necessary regulatory action associated with any other determination, before the described significant new use of the chemical substance occurs.

• EPA will identify as significant new uses any manufacturing, processing, distribution in commerce, use, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).

Issuance of a SNUR for a chemical substance does not signify that the chemical substance is listed on the TSCA Chemical Substance Inventory (TSCA Inventory). Guidance on how to determine if a chemical substance is on the TSCA Inventory is available on the internet at http://www.epa.gov/opptintr/existingchemicals/pubs/tscainventory/index.html.

VI. Direct Final Procedures

EPA is issuing these SNURs as a direct final rule. The effective date of this rule is October 26, 2018 without further notice, unless EPA receives written adverse comments before September 26, 2018.

If EPA receives written adverse comments on one or more of these SNURs before September 26, 2018, EPA will withdraw the relevant sections of this direct final rule before its effective date.

This rule establishes SNURs for a number of chemical substances. Any person who submits adverse comments must identify the chemical substance and the new use to which it applies. EPA will not withdraw a SNUR for a chemical substance not identified in the comment.

VII. Applicability of the Significant New Use Designation

To establish a significant new use, EPA must determine that the use is not ongoing. The chemical substances subject to this rule have undergone premanufacture review. In cases where EPA has not received a notice of commencement (NOC) and the chemical substance has not been added to the TSCA Inventory, no person may commence such activities without first submitting a PMN. Therefore, for chemical substances for which an NOC has not been submitted EPA concludes that the designated significant new uses are not ongoing.

When chemical substances identified in this rule are added to the TSCA Inventory, EPA recognizes that, before the rule is effective, other persons might engage in a use that has been identified as a significant new use. However, TSCA section 5(e) Orders have been issued for all of the chemical substances, and the PMN submitters are prohibited by the TSCA section 5(e) Orders from undertaking activities which will be designated as significant new uses. The identities of 7 of the 10 chemical substances subject to this rule have been claimed as confidential and EPA has received no post-PMN bona fide submissions (per §§ 720.25 and 721.11) for a chemical substance covered by this action. Based on this, the Agency believes that it is highly unlikely that any of the significant new uses described in the regulatory text of this rule are ongoing.

Therefore, EPA designates August 27, 2018 as the cutoff date for determining whether the new use is ongoing. The objective of EPA's approach has been to ensure that a person could not defeat a SNUR by initiating a significant new use before the effective date of the direct final rule.

Persons who begin commercial manufacture or processing of the chemical substances for a significant new use identified as of that date will have to cease any such activity upon the effective date of the final rule. To resume their activities, these persons will have to first comply with all applicable SNUR notification requirements and wait until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.

VIII. Development and Submission of Information

EPA recognizes that TSCA section 5 does not require developing any particular new information (e.g., generating test data) before submission of a SNUN. There is an exception: development of test data is required where the chemical substance subject to the SNUR is also subject to a rule, order or consent agreement under TSCA section 4 (see TSCA section 5(b)(1)).

In the absence of a TSCA section 4 test rule covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to or reasonably ascertainable by them (see 40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing. Unit IV. lists required or recommended testing for all of the listed SNURs. Descriptions of this information are provided for informational purposes. EPA strongly encourages persons, before performing any testing, to consult with the Agency pertaining to protocol selection. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing in vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialog with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h). To access the OCSPP test guidelines referenced in this document electronically, please go to http://www.epa.gov/ocspp and select “Test Methods and Guidelines.” The Organisation for Economic Co-operation and Development (OECD) test guidelines are available from the OECD Bookshop at http://www.oecdbookshop.org or SourceOECD at http://www.sourceoecd.org.

In certain of the TSCA section 5(e) Orders for the chemical substances regulated under this rule, EPA has established production volume limits in view of the lack of data on the potential health and environmental risks that may be posed by the significant new uses or increased exposure to the chemical substances. These limits cannot be exceeded unless the PMN submitter first submits the results of toxicity tests that would permit a reasoned evaluation of the potential risks posed by these chemical substances. Under recent TSCA section 5(e) Orders, each PMN submitter is required to submit each study at least 14 weeks (earlier TSCA section 5(e) Orders required submissions at least 12 weeks) before reaching the specified production limit. Listings of the tests specified in the TSCA section 5(e) Orders are included in Unit IV. The SNURs contain the same production volume limits as the TSCA section 5(e) Orders. Exceeding these production limits is defined as a significant new use. Persons who intend to exceed the production limit must notify the Agency by submitting a SNUN at least 90 days in advance of commencement of non-exempt commercial manufacture or processing.

Any request by EPA for the triggered and pended testing described in the Orders was made based on EPA's consideration of available screening-level data, if any, as well as other available information on appropriate testing for the PMN substances. Further, any such testing request on the part of EPA that includes testing on vertebrates was made after consideration of available toxicity information, computational toxicology and bioinformatics, and high-throughput screening methods and their prediction models.

The potentially useful information identified in Unit IV. may not be the only means of addressing the potential risks of the chemical substance. However, submitting a SNUN without any test data may increase the likelihood that EPA will take action under TSCA section 5(e), particularly if satisfactory test results have not been obtained from a prior PMN or SNUN submitter. EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to generate useful information.

SNUN submitters should be aware that EPA will be better able to evaluate SNUNs which provide detailed information on the following:

• Human exposure and environmental release that may result from the significant new use of the chemical substances.

• Information on risks posed by the chemical substances compared to risks posed by potential substitutes.

IX. Procedural Determinations

By this rule, EPA is establishing certain significant new uses which have been claimed as CBI subject to Agency confidentiality regulations at 40 CFR part 2 and 40 CFR part 720, subpart E. Absent a final determination or other disposition of the confidentiality claim under 40 CFR part 2 procedures, EPA is required to keep this information confidential. EPA promulgated a procedure to deal with the situation where a specific significant new use is CBI, at § 721.1725(b)(1).

Under these procedures a manufacturer or processor may request EPA to determine whether a proposed use would be a significant new use under the rule. The manufacturer or processor must show that it has a bona fide intent to manufacture or process the chemical substance and must identify the specific use for which it intends to manufacture or process the chemical substance. If EPA concludes that the person has shown a bona fide intent to manufacture or process the chemical substance, EPA will tell the person whether the use identified in the bona fide submission would be a significant new use under the rule. Since most of the chemical identities of the chemical substances subject to these SNURs are also CBI, manufacturers and processors can combine the bona fide submission under the procedure in § 721.1725(b)(1) with that under § 721.11 into a single step.

If EPA determines that the use identified in the bona fide submission would not be a significant new use, i.e., the use does not meet the criteria specified in the rule for a significant new use, that person can manufacture or process the chemical substance so long as the significant new use trigger is not met. In the case of a production volume trigger, this means that the aggregate annual production volume does not exceed that identified in the bona fide submission to EPA. Because of confidentiality concerns, EPA does not typically disclose the actual production volume that constitutes the use trigger. Thus, if the person later intends to exceed that volume, a new bona fide submission would be necessary to determine whether that higher volume would be a significant new use.

X. SNUN Submissions

According to § 721.1(c), persons submitting a SNUN must comply with the same notification requirements and EPA regulatory procedures as persons submitting a PMN, including submission of test data on health and environmental effects as described in 40 CFR 720.50. SNUNs must be submitted on EPA Form No. 7710-25, generated using e-PMN software, and submitted to the Agency in accordance with the procedures set forth in 40 CFR 720.40 and 721.25. E-PMN software is available electronically at http://www.epa.gov/opptintr/newchems.

XI. Economic Analysis

EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers and processors of the chemical substances subject to this rule. EPA's complete economic analysis is available in the docket under docket ID number EPA-HQ-OPPT-2017-0560.

XII. Statutory and Executive Order Reviews A. Executive Order 12866

This action establishes SNURs for several new chemical substances that were the subject of PMNs and TSCA section 5(e) Orders. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review” (58 FR 51735, October 4, 1993).

B. Paperwork Reduction Act (PRA)

According to PRA (44 U.S.C. 3501 et seq.), an agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register, are listed in 40 CFR part 9, and included on the related collection instrument or form, if applicable. EPA is amending the table in 40 CFR part 9 to list the OMB approval number for the information collection requirements contained in this action. This listing of the OMB control numbers and their subsequent codification in the CFR satisfies the display requirements of PRA and OMB's implementing regulations at 5 CFR part 1320. This Information Collection Request (ICR) was previously subject to public notice and comment prior to OMB approval, and given the technical nature of the table, EPA finds that further notice and comment to amend it is unnecessary. As a result, EPA finds that there is “good cause” under section 553(b)(3)(B) of the Administrative Procedure Act (5 U.S.C. 553(b)(3)(B)) to amend this table without further notice and comment.

The information collection requirements related to this action have already been approved by OMB pursuant to PRA under OMB control number 2070-0012 (EPA ICR No. 574). This action does not impose any burden requiring additional OMB approval. If an entity were to submit a SNUN to the Agency, the annual burden is estimated to average between 30 and 170 hours per response. This burden estimate includes the time needed to review instructions, search existing data sources, gather and maintain the data needed, and complete, review, and submit the required SNUN.

Send any comments about the accuracy of the burden estimate, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques, to the Director, Collection Strategies Division, Office of Environmental Information (2822T), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001. Please remember to include the OMB control number in any correspondence, but do not submit any completed forms to this address.

C. Regulatory Flexibility Act (RFA)

On February 18, 2012, EPA certified pursuant to RFA section 605(b) (5 U.S.C. 601 et seq.), that promulgation of a SNUR does not have a significant economic impact on a substantial number of small entities where the following are true:

1. A significant number of SNUNs would not be submitted by small entities in response to the SNUR.

2. The SNUR submitted by any small entity would not cost significantly more than $8,300.

A copy of that certification is available in the docket for this action.

This action is within the scope of the February 18, 2012 certification. Based on the Economic Analysis discussed in Unit XI. and EPA's experience promulgating SNURs (discussed in the certification), EPA believes that the following are true:

• A significant number of SNUNs would not be submitted by small entities in response to the SNUR.

• Submission of the SNUN would not cost any small entity significantly more than $8,300.

Therefore, the promulgation of the SNUR would not have a significant economic impact on a substantial number of small entities.

D. Unfunded Mandates Reform Act (UMRA)

Based on EPA's experience with proposing and finalizing SNURs, State, local, and Tribal governments have not been impacted by these rulemakings, and EPA does not have any reasons to believe that any State, local, or Tribal government will be impacted by this action. As such, EPA has determined that this action does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of UMRA sections 202, 203, 204, or 205 (2 U.S.C. 1501 et seq.).

E. Executive Order 13132

This action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999).

F. Executive Order 13175

This action does not have Tribal implications because it is not expected to have substantial direct effects on Indian Tribes. This action does not significantly nor uniquely affect the communities of Indian Tribal governments, nor does it involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), do not apply to this action.

G. Executive Order 13045

This action is not subject to Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined by Executive Order 12866, and this action does not address environmental health or safety risks disproportionately affecting children.

H. Executive Order 13211

This action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because this action is not expected to affect energy supply, distribution, or use and because this action is not a significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act (NTTAA)

In addition, since this action does not involve any technical standards, NTTAA section 12(d) (15 U.S.C. 272 note), does not apply to this action.

J. Executive Order 12898

This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

XIII. Congressional Review Act

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

List of Subjects 40 CFR Part 9

Environmental protection, Reporting and recordkeeping requirements.

40 CFR Part 721

Environmental protection, Chemicals, Hazardous substances, Reporting and recordkeeping requirements.

Dated: August 20, 2018. Jeffery T. Morris, Director, Office of Pollution Prevention and Toxics.

Therefore, 40 CFR parts 9 and 721 are amended as follows:

PART 9—[AMENDED] 1. The authority citation for part 9 continues to read as follows: Authority:

7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003, 2005, 2006, 2601-2671; 21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33 U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318, 1321, 1326, 1330, 1342, 1344, 1345 (d) and (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971-1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243, 246, 300f, 300g, 300g-1, 300g-2, 300g-3, 300g-4, 300g-5, 300g-6, 300j-1, 300j-2, 300j-3, 300j-4, 300j-9, 1857 et seq., 6901-6992k, 7401-7671q, 7542, 9601-9657, 11023, 11048.

2. In § 9.1, add the following sections in numerical order under the undesignated center heading “Significant New Uses of Chemical Substances” to read as follows:
§ 9.1 OMB approvals under the Paperwork Reduction Act. 40 CFR citation OMB
  • control No.
  • *    *    *    *    * Significant New Uses of Chemical Substances *    *    *    *    * 721.11116 2070-0012 721.11117 2070-0012 721.11118 2070-0012 721.11119 2070-0012 721.11120 2070-0012 721.11121 2070-0012 721.11122 2070-0012 721.11123 2070-0012 *    *    *    *    *
    PART 721—[AMENDED] 3. The authority citation for part 721 continues to read as follows: Authority:

    15 U.S.C. 2604, 2607, and 2625(c).

    4. Add § 721.11116 to subpart E to read as follows:
    § 721.11116 Substituted carbocycle, N-[[[4-[[(4-substituted carbocyclic)amino]sulfonyl]carbocyclic]amino]carbonyl]-4-methyl- (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified as substituted carbocycle, N-[[[4-[[(4-substituted carbocyclic)amino]sulfonyl]carbocyclic]amino]carbonyl]-4-methyl- (PMN P-13-307) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (a)(3), (a)(4) (when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) and (4), engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible), (a)(5)(respirators must provide a National Institute for Occupational Safety and Health (NIOSH) assigned protection factor of at least 10 or maintain workplace airborne concentrations), (a)(6)(particulate), (b)(concentrations set at 1.0%) and (c).

    (A) As an alternative to the respirator requirements in paragraph (a)(2)(i) of this section, a manufacturer or processor may choose to follow the new chemical exposure limit (NCEL) provision listed in the TSCA section 5(e) Order for this substance. The NCEL is 4 mg/m3 as an 8-hour time weighted average. Persons who wish to pursue NCELs as an alternative to § 721.63 respirator requirements may request to do so under § 721.30. Persons whose § 721.30 requests to use the NCELs approach are approved by EPA will be required to follow NCELs provisions comparable to those contained in the corresponding TSCA section 5(e) Order.

    (B) [Reserved]

    (ii) Hazard communication. Requirements as specified in § 721.72(a), (b), (c), (d), (e)(concentration set at 1.0%), (f), (g)(1)(iv), (viii), (ix), (g)(2)(ii), (iii), (use respiratory protection or maintain workplace airborne concentrations below an 8-hour time-weighted average of 4 mg/m3), (g)(2)(v), (g)(4)(i), (ii) and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(f), (k) and (q).

    (iv) Release to water. Requirements as specified in § 721.90(a)(4), (b)(4), and (c)(4) where N = 30 ppb.

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph (b).

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a), (i) and (k).

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    5. Add § 721.11117 to subpart E to read as follows:
    § 721.11117 Aliphatic polyester (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substances identified generically as aliphatic polyester (PMNs P-16-316 and P-16-317) are subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(k). It is a significant new use to manufacture the PMN substances with an average molecular weight lower than 22,000 daltons for P16-316 and lower than 14,000 daltons for P-16-317 and containing more than 2% by weight of molecular weight species less than 500 daltons.

    (ii) [Reserved]

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph (b).

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (c) and (i) are applicable to manufacturers and processors of these substances.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(i) of this section.

    6. Add § 721.11118 to subpart E to read as follows:
    § 721.11118 Modified acrylic polymer (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as modified acrylic polymer (PMN P-16-342) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Hazard communication. Requirements as specified in § 721.72(a), (b), (c), (d), (e)(concentration set at 1.0%), (f), (g)(1)(ii), (g)(2)(ii), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (ii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(f). It is a significant new use for any use other than as a dispersant for deflocculation of pigments in industrial paints and coatings, any use in the paint/coating formulation at concentration greater than 1 percent by weight or volume, and any use of the substance that would allow inhalation exposure to the substance by vapor, dust, mist or aerosols at concentrations greater than 1 percent by weight or volume.

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph (b).

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a), (b), (c), (f), (g), (h), and (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    7. Add § 721.11119 to subpart E to read as follows:
    § 721.11119 Functionalized polyimide (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substances identified as functionalized polyimide (PMN P-16-406 and P-16-407) are subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(y)(1) and (2). It is a significant new use to use the substances other than as a coating for solid substrates. Any manufacturing process that results in inhalation exposure to the substances is a significant new use.

    (ii) [Reserved]

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph (b).

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (c) and (i) are applicable to manufacturers and processors of these substances.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    8. Add § 721.11120 to subpart E to read as follows:
    § 721.11120 Siloxanes and Silicones, di-Me, 3-hydroxypropyl Me, Me 3,3,4,4,5,5,6,6,6-nonafluorohexyl.

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified as siloxanes and silicones, di-Me, 3-hydroxypropyl Me, Me 3,3,4,4,5,5,6,6,6-nonafluorohexyl (CAS: 1610862-54-8) (PMN P-16-413) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements are described in § 721.80(f) and (p)(40,000 kilograms and 151,300 kilograms). It is a significant new use to process or use the PMN substance in a manner that results in inhalation exposure to spray, mist or aerosol.

    (ii) Release to water. Requirements as specified in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph (b).

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (c), (i), and (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    9. Add § 721.11121 to subpart E to read as follows:
    § 721.11121 Sodium tungsten oxide.

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified as sodium tungsten oxide (CAS No. 11120-01-7) (PMN P-16-455) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the PMN substance after they have been incorporated into a polymer matrix.

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (a)(3), (a)(4)(when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) and (4), engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible), (a)(5)(respirators must provide a National Institute for Occupational Safety and Health (NIOSH) assigned protection factor of at least 1000, (a)(6)(particulate), (b)(concentrations set at 0.1%) and (c).

    (A) As an alternative to the respirator requirements in paragraph (a)(2)(i) of this section, a manufacturer or processor may choose to follow the new chemical exposure limit (NCEL) provision listed in the TSCA section 5(e) Order for this substance. The NCEL is 0.3 mg/m3 as an 8-hour time weighted average. Persons who wish to pursue NCELs as an alternative to § 721.63 respirator requirements may request to do so under § 721.30. Persons whose § 721.30 requests to use the NCELs approach are approved by EPA will be required to follow NCELs provisions comparable to those contained in the corresponding TSCA section 5(e) Order.

    (B) [Reserved]

    (ii) Hazard communication. Requirements as specified in § 721.72(a), (b), (c), (d), (e)(concentration set at 0.1%), (f), (g)(1)(lung effects), (g)(1)(vii), (g)(2)(ii), (iii), (g)(2)(use respiratory protection or maintain workplace airborne concentrations below an 8-hour time-weighted average of 0.3 mg/m3), (g)(3)(ii), (g)(4)(i), (iii) and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(q). It is a significant new to use the substance other than as a component of infrared absorption material. It is a significant new use to use involving an application method that generates a dust, mist, or aerosol, unless the application method occurs within an enclosed process.

    (iv) Disposal. Requirements as specified in § 721.85(a)(1), (2), (b)(1), (2), (c)(1), and (2).

    (v) Release to water. Requirements as specific in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph (b).

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    10. Add §  721.11122 to subpart E to read as follows:
    §  721.11122 Fatty acids, tall-oil, polymers with alkanoic acid, substituted carbomonocycle, alkyl peroxide-initiated (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as fatty acids, tall-oil, polymers with alkanoic acid, substituted carbomonocycle, alkyl peroxide-initiated (PMN P-16-503) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(g). It is a significant new use to manufacture the substance with an average molecular weight lower than 1,500 dalton or more than 24% by weight of acid monomer in the polymer.

    (ii) [Reserved]

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph (b).

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (c) and (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    11. Add §  721.11123 to subpart E to read as follows:
    §  721.11123 Carboxilic acids, C6-18 and C8-15-di, polymers with diethylene glycol, glycerol, oleic acid, phthalic, acid and sorbitol.

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified as Carboxilic acids, C6-18 and C8-15-di, polymers with diethylene glycol, glycerol, oleic acid, phthalic, acid and sorbitol (CAS: 1877295-51-6) (PMN P-16-570) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the PMN substance after they have been completely reacted (cured).

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (ii), (iii), (a)(3), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (b)(concentrations set at 0.1%) and (c).

    (ii) Hazard communication. Requirements as specified in § 721.72(a), (b), (c), (d), (e)(concentration set at 1.0%), (f), (g)(1)(vi), (ix), (g)(2)(i), (ii), (iii), (v), (g)(3)(i), (g)(4)(iii) and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(q). It is a significant new use to use the substance other than as an aromatic polyester polyol for manufacturing rigid foam. It is a significant new use to manufacture the substance with residual phthalate greater than 0.1% by weight. It is a significant new use to modify the manufacturing, processing or use activities of the PMN substance to result in the generation of a vapor, mist or aerosol.

    (iv) Release to water. Requirements as specified in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph (b).

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) and (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    [FR Doc. 2018-18534 Filed 8-24-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 9 and 721 [EPA-HQ-OPPT-2017-0464; FRL-9982-24] RIN 2070-AB27 Significant New Use Rules on Certain Chemical Substances AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Direct final rule.

    SUMMARY:

    EPA is promulgating significant new use rules (SNURs) under the Toxic Substances Control Act (TSCA) for 19 chemical substances which were the subject of premanufacture notices (PMNs). The chemical substances are subject to Orders issued by EPA pursuant to section 5(e) of TSCA. This action requires persons who intend to manufacture (defined by statute to include import) or process any of these 19 chemical substances for an activity that is designated as a significant new use by this rule to notify EPA at least 90 days before commencing that activity. The required notification initiates EPA's evaluation of the intended use within the applicable review period. Persons may not commence manufacture or processing for the significant new use until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.

    DATES:

    This rule is effective on October 26, 2018. For purposes of judicial review, this rule shall be promulgated at 1 p.m. (e.s.t.) on September 10, 2018.

    Written adverse comments on one or more of these SNURs must be received on or before September 26, 2018 (see Unit VI. of the SUPPLEMENTARY INFORMATION). If EPA receives written adverse comments on one or more of these SNURs before September 26, 2018, EPA will withdraw the relevant sections of this direct final rule before its effective date.

    For additional information on related reporting requirement dates, see Units I.A., VI., and VII. of the SUPPLEMENTARY INFORMATION.

    ADDRESSES:

    Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2017-0464, by one of the following methods:

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

    Mail: Document Control Office (7407M), Office of Pollution Prevention and Toxics (OPPT), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.

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

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

    FOR FURTHER INFORMATION CONTACT:

    For technical information contact: Kenneth Moss, Chemical Control Division (7405M), Office of Pollution Prevention and Toxics, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 564-9232; email address: [email protected]

    For general information contact: The TSCA-Hotline, ABVI-Goodwill, 422 South Clinton Ave., Rochester, NY 14620; telephone number: (202) 554-1404; email address: [email protected]

    SUPPLEMENTARY INFORMATION:

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

    You may be potentially affected by this action if you manufacture, process, or use the chemical substances contained in this rule. 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:

    • Manufacturers or processors of one or more subject chemical substances (NAICS codes 325 and 324110), e.g., chemical manufacturing and petroleum refineries.

    This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127 and 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and orders under TSCA. Importers of chemicals subject to these SNURs must certify their compliance with the SNUR requirements. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, any persons who export or intend to export a chemical substance that is the subject of this rule on or after September 26, 2018 are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) (see §  721.20), and must comply with the export notification requirements in 40 CFR part 707, subpart D.

    B. What should I consider as I prepare my comments for EPA?

    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.

    II. Background A. What action is the Agency taking?

    1. Direct Final Rule. EPA is promulgating these SNURs using direct final rule procedures. These SNURs will require persons to notify EPA at least 90 days before commencing the manufacture or processing of a chemical substance for any activity designated by these SNURs as a significant new use. Receipt of such notices obligates EPA to assess risks that may be associated with the significant new uses under the conditions of use and, if appropriate, to regulate the proposed uses before they occur.

    2. Proposed Rule. In addition to this Direct Final Rule, elsewhere in this issue of the Federal Register, EPA is issuing a Notice of Proposed Rulemaking for this rule. If EPA receives no adverse comment, the Agency will not take further action on the proposed rule and the direct final rule will become effective as provided in this action. If EPA receives adverse comment on one or more of SNURs in this action by September 26, 2018 (see Unit VI. of the SUPPLEMENTARY INFORMATION), the Agency will publish in the Federal Register a timely withdrawal of the specific SNURs that the adverse comments pertain to, informing the public that the actions will not take effect. EPA would then address all adverse public comments in a response to comments document in a subsequent final rule, based on the proposed rule.

    B. What is the Agency's authority for taking this action?

    Section 5(a)(2) of TSCA (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the four bulleted TSCA section 5(a)(2) factors listed in Unit III. Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B) requires persons to submit a significant new use notice (SNUN) to EPA at least 90 days before they manufacture or process the chemical substance for that use (15 U.S.C. 2604(a)(1)(B)(i)). TSCA furthermore prohibits such manufacturing or processing from commencing until EPA has conducted a review of the notice, made an appropriate determination on the notice, and taken such actions as are required in association with that determination (15 U.S.C. 2604(a)(1)(B)(ii)). As described in Unit V., the general SNUR provisions are found at 40 CFR part 721, subpart A.

    C. Applicability of General Provisions

    General provisions for SNURs appear in 40 CFR part 721, subpart A. These provisions describe persons subject to the rule, recordkeeping requirements, exemptions to reporting requirements, and applicability of the rule to uses occurring before the effective date of the rule. Provisions relating to user fees appear at 40 CFR part 700. According to §  721.1(c), persons subject to these SNURs must comply with the same SNUN requirements and EPA regulatory procedures as submitters of PMNs under TSCA section 5(a)(1)(A). In particular, these requirements include the information submission requirements of TSCA section 5(b) and 5(d)(1), the exemptions authorized by TSCA section 5(h)(1), (h)(2), (h)(3), and (h)(5), and the regulations at 40 CFR part 720. Once EPA receives a SNUN, EPA must either determine that the significant new use is not likely to present an unreasonable risk of injury or take such regulatory action as is associated with an alternative determination before the manufacture or processing for the significant new use can commence. If EPA determines that the significant new use is not likely to present an unreasonable risk, EPA is required under TSCA section 5(g) to make public, and submit for publication in the Federal Register, a statement of EPA's findings.

    III. Significant New Use Determination

    Section 5(a)(2) of TSCA states that EPA's determination that a use of a chemical substance is a significant new use must be made after consideration of all relevant factors, including:

    • The projected volume of manufacturing and processing of a chemical substance.

    • The extent to which a use changes the type or form of exposure of human beings or the environment to a chemical substance.

    • The extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance.

    • The reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.

    In addition to these factors enumerated in TSCA section 5(a)(2), the statute authorizes EPA to consider any other relevant factors.

    To determine what would constitute a significant new use for the chemical substances that are the subject of these SNURs, EPA considered relevant information about the toxicity of the chemical substances, likely human exposures and environmental releases associated with possible uses, and the four bulleted TSCA section 5(a)(2) factors listed in this unit.

    IV. Substances Subject to This Rule

    EPA is establishing significant new use and recordkeeping requirements for 19 chemical substances in 40 CFR part 721, subpart E. In this unit, EPA provides the following information for each chemical substance:

    • PMN number.

    • Chemical name (generic name, if the specific name is claimed as CBI).

    • Chemical Abstracts Service (CAS) Registry number (if assigned for non-confidential chemical identities).

    • Basis for the TSCA section 5(e) Order.

    • Information identified by EPA that would help characterize the potential health and/or environmental effects of the chemical substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use designated by the SNUR. This information may include testing required in a TSCA section 5(e) Order to be conducted by the PMN submitter, as well as testing not required to be conducted but which would also help characterize the potential health and/or environmental effects of the PMN substance. Any recommendation for information identified by EPA was made based on EPA's consideration of available screening-level data, if any, as well as other available information on appropriate testing for the chemical substance. Further, any such testing identified by EPA that includes testing on vertebrates was made after consideration of available toxicity information, computational toxicology and bioinformatics, and high-throughput screening methods and their prediction models. EPA also recognizes that whether testing/further information is needed will depend on the specific exposure and use scenario in the SNUN. EPA encourages all SNUN submitters to contact EPA to discuss any potential future testing. See Unit VIII. for more information.

    • CFR citation assigned in the regulatory text section of this rule.

    The regulatory text section of these rules specify the activities designated as significant new uses. Certain new uses, including exceedance of production volume limits (i.e., limits on manufacture volume) and other uses designated in this rule, may be claimed as CBI. Unit IX. discusses a procedure companies may use to ascertain whether a proposed use constitutes a significant new use.

    These rules include 19 PMN substances that are subject to Orders under TSCA section 5(e)(1)(A)(ii)(I) where EPA determined that it has insufficient information to conduct a reasoned evaluation and the activities associated with the PMN substances may present unreasonable risk to human health or the environment. Those Orders require protective measures to limit exposures or otherwise mitigate the potential unreasonable risk. The SNURs identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).

    Where EPA determined that the PMN substance may present an unreasonable risk of injury to human health via inhalation exposure, the underlying TSCA section 5(e) Order usually requires, among other things, that potentially exposed employees wear specified respirators unless actual measurements of the workplace air show that air-borne concentrations of the PMN substance are below a New Chemical Exposure Limit (NCEL) that is established by EPA to provide adequate protection to human health. In addition to the actual NCEL concentration, the comprehensive NCELs provisions in TSCA section 5(e) Orders, which are modeled after Occupational Safety and Health Administration (OSHA) Permissible Exposure Limits (PELs) provisions, include requirements addressing performance criteria for sampling and analytical methods, periodic monitoring, respiratory protection, and recordkeeping. However, no comparable NCEL provisions currently exist in 40 CFR part 721, subpart B, for SNURs. Therefore, for these cases, the individual SNURs in 40 CFR part 721, subpart E, will state that persons subject to the SNUR who wish to pursue NCELs as an alternative to the § 721.63 respirator requirements may request to do so under §  721.30. EPA expects that persons whose § 721.30 requests to use the NCELs approach for SNURs that are approved by EPA will be required to comply with NCELs provisions that are comparable to those contained in the corresponding TSCA section 5(e) Order for the same chemical substance.

    PMN Number P-15-719

    Chemical name: Benzene, 1,4-bis(alkyl)-, homopolymer (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: July 24, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a flame retardant synergist and radical source. Based on test data and analog data EPA estimates that the PMN substances will persist in the environment for more than two months and estimates a bioaccumulation factor of greater than or equal to 1,000. Because the PMN substance is expected to be persistent and bioaccumulative, EPA is unable to assess the potential risks to sediment dwelling organisms. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), as well as 5(a)(3)(B)(i) and 5(e)(1)(A)(i) based on findings that the substance may present an unreasonable risk of injury to health and the environment, and that the information available to the Agency is insufficient to permit a reasoned evaluation of the environmental effects of the PMN substance. To protect against potential risks, the Order requires:

    1. Submit to EPA certain toxicity testing prior to exceeding the confidential production volume limits specified in the Order;

    2. Label containers of the substance and provide Safety Data Sheets (SDS) or Material Safety Data Sheets (MSDS) and worker training in accordance with the provisions of the Hazard Communication Program section;

    3. Not use the substance other than for the confidential uses allowed in the Order;

    4. Dispose of the substance only by incineration or landfill; and

    5. Comply with the release to water provisions.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the environmental fate, bioaccumulation, and environmental toxicity of the PMN substance may be potentially useful to characterize the effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the confidential production limit without performing specific aquatic toxicity, bioaccumulation and environmental fate testing.

    CFR citation: 40 CFR 721.11097.

    PMN Number P-16-99

    Chemical name: Polyethylene glycol polymer with aliphatic polycarbodiimide Bis(alkoxysilylpropyl) amine blocked (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: June 30, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as an additive for industrial coatings. EPA identified concerns for irritation to all issues and lung toxicity based on SAR analysis of test data on analogous alkoxysilanes and concerns for acute toxicity, neurotoxicity (especially to the eye), and liver, kidney, and cardiac toxicity based on the release of methanol. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. Submission to EPA of certain toxicity testing prior to exceeding the confidential aggregate production volume limit specified in the Order;

    2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposure);

    3. Use of a National Institute for Occupational Safety and Health (NIOSH)-certified respirator with an Applied Protection Factor (APF) of at least 10 (where there is a potential for inhalation exposure) or compliance with a New Chemicals Exposure Limit (NCEL) of 0.9 milligrams per cubic meter as an 8-hour time-weighted average to prevent inhalation exposure. (EPA's estimates indicate that variations of the parameters (including batch size, number of processing sites, days per year of operation) of the uses identified below would not result in inhalation exposure that would indicate a different respirator.)

    4. Establishment and use of a hazard communication program, including precautionary statements on each label and in the SDS.

    5. Not use the substance other than for the use allowed in the Order in commercial use (as that term is defined in 40 CFR 721.3) but without any use in a consumer setting (as that term is defined in 40 CFR 721.3);

    6. Not exceed the confidential annual production volume limit in the Order; and

    7. No manufacture of the substance where there is more than 0.2% residual isocyanate.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the confidential production limit without performing specific pulmonary and internal organ toxicity testing.

    CFR citation: 40 CFR 721.11098.

    PMN Number P-16-221

    Chemical name: Fluorinated organopolysilazane (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: June 20, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the substance will be used as a coating agent for optical lenses. EPA identified human health and environmental concerns because the potential degradation products of the PMN substance may be persistent, bioaccumulative, and toxic (PBT) chemicals. EPA estimates that the PMN substance degradation products will persist in the environment for more than two months and estimates a bioaccumulation factor of greater than or equal to 1,000. EPA also identified concerns for liver toxicity, blood toxicity, male reproductive toxicity, and toxicity to aquatic organisms, terrestrial mammals and birds based on data for the PMN substance degradation product. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. Submission to EPA of certain toxicity testing before exceeding a total production volume of 204 kilograms, as specified in the Order;

    2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposures);

    3. No use of the substance other than allowed by the Order which is the confidential coating system described in the PMN;

    4. Manufacture not to exceed an annual manufacture volume of 100 kilograms;

    5. Refrain from domestic manufacture in the United States (i.e., import only); and

    6. No release of the PMN substance to surface waters.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the production limit in the Order without performing specific internal organ toxicity testing on the degradation product of the PMN substance. In addition, EPA has determined that the results of specific organ toxicity on degradations products of the PMN substance may be potentially useful in characterizing the health effects of the PMN substance. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11099.

    PMN Number P-16-359

    Chemical name: Carbopolycycle-bis(diazonium), dihalo-, chloride (1:2), reaction products with metal hydroxide, 4-[(dioxoalkyl)amino]substituted benzene, 2-[(dioxoalkyl)amino]substituted benzene, 5-[(dioxoalkyl)amino]-2-hydroxy-substituted benzene and oxo-n-phenylalkanamide (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: June 20, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a pigment additive for industrial coatings. EPA identified concerns for oncogenicity and mutagenicity for the PMN substance degradation product. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. Submission to EPA of certain toxicity testing before exceeding the confidential production volume limit specified in the Order;

    2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for inhalation exposures);

    3. Establishment and use of a hazard communication program, including precautionary statements on each label and in SDS;

    4. No processing or use of the substance at temperatures greater than 200 degrees Celsius; and

    5. No domestic manufacture of the substance.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the fate and biodegradability of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the production limit in the Order without performing specific biodegradability and photolysis tests.

    CFR citation: 40 CFR 721.11100.

    PMN Number P-16-363

    Chemical name: Blocked polyester polyurethane, neutralized (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: June 20, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be an open non-dispersive use. EPA identified concerns for irritation, sensitization, and lung toxicity based on analogy to diisocyanates and cationic binding to lung tissue. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to human health. To protect against potential risks, the Order requires:

    1. Use personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposures);

    2. Establishment and use of a hazard communication program, including precautionary statements on each label and in the SDS;

    3. Manufacture (including import) the substance with a residual of free isocyanate monomers no greater than 0.1% by weight;

    4. Refraining from manufacture, processing, or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols;

    5. Refraining from manufacture, processing, or use for consumer use or in commercial use (as that term is defined in 40 CFR 721.3) where there is use in a consumer setting (as that term is defined in 40 CFR 721.3); and

    6. Manufacture, process, or use the substance only in an aqueous formulation.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of specific target organ toxicity testing and a sensitization test of the PMN substance may be potentially useful in characterizing the health effects of the PMN substance. Although the Order does not require these tests, the Order's restrictions on manufacture, processing, use, distribution in commerce, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11101.

    PMN Number P-16-370

    Chemical name: Methoxy-terminated polysiloxane (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: July 18, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a crosslinker for adhesives and coatings. EPA identified concerns for irritation to the skin, eyes, lung, and mucous membranes and other lung effects on analogy to alkoxysilanes. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to human health. To protect against potential risks, the Order requires:

    1. Submission to EPA of certain toxicity testing before exceeding the confidential production volume limit specified in the Order;

    2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposures);

    3. Establishment and use of a hazard communication program, including precautionary statements on each label and in the SDS;

    4. Use of a NIOSH-certified respirator with an APF of at least 10 (where there is a potential for inhalation exposures) or compliance with a NCEL of 8.4 milligrams per cubic meter as an 8-hour time-weighted average to prevent inhalation exposure. (EPA's estimates indicate that variations of the parameters (including batch size, number of processing sites, days per year of operation) of the uses identified below would not result in inhalation exposure that would indicate a different respirator.)

    5. Refraining from modifying the manufacture, processing, or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols; and

    6. Refraining from manufacture, processing, or use for consumer use or in commercial use (as that term is defined in 40 CFR 721.3) where there is use in a consumer setting (as that term is defined in 40 CFR 721.3).

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially Useful Information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the production limit in the Order without performing specific pulmonary toxicity testing.

    CFR citation: 40 CFR 721.11103.

    PMN Number P-16-376

    Chemical name: Hydroxystyrene resin (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: June 16, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be for photolithography. EPA identified potential health and environmental toxicity if the PMN substance is manufactured at a lower molecular weight. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires manufacture of the substance at an average molecular weight greater than 2906 daltons and with 0.5 percent low weight molecular species less than 500 daltons and 1.0 percent low weight molecular species less than 1,000 daltons.

    The SNUR designates as a “significant new use” the absence of this protective measure.

    Potentially useful information: EPA has determined that certain information about the physical-chemical properties and toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of physical-chemical property tests, internal organ effects testing, and aquatic toxicity tests may be potentially useful in characterizing the health and environmental effects of the PMN substance. Although the Order does not require this testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request

    CFR citation: 40 CFR 721.11104.

    PMN Number P-16-487

    Chemical name: Benzenesulfonic acid 1,2-diazenediylbis[6-ethenyl]-3-sulfophenyl diazenyl-2-sulfophenyl ethenyl salt (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: June 27, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the substance will be used as a yellow dye for paper. EPA identified concerns for developmental, reproductive, liver, kidney, and blood toxicity based for the azo reduction products of the substance based on analogue data. Based on SAR analysis for acid dyes, EPA predicts toxicity to aquatic organisms may occur at concentrations that exceed 55 parts per billion (ppb) in surface waters. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), as well as 5(a)(3)(B)(ii)(II) and 5(e)(1)(A)(ii)(II), based on a finding that the substance may present an unreasonable risk of injury to health and the environment and that the substance is or will be produced in substantial quantities and there is or may be significant (substantial) human exposure to the substance. To protect against potential risks, the Order requires:

    1. Submission to EPA of certain toxicity testing before exceeding the confidential production volume limits specified in the Order;

    2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposures);

    3. Establishment and use of a hazard communication program, including precautionary statements on each label and in the SDS;

    4. No manufacture of the substance in the United States (i.e. import only);

    5. Import the substance only as a solution;

    6. No use of the substance other than for the confidential uses allowed in the Order; and

    7. Not release the substance in surface waters resulting in concentrations that exceed 55 ppb.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the fate and toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the production limit in the Order without performing specific photolysis, internal organ effects, reproductive/developmental toxicity, and aquatic toxicity tests.

    CFR citation: 40 CFR 721.11105.

    PMN Number P-16-533

    Chemical name: Ethanaminium, alkyl-, salt with triazole (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: July 24, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a cleaning agent for electronics manufacture. EPA identified concerns for neurotoxicity, developmental and reproductive toxicity, irritation, corrosion, sensitization, and carcinogenicity based on analogy to benzotriazole and quaternary amines. Based on SAR analysis of test data on analogous benzotriazoles, EPA predicts toxicity to aquatic organisms may occur at concentrations that exceed 570 ppb in surface waters. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. Submission to EPA of certain toxicity testing before exceeding the confidential production volume limits specified in the Order;

    2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposure);

    3. Establishment and use of a hazard communication program, including precautionary statements on each label and in the SDS;

    4. Refrain from manufacture, process or use activities that result in inhalation exposure to vapor, dust, mist or aerosols;

    5. No use other than confidential use allowed by the Order; and

    6. No release of the substance to surface waters.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the production limit in the Order without performing specific internal organ effects testing of the PMN substance. In addition, EPA has determined that the results of acute and chronic aquatic toxicity testing may be potentially useful in characterizing the environmental effects of the PMN substance. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11105.

    PMN Number P-16-595

    Chemical name: Substituted-(hydroxyalkyl)-alkyl-alkanoic acid, hydroxy-(substitutedalkyl)-alkyl-, polymer with alpha-hydro-omega-hydroxypoly[oxy (alkylethanediyl)] and isocyanato-(isocyanatoalkyl)-multialkylcycloalkane, salt, alkanol-blocked, compds. (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: June 27, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a polymer. EPA identified concerns for irritation to skin, eyes, and lung, kidney and developmental effects based on functional groups present as part of the PMN structure. Based on SAR analysis of test data on analogous polyanionic polymers, EPA identified potential environmental toxicity if the substance is produced with a different average molecular weight or proportion of repeating units. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. No manufacture of the substance in the United States (i.e. import only);

    2. Import of the substance under the confidential conditions required by the Order;

    3. No use of the substance other than as the confidential use allowed described in the Order; and

    4. No release of the substance to surface waters.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the physical-chemical properties and toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of physical-chemical property measurements, acute toxicity tests, and acute and chronic aquatic toxicity tests may be potentially useful in characterizing the health and environmental effects of the PMN substance. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11106.

    PMN Number P-17-170

    Chemical name: Alkanediol, 2,2-bis (substituted alkyl)- polymer with substituted alkane, heteromonocycles, alkenoate (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: July 12, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the substance will be used as an ultraviolet curable coating resin for three-dimensional printing applications. EPA identified concerns for oncogenicity, developmental toxicity, liver and kidney effects, sensitization, and irritation based on analogy to acrylates. EPA also identified additional human health concerns and environmental toxicity concerns if the polymer is made differently than described in the PMN. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. Submission to EPA of certain toxicity testing before exceeding the aggregate production volume limit of 105,000 kilograms specified in the Order;

    2. Use of personal protective equipment to prevent dermal exposure including gloves (where there is a potential for dermal exposures);

    3. Establishment and use of a hazard communication program, including precautionary statements on each label and in the SDS;

    4. Refrain from manufacture, process or use activities that result in inhalation exposure to vapor, dust, mist or aerosols;

    5. No use other than as an ultraviolet curable coating resin for three-dimensional printing applications;

    6. Manufacture of the substance with no greater than 0.1% residual isocyanate; and

    7. Manufacture of the substance with an average molecular weight greater than 1,000 daltons.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the physical-chemical properties and toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the production limit in the Order without performing specific mutagenicity and sensitization testing of the PMN substance. In addition, EPA has determined that the results of physical-chemical property measurements, internal organ toxicity tests, and acute and chronic aquatic toxicity tests may be potentially useful in characterizing the environmental effects of the PMN substance. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11107.

    PMN Number P-17-172

    Chemical name: Sulfurized alkylphenol, calcium salts (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: June 19, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a lubricating oil additive. EPA identified concerns for lung toxicity based on submitted test data and data for analogous chemicals. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), as well as 5(a)(3)(B)(ii)(II) and 5(e)(1)(A)(ii)(II), based on a finding that the substance may present an unreasonable risk of injury to human health and the environment, and the substance is or will be produced in substantial quantities and there is or may be significant (substantial) human exposure to the substance. To protect against potential risks, the Order requires:

    1. Refrain from manufacture, process or use activities that result in inhalation exposure to vapor, dust, mist or aerosols; and

    2. No use other than the confidential use allowed by the Order;

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of pulmonary effects testing may be potentially useful in characterizing the health effects of the PMN substance. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11108.

    PMN Number P-17-177

    Chemical name: Monoheteropentacycloalkane-4-carboxylic acid, substituted cyclo-alkyl ester (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: July 28, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be for microlithography for electronic device manufacturing. EPA identified human health and environmental concerns because the substance may be persistent, bioaccumulative, and toxic (PBT) chemicals. EPA estimates that the substance will persist in the environment for more than two months and estimates a bioaccumulation factor of greater than or equal to 1,000. EPA identified concerns for oncogenicity, developmental toxicity, liver and kidney effects, sensitization, and irritation based on data for analogous chemicals. Based on SAR estimates for esters and other analogous chemicals. EPA predicts toxicity to aquatic organisms may occur at concentrations that exceed 2 ppb in surface waters. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposures);

    2. Establishment and use of a hazard communication program, including precautionary statements on each label and in the SDS;

    3. No manufacture of the substance in the United States (i.e. import only);

    4. No use other than the confidential use allowed by the Order;

    5. No exceedance of the confidential annual production volume limit in the Order; and

    6. No release of the substance to surface waters.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the fate and toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of acute toxicity, mutagenicity, sensitization, internal organ toxicity, reproductive/developmental toxicity, biodegradation, bioconcentration, and acute and chronic aquatic toxicity testing may be potentially useful in characterizing the health and environmental effects of the PMN substance. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11109.

    PMN Number P-17-179

    Chemical name: Modified carboxypolyamine salt (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: July 31, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the substance will be used as a dispersive additive for pigments in industrial paints and coatings. EPA identified concerns for skin irritation and lung toxicity based on cationic binding properties. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. Submission to EPA of certain toxicity testing before excceding the confidential production volume limit specified in the Order;

    2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposures);

    3. Establishment and use of a hazard communication program, including precautionary statements on each label and in the SDS;

    4. Refrain from manufacture, process or use activities that result in inhalation exposure to vapor, dust, mist or aerosols;

    5. No use other than a dispersive additive for pigments in industrial paints and coatings;

    6. No processing or use of the substance in a paint or coating formulation greater than 1% by weight or volume; and

    7. No manufacture of the substance in the United States (i.e. import only).

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the production limit in the Order without performing specific pulmonary effects testing of the PMN substance.

    CFR citation: 40 CFR 721.11110.

    PMN Number P-17-222

    Chemical name: 1, 3,5-Triazine-2,4-diamine, 6-phenyl-, reaction products with polyalkylene glycol mono- alkyl ether and 2,4-toluene diisocyanate (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: July 28, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as an additive open non-dispersive use. EPA identified concerns for dermal sensitization, respiratory sensitization, lung effects, neurotoxicity, and developmental toxicity based on the potential for residual diisocyanates. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. Refrain from manufacture, process or use activities that result in inhalation exposure to vapor, dust, mist or aerosols;

    2. Not sell the substance for “consumer use” or for “commercial uses” (as the term is defined at 40 CFR 721.3) when the “saleable goods or service” could introduce the material into a “consumer” setting (as that term is defined in 40 CFR 721.3);

    3. Use the substance only in a formulation for the use allowed in the Order with isocyanate residuals not greater than 0.1 percent by weight or volume; and

    4. Import the substance where there is no more than 0.15% residual toluene isocyanate.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of a sensitization test and pulmonary effects test may be potentially useful in characterizing the health effects of the PMN substance. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11111.

    PMN Number P-17-231

    Chemical name: Fatty acids, polymers with benzoic acid, cyclohexanedicarboxylic acid anhydride, aliphatic diisocyanate, alkyl diol, alkyl triol, pentaerythritol, phthalic anhydride, polyalkylene glycol amine, and aromatic dicarboxylate sulfonic acid sodium salt (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: July 20, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a paint, stain, or primer coating. EPA identified concerns for dermal sensitization, respiratory sensitization, lung effects, neurotoxicity, and developmental toxicity based on the potential for residual diisocyanates. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to health and the environment.

    To protect against potential risks, the Order requires:

    1. Manufacture of the substance where there is no more than 0.1% residual isocyanate.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of a sensitization test and a pulmonary effects test may be potentially useful in characterizing the health effects of the PMN substance. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11112.

    PMN Numbers P-17-247 and P-17-248

    Chemical names: Branched alkyl (C=17) carboxylic acid (generic) (P-17-247) and branched alkyl (C=18) alcohol (generic) (P-17-248).

    CAS numbers: Not available.

    Effective date of TSCA section 5(e) Order: June 29, 2017.

    Basis for TSCA section 5(e) Order: The PMNs state that the generic (non-confidential) use of the substances will be as chemical raw materials. EPA identified human health and environmental concerns because the substances may be persistent, bioaccumulative, and toxic (PBT) chemicals. EPA estimates that the substances will persist in the environment for more than two months and estimates a bioaccumulation factor of greater than or equal to 1,000. Based on analogue data EPA identified concerns for developmental toxicity, liver, kidney, and thyroid effects, dermal sensitization, and irritation. Based on SAR estimates for neutral organic chemicals, EPA predicts toxicity to aquatic organisms may occur at concentrations that exceed 1 ppb in surface waters. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substances may present an unreasonable risk of injury to health and the environment. To protect against potential risks, the Order requires:

    1. Submission to EPA of certain toxicity testing before exceeding the confidential production volume limit specified in the Order;

    2. Use of personal protective equipment to prevent dermal exposure (where there is a potential for dermal exposures);

    3. Establishment and use of a hazard communication program, including precautionary statements on each label and in the SDS;

    4. Refrain from manufacture, process or use activities that result in inhalation exposure to vapor, dust, mist or aerosols;

    5. No use other than as a chemical intermediate;

    6. No manufacture of the substances in the United States (i.e. import only); and

    7. No release of the substances to surface waters.

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the bioaccumulation and toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. The submitter has agreed not to exceed the production limit in the Order without performing specific sensitization, internal organ effect, and reproductive/developmental testing of the PMN substances. In addition, EPA has determined that the results of acute aquatic toxicity and bioaccumulation testing may be potentially useful in characterizing the environmental and health effects of the PMN substances. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citations: 40 CFR 721.11113 P-17-247 and 40 CFR 721.11114 P-17-248.

    PMN Number P-17-260

    Chemical name: Alkoxy silane modified butadiene styrene copolymer (generic).

    CAS number: Not available.

    Effective date of TSCA section 5(e) Order: July 10, 2017.

    Basis for TSCA section 5(e) Order: The PMN states that the generic (non-confidential) use of the substance will be as a resin modifier. EPA identified concerns for lung effects based on test data for the substance and data for analogous alkoxysilane non-ionic polymers. The Order was issued under TSCA sections 5(a)(3)(B)(ii)(I) and 5(e)(1)(A)(ii)(I), based on a finding that the substance may present an unreasonable risk of injury to human health. To protect against potential risks, the Order requires:

    1. Refrain from manufacture, process or use activities that result in inhalation exposure to vapor, dust, mist or aerosols; and

    2. No use other than the confidential use allowed by the Order;

    The SNUR designates as a “significant new use” the absence of these protective measures.

    Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance in support of a request by the PMN submitter to modify the Order, or if a manufacturer or processor is considering submitting a SNUN for a significant new use that will be designated by this SNUR. EPA has determined that the results of pulmonary effects test may be potentially useful in characterizing the health effects of the PMN substance. Although the Order does not require this additional testing, the Order's restrictions on manufacture, processing, distribution in commerce, use, and disposal will remain in effect until the Order is modified or revoked by EPA based on submission of this or other information that EPA determines is relevant and needed to evaluate a modification request.

    CFR citation: 40 CFR 721.11115.

    V. Rationale and Objectives of the Rule A. Rationale

    During review of the PMNs submitted for the chemical substances that are subject to these SNURs, EPA concluded that for all 19 chemical substances, regulation was warranted under TSCA section 5(e), pending the development of information sufficient to make reasoned evaluations of the health or environmental effects of the chemical substances. The basis for such findings is outlined in Unit IV. Based on these findings, TSCA section 5(e) Orders requiring the use of appropriate exposure controls were negotiated with the PMN submitters.

    The SNURs identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).

    B. Objectives

    EPA is issuing these SNURs for specific chemical substances which have undergone premanufacture review because the Agency wants to achieve the following objectives with regard to the significant new uses designated in this rule:

    • EPA will receive notice of any person's intent to manufacture or process a listed chemical substance for the described significant new use before that activity begins.

    • EPA will have an opportunity to review and evaluate data submitted in a SNUN before the notice submitter begins manufacturing or processing a listed chemical substance for the described significant new use.

    • EPA will be able to either determine that the prospective manufacture or processing is not likely to present an unreasonable risk, or to take necessary regulatory action associated with any other determination, before the described significant new use of the chemical substance occurs.

    • EPA will identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).

    Issuance of a SNUR for a chemical substance does not signify that the chemical substance is listed on the TSCA Chemical Substance Inventory (TSCA Inventory). Guidance on how to determine if a chemical substance is on the TSCA Inventory is available on the internet at http://www.epa.gov/opptintr/existingchemicals/pubs/tscainventory/index.html.

    VI. Direct Final Procedures

    EPA is issuing these SNURs as a direct final rule. The effective date of this rule is October 26, 2018 without further notice, unless EPA receives written adverse comments before September 26, 2018.

    If EPA receives written adverse comments on one or more of these SNURs before September 26, 2018, EPA will withdraw the relevant sections of this direct final rule before its effective date.

    This rule establishes SNURs for a number of chemical substances. Any person who submits adverse comments must identify the chemical substance and the new use to which it applies. EPA will not withdraw a SNUR for a chemical substance not identified in the comment.

    VII. Applicability of the Significant New Use Designation

    To establish a significant new use, EPA must determine that the use is not ongoing. The chemical substances subject to this rule have undergone premanufacture review. In cases where EPA has not received a notice of commencement (NOC) and the chemical substance has not been added to the TSCA Inventory, no person may commence such activities without first submitting a PMN. Therefore, for chemical substances for which an NOC has not been submitted EPA concludes that the designated significant new uses are not ongoing.

    When chemical substances identified in this rule are added to the TSCA Inventory, EPA recognizes that, before the rule is effective, other persons might engage in a use that has been identified as a significant new use. However, TSCA section 5(e) Orders have been issued for all of the chemical substances, and the PMN submitters are prohibited by the TSCA section 5(e) Orders from undertaking activities which will be designated as significant new uses. The identities of the 19 chemical substances subject to these rules have been claimed as confidential and EPA has received no post-PMN bona fide submission (per §§ 720.25 and 721.11) for a chemical substance covered by this action. Based on this, the Agency believes that it is highly unlikely that any of the significant new uses described in the regulatory text of this rule are ongoing.

    Therefore, EPA designates August 27, 2018 as the cutoff date for determining whether the new use is ongoing. The objective of EPA's approach has been to ensure that a person could not defeat a SNUR by initiating a significant new use before the effective date of the direct final rule. In developing this rule, EPA has recognized that, given EPA's practice of on occasion posting rules on its website a week or more in advance of Federal Register publication, this objective could be thwarted even before that publication.

    Persons who begin commercial manufacture or processing of the chemical substances for a significant new use identified as of that date will have to cease any such activity upon the effective date of the final rule. To resume their activities, these persons will have to first comply with all applicable SNUR notification requirements and wait until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.

    VIII. Development and Submission of Information

    EPA recognizes that TSCA section 5 does not require developing any particular new information (e.g., generating test data) before submission of a SNUN. There is an exception: Development of test data is required where the chemical substance subject to the SNUR is also subject to a rule, order or consent agreement under TSCA section 4 (see TSCA section 5(b)(1)).

    In the absence of a TSCA section 4 test rule covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to or reasonably ascertainable by them (see 40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing. Unit IV. lists potentially useful information for all of the listed SNURs. Descriptions of this information is provided for informational purposes. EPA strongly encourages persons, before performing any testing, to consult with the Agency pertaining to protocol selection. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing in vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialog with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h). To access the OCSPP test guidelines referenced in this document electronically, please go to http://www.epa.gov/ocspp and select “Test Methods and Guidelines.” The Organisation for Economic Co-operation and Development (OECD) test guidelines are available from the OECD Bookshop at http://www.oecdbookshop.org or SourceOECD at http://www.sourceoecd.org.

    In certain of the TSCA section 5(e) Orders for the chemical substances regulated under this rule, EPA has established production volume limits in view of the lack of data on the potential health and environmental risks that may be posed by the significant new uses or increased exposure to the chemical substances. These limits cannot be exceeded unless the PMN submitter first submits the results of specified tests that would permit a reasoned evaluation of the potential risks posed by these chemical substances. Under recent TSCA section 5(e) Orders, each PMN submitter is required to submit each study at least 14 weeks (earlier TSCA section 5(e) Orders required submissions at least 12 weeks) before reaching the specified production limit. The SNURs contain the same production volume limits as the TSCA section 5(e) Orders. Exceeding these production limits is defined as a significant new use. Persons who intend to exceed the production limit must notify the Agency by submitting a SNUN at least 90 days in advance of commencement of non-exempt commercial manufacture or processing.

    Any request by EPA for the triggered and pended testing described in the Orders was made based on EPA's consideration of available screening-level data, if any, as well as other available information on appropriate testing for the PMN substances. Further, any such testing request on the part of EPA that includes testing on vertebrates was made after consideration of available toxicity information, computational toxicology and bioinformatics, and high-throughput screening methods and their prediction models.

    The potentially useful information identified in Unit IV. may not be the only means of addressing the potential risks of the chemical substance. However, submitting a SNUN without any test data or other information may increase the likelihood that EPA will take action under TSCA section 5(e), particularly if satisfactory test results have not been obtained from a prior PMN or SNUN submitter. EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to generate useful information.

    SNUN submitters should be aware that EPA will be better able to evaluate SNUNs which provide detailed information on the following:

    • Human exposure and environmental release that may result from the significant new use of the chemical substances.

    • Information on risks posed by the chemical substances compared to risks posed by potential substitutes.

    IX. Procedural Determinations

    By this rule, EPA is establishing certain significant new uses which have been claimed as CBI subject to Agency confidentiality regulations at 40 CFR part 2 and 40 CFR part 720, subpart E. Absent a final determination or other disposition of the confidentiality claim under 40 CFR part 2 procedures, EPA is required to keep this information confidential. EPA promulgated a procedure to deal with the situation where a specific significant new use is CBI, at § 721.1725(b)(1).

    Under these procedures a manufacturer or processor may request EPA to determine whether a proposed use would be a significant new use under the rule. The manufacturer or processor must show that it has a bona fide intent to manufacture or process the chemical substance and must identify the specific use for which it intends to manufacture or process the chemical substance. If EPA concludes that the person has shown a bona fide intent to manufacture or process the chemical substance, EPA will tell the person whether the use identified in the bona fide submission would be a significant new use under the rule. Since most of the chemical identities of the chemical substances subject to these SNURs are also CBI, manufacturers and processors can combine the bona fide submission under the procedure in §  721.1725(b)(1) with that under §  721.11 into a single step.

    If EPA determines that the use identified in the bona fide submission would not be a significant new use, i.e., the use does not meet the criteria specified in the rule for a significant new use, that person can manufacture or process the chemical substance so long as the significant new use trigger is not met. In the case of a production volume trigger, this means that the aggregate annual production volume does not exceed that identified in the bona fide submission to EPA. Because of confidentiality concerns, EPA does not typically disclose the actual production volume that constitutes the use trigger. Thus, if the person later intends to exceed that volume, a new bona fide submission would be necessary to determine whether that higher volume would be a significant new use.

    X. SNUN Submissions

    According to §  721.1(c), persons submitting a SNUN must comply with the same notification requirements and EPA regulatory procedures as persons submitting a PMN, including submission of test data on health and environmental effects as described in 40 CFR 720.50. SNUNs must be submitted on EPA Form No. 7710-25, generated using e-PMN software, and submitted to the Agency in accordance with the procedures set forth in 40 CFR 720.40 and § 721.25. E-PMN software is available electronically at http://www.epa.gov/opptintr/newchems.

    XI. Economic Analysis

    EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers and processors of the chemical substances subject to this rule. EPA's complete economic analysis is available in the docket under docket ID number EPA-HQ-OPPT-2017-0464.

    XII. Statutory and Executive Order Reviews A. Executive Order 12866

    This action establishes SNURs for several new chemical substances that were the subject of PMNs and TSCA section 5(e) Orders. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled Regulatory Planning and Review” (58 FR 51735, October 4, 1993).

    B. Paperwork Reduction Act (PRA)

    According to PRA (44 U.S.C. 3501 et seq.), an agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register, are listed in 40 CFR part 9, and included on the related collection instrument or form, if applicable. EPA is amending the table in 40 CFR part 9 to list the OMB approval number for the information collection requirements contained in this action. This listing of the OMB control numbers and their subsequent codification in the CFR satisfies the display requirements of PRA and OMB's implementing regulations at 5 CFR part 1320. This Information Collection Request (ICR) was previously subject to public notice and comment prior to OMB approval, and given the technical nature of the table, EPA finds that further notice and comment to amend it is unnecessary. As a result, EPA finds that there is “good cause” under section 553(b)(3)(B) of the Administrative Procedure Act (5 U.S.C. 553(b)(3)(B)) to amend this table without further notice and comment.

    The information collection requirements related to this action have already been approved by OMB pursuant to PRA under OMB control number 2070-0012 (EPA ICR No. 574). This action does not impose any burden requiring additional OMB approval. If an entity were to submit a SNUN to the Agency, the annual burden is estimated to average between 30 and 170 hours per response. This burden estimate includes the time needed to review instructions, search existing data sources, gather and maintain the data needed, and complete, review, and submit the required SNUN.

    Send any comments about the accuracy of the burden estimate, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques, to the Director, Collection Strategies Division, Office of Environmental Information (2822T), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001. Please remember to include the OMB control number in any correspondence, but do not submit any completed forms to this address.

    C. Regulatory Flexibility Act (RFA)

    On February 18, 2012, EPA certified pursuant to RFA section 605(b) (5 U.S.C. 601 et seq.), that promulgation of a SNUR does not have a significant economic impact on a substantial number of small entities where the following are true:

    1. A significant number of SNUNs would not be submitted by small entities in response to the SNUR.

    2. The SNUR submitted by any small entity would not cost significantly more than $8,300.

    A copy of that certification is available in the docket for this action.

    This action is within the scope of the February 18, 2012 certification. Based on the Economic Analysis discussed in Unit XI. and EPA's experience promulgating SNURs (discussed in the certification), EPA believes that the following are true:

    • A significant number of SNUNs would not be submitted by small entities in response to the SNUR.

    • Submission of the SNUN would not cost any small entity significantly more than $8,300.

    Therefore, the promulgation of the SNUR would not have a significant economic impact on a substantial number of small entities.

    D. Unfunded Mandates Reform Act (UMRA)

    Based on EPA's experience with proposing and finalizing SNURs, State, local, and Tribal governments have not been impacted by these rulemakings, and EPA does not have any reasons to believe that any State, local, or Tribal government will be impacted by this action. As such, EPA has determined that this action does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of UMRA sections 202, 203, 204, or 205 (2 U.S.C. 1501 et seq.).

    E. Executive Order 13132

    This action will not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999).

    F. Executive Order 13175

    This action does not have Tribal implications because it is not expected to have substantial direct effects on Indian Tribes. This action does not significantly nor uniquely affect the communities of Indian Tribal governments, nor does it involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), do not apply to this action.

    G. Executive Order 13045

    This action is not subject to Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined by Executive Order 12866, and this action does not address environmental health or safety risks disproportionately affecting children.

    H. Executive Order 13211

    This action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because this action is not expected to affect energy supply, distribution, or use and because this action is not a significant regulatory action under Executive Order 12866.

    I. National Technology Transfer and Advancement Act (NTTAA)

    In addition, since this action does not involve any technical standards, NTTAA section 12(d) (15 U.S.C. 272 note), does not apply to this action.

    J. Executive Order 12898

    This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

    XIII. Congressional Review Act

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

    List of Subjects 40 CFR Part 9

    Environmental protection, Reporting and recordkeeping requirements.

    40 CFR Part 721

    Environmental protection, Chemicals, Hazardous substances, Reporting and recordkeeping requirements.

    Dated: August 17, 2018. Jeffery T. Morris, Director, Chemical Control Division, Office of Pollution Prevention and Toxics.

    Therefore, 40 CFR parts 9 and 721 are amended as follows:

    PART 9—[AMENDED] 1. The authority citation for part 9 continues to read as follows: Authority:

    7 U.S.C. 135 et seq., 136-136y; 15 U.S.C. 2001, 2003, 2005, 2006, 2601-2671; 21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33 U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318, 1321, 1326, 1330, 1342, 1344, 1345(d) and (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971-1975 Comp. p. 973; 42 U.S.C. 241, 242b, 243, 246, 300f, 300g, 300g-1, 300g-2, 300g-3, 300g-4, 300g-5, 300g-6, 300j-1, 300j-2, 300j-3, 300j-4, 300j-9, 1857 et seq., 6901-6992k, 7401-7671q, 7542, 9601-9657, 11023, 11048.

    2. In §  9.1, add the following sections in numerical order under the undesignated center heading “Significant New Uses of Chemical Substances” to read as follows:
    §  9.1 OMB approvals under the Paperwork Reduction Act. 40 CFR citation OMB
  • control No.
  • *    *    *    *    * Significant New Uses of Chemical Substances *    *    *    *    * 721.11097 2070-0012 721.11098 2070-0012 721.11099 2070-0012 721.11100 2070-0012 721.11101 2070-0012 721.11102 2070-0012 721.11103 2070-0012 721.11104 2070-0012 721.11105 2070-0012 721.11106 2070-0012 721.11107 2070-0012 721.11108 2070-0012 721.11109 2070-0012 721.11110 2070-0012 721.11111 2070-0012 721.11112 2070-0012 721.11113 2070-0012 721.11114 2070-0012 721.11115 2070-0012 *    *    *    *    *
    PART 721—[AMENDED] 3. The authority citation for part 721 continues to read as follows: Authority:

    15 U.S.C. 2604, 2607, and 2625(c).

    4. Add §  721.11097 to subpart E to read as follows:
    §  721.11097 Benzene, 1,4-bis(alkyl)-, homopolymer (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically benzene, 1,4-bis(alkyl)-, homopolymer (PMN P-15-719) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentrations set at 1.0 percent), (f), (g)(4)(i), (iii), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (ii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(k) and (q).

    (iii) Disposal. Requirements as specified in § 721.85(a)(1), (2), (b)(1), (2), (c)(1), and (2).

    (iv) Release to water. Requirements as specified in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a), (b), (c), and (f) through (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    5. Add §  721.11098 to subpart E to read as follows:
    §  721.11098 Polyethylene glycol polymer with aliphatic polycarbodiimide bis(alkoxysilylpropyl) amine blocked (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as polyethylene glycol polymer with aliphatic polycarbodiimide bis(alkoxysilylpropyl) amine blocked (PMN P-16-99) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (a)(3), (a)(4), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) and (a)(4), engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (a)(5) (respirators must provide a National Institute for Occupational Safety and Health (NIOSH) with an assigned protection factor (APF) of at least 10), (a)(6)(particulate), (b)(concentrations set at 1.0 percent) and (c).

    (A) As an alternative to the respirator requirements in paragraph (a)(2)(i) of this section, a manufacturer or processor may choose to follow the new chemical exposure limit (NCEL) provision listed in the TSCA section 5(e) Order for this substance. The NCEL is 0.9 mg/m3 as an 8-hour time weighted average. Persons who wish to pursue NCELs as an alternative to § 721.63 respirator requirements may request to do so under § 721.30. Persons whose § 721.30 requests to use the NCELs approach are approved by EPA will be required to follow NCELs provisions comparable to those contained in the corresponding TSCA section 5(e) Order.

    (B) [Reserved]

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 1.0 percent), (f), (g)(1)(ii), (g)(2)(ii), (iii), (use respiratory protection or maintain workplace airborne concentrations at or below an 8-hour time-weighted average of 0.9 mg/m3), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(k), (q) and (t). It is a significant new use to process or use the chemical substance other than for commercial use but without any use in a consumer setting. It is a significant new use to manufacture the chemical substance containing greater than 0.2% residual isocyanate.

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    6. Add §  721.11099 to subpart E to read as follows:
    §  721.11099 Fluorinated organopolysilazane (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as a fluorinated organopolysilazane (PMN P-16-221) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(3), (a)(4), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (a)(6)(particulate), (a)(6)(v), (vi), (b)(concentrations set at 1.0 percent), and (c).

    (ii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(f), (p) (204 kilograms) and (s)(100 kilograms). It is a significant new use to use the substance other than in confidential coating system allowed in the Order.

    (iii) Release to water. Requirements as specified in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (e), (i), and (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    7. Add §  721.11100 to subpart E to read as follows:
    §  721.11100 Carbopolycycle-bis(diazonium), dihalo-, chloride (1:2), reaction products with metal hydroxide, 4-[(dioxoalkyl)amino]substituted benzene, 2-[(dioxoalkyl)amino]substituted benzene, 5-[(dioxoalkyl)amino]-2-hydroxy-substituted benzene and oxo-n-phenylalkanamide (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as carbopolycycle-bis(diazonium), dihalo-, chloride (1:2), reaction products with metal hydroxide, 4-[(dioxoalkyl)amino] substituted benzene, 2-[(dioxoalkyl)amino]substituted benzene, 5-[(dioxoalkyl) amino] 2-hydroxy-substituted benzene and oxo-n-phenylalkanamide (PMN P-16-359) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(3), (a)(4), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1), engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (a)(6)(particulate), (b)(concentrations set at 0.1 percent) and (c).

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 0.1 percent), (f), (g)(1)(iv), (vii), (g)(2)(i), (ii), (do not process or use at greater than 200 degrees Celsius), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80 (f) and (q). It is a significant new use to process or use the PMN substance at a temperature greater than 200 degrees C.

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    8. Add §  721.11101 to subpart E to read as follows:
    §  721.11101 Blocked polyester polyurethane, neutralized (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as blocked polyester polyurethane, neutralized (PMN P-16-363) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (a)(2)(i), (ii), (iii), (a)(3), (a)(6)(particulate), (a)(6)(v), (vi) (b)(concentrations set at 0.1 percent) and (c).

    (ii) Hazard communication. Requirements as specified in § 721.72 (a) through (e)(concentration set 0.1 percent), (f), (g)(1)(i), (ii), (g)(2)(i), (ii), (iii), (iv), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80 It is a significant new use to manufacture, process, or use the substance with a residual of free isocyanate monomers greater than 0.1 percent by weight. It is a significant new use to modify manufacture, process or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols to the substance. It is a significant new use to manufacture, process, or use the substance for consumer use, or for commercial uses when the saleable goods or service could introduce the substance into a consumer setting. It is a significant new use to manufacture, process, or use the substance other than in an aqueous formulation.

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    9. Add §  721.11102 to subpart E to read as follows:
    §  721.11102 Methoxy-terminated polysiloxane (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as methoxy-terminated polysiloxane (PMN P-16-370) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (ii), (iii), (a)(3), (a)(4), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) and (a)(4), engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (a)(5) (respirators must provide a National Institute for Occupational Safety and Health (NIOSH) assigned protection factor (APF) of at least 25), (a)(6)(particulate), (a)(6)(v), (vi), (b)(concentrations set at 1.0 percent), and (c).

    (A) As an alternative to the respirator requirements in paragraph (a)(2)(i) of this section, a manufacturer or processor may choose to follow the new chemical exposure limit (NCEL) provision listed in the TSCA section 5(e) Order for this substance. The NCEL is 8.4 milligrams per cubic meter as an 8-hour time weighted average. Persons who wish to pursue NCELs as an alternative to § 721.63 respirator requirements may request to do so under § 721.30. Persons whose § 721.30 requests to use the NCELs approach are approved by EPA will be required to follow NCELs provisions comparable to those contained in the corresponding TSCA section 5(e) Order.

    (B) [Reserved]

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 1.0 percent), (f), (g)(1)(i), (ii), (g)(2)(i), (ii), (iii), (use respiratory protection or maintain workplace airborne concentrations at or below an 8-hour time-weighted average of 8.4 mg/m3), (g)(2)(v), (do not use for spray application), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(q), and (y)(1). It is a significant new use to manufacture, process, or use the substance for consumer use, or for commercial uses when the saleable goods or service could introduce the substance into a consumer setting.

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    10. Add §  721.11103 to subpart E to read as follows:
    §  721.11103 Hydroxystyrene resin (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as hydroxystyrene resin (PMN P-16-376) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80 It is a significant new use to manufacture the PMN substance with an average molecular weight less than 2906 daltons and to have greater than 0.5 percent low weight molecular species less than 500 daltons and 1.0 percent low weight molecular species less than 1000 daltons.

    (ii) [Reserved]

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    11. Add §  721.11104 to subpart E to read as follows:
    §  721.11104 Benzenesulfonic acid 1,2-diazenediylbis[6-ethenyl]-3-sulfophenyl diazenyl-2-sulfophenyl ethenyl salt (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as benzenesulfonic acid 1,2-diazenediylbis[6-ethenyl]-3-sulfophenyl diazenyl-2-sulfophenyl ethenyl salt (PMN P-16-487) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (a)(3), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (b) (concentration set 1.0 percent), and (c).

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 1.0 percent), (f), (g)(1)(iv), (vi), (ix), (blood effects), (g)(2)(i), (v), (g)(3)(i), (ii), (g)(4)(water release restrictions apply), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(f), (k), and (q). It is a significant new use to import the substance other than in solution.

    (iv) Release to water. Requirements as specified in § 721.90(a)(4), (b)(4), and (c)(4) where N = 55.

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    12. Add §  721.11105 to subpart E to read as follows:
    §  721.11105 Ethanaminium, alkyl-, salt with triazole (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as ethanaminium, alkyl-, salt with triazole (PMN P-16-533) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (ii), (iii), (a)(3), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (a)(6)(particulate), (a)(6)(v), (vi), (b) (concentration set 0.1 percent), and (c).

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 0.1 percent), (f), (g)(1)(i), (iii), (v), (vii), (ix), (g)(2)(i), (ii), (iii), (v), (g)(3)(i), (ii), (g)(4)(iii), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(k) and (q). It is a significant new use to modify the manufacture, process or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols to the substance.

    (iv) Release to water. Requirements as specified in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) and (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    13. Add §  721.11106 to subpart E to read as follows:
    §  721.11106 Substituted-(hydroxyalkyl)-alkyl-alkanoic acid, hydroxy-(substitutedalkyl)-alkyl-, polymer with alpha-hydro-omega-hydroxypoly[oxy (alkylethanediyl)] and isocyanato-(isocyanatoalkyl)-multialkylcycloalkane, salt, alkanol-blocked, compds. (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as substituted-(hydroxyalkyl)-alkyl-alkanoic acid, hydroxy-(substitutedalkyl)-alkyl-, polymer with alpha-hydro-omega-hydroxypoly [oxy(alkylethanediyl)] and isocyanato-(isocyanatoalkyl)-multialkylcycloalkane, salt, alkanol-blocked, compds. (PMN P-16-595) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(f) and (k). It is a significant new use to import the substance other than as required in the Order.

    (ii) Release to water. Requirements as specified in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) (b), (c), (i), and (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    14. Add §  721.11107 to subpart E to read as follows:
    §  721.11107 Alkanediol, 2,2-bis (substituted alkyl)- polymer with substituted alkane, heteromonocycles, alkenoate (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as alkanediol, 2,2-bis (substituted alkyl)- polymer with substituted alkane, heteromonocycles, alkenoate (PMN P-17-170) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the PMN substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (a)(3), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (b)(concentration set 0.1 percent), and (c)

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 0.1 percent), (f), (g)(1)(i), (ii), (v), (vii), (ix), (g)(2)(i), (v), (g)(4) and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80 (k)(ultraviolet curable coating resin for three dimensional printing applications) and (p)(105,000 kilograms). It is a significant new use to modify the manufacture, process or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols to the substance. It is a significant new use to manufacture the chemical substance containing greater than 0.1 percent residual isocyanate or an average molecular weight below 1,000 daltons.

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    15. Add §  721.11108 to subpart E to read as follows:
    §  721.11108 Sulfurized alkylphenol, calcium salts (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as sulfurized alkylphenol, calcium salts (PMN P-17-172) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section.

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(k). It is a significant new use to modify the manufacture, process or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols to the substance.

    (ii) [Reserved]

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a), (b), (c), and (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    16. Add §  721.11109 to subpart E to read as follows:
    §  721.11109 Monoheteropentacycloalkane-4-carboxylic acid, substituted cyclo-alkyl ester (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as monoheteropentacycloalkane-4-carboxylic acid, substituted cyclo-alkyl ester (PMN P-17-177) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(3), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (b)(concentration set 0.1 percent), and (c).

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 0.1 percent), (f), (g)(1)(i), (ii), (iv), (vi), (vii), (ix), (skin, eye, and mucous membrane irritation), (g)(2)(i), (ii), (iii), (v), (g)(3)(i), (ii), (g)(4)(i), (ii), (iii) and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(f), (k), and (t).

    (iv) Release to water. Requirements as specified in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) and (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    17. Add §  721.11110 to subpart E to read as follows:
    §  721.11110 Modified carboxypolyamine salt (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as modified carboxypolyamine salt (PMN P-17-179) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (iv), (a)(3), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (a)(6)(particulate), (a)(6)(v), (vi), (b)(concentration set 0.1 percent), and (c).

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 0.1 percent), (f), (g)(1)(i), (ii), (g)(2)(i), (ii), (v), (g)(3)(i), (ii), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(f), (k)(dispersive additive for pigments in industrial paints and coatings) and (q). It is a significant new use to process or use the substance in a paint or coating formulation greater than 1 percent by weight or volume. It is a significant new use to process or use the substance resulting in inhalation exposure to a vapor, dust, mist or aerosol at greater than 1 percent by weight or volume.

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    18. Add §  721.11111 to subpart E to read as follows:
    §  721.11111 1,3,5-Triazine-2,4-diamine, 6-phenyl-, reaction products with polyalkylene glycol mono- alkyl ether and 2,4-toluene diisocyanate (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as 1,3,5-triazine-2,4-diamine, 6-phenyl-, reaction products with polyalkylene glycol mono-alkyl ether and 2,4-toluene diisocyanate (PMN P-17-222) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the PMN substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(k)(use of the substance in the formulation for the use allowed in the Order with isocyanate residuals not greater than 0.1 percent by weight or volume). It is a significant new use to process or use the chemical substance other than for commercial use but without any use in a consumer setting. It is a significant new use to modify the manufacture, process or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols to the substance. It is a significant new use to import the chemical substance containing greater than 0.15 percent residual isocyanate.

    (ii) [Reserved]

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a), (b), (c), and (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(i) of this section.

    19. Add §  721.11112 to subpart E to read as follows:
    §  721.11112 Fatty acids, polymers with benzoic acid, cyclohexanedicarboxylic acid anhydride, aliphatic diisocyanate, alkyl diol, alkyl triol, pentaerythritol, phthalic anhydride, polyalkylene glycol amine, and aromatic dicarboxylate sulfonic acid sodium salt (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as fatty acids, polymers with benzoic acid, cyclohexanedicarboxylic acid anhydride, aliphatic diisocyanate, alkyl diol, alkyl triol, pentaerythritol, phthalic anhydride, polyalkylene glycol amine, and aromatic dicarboxylate sulfonic acid sodium salt (PMN P-17-231) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80. It is a significant new use to manufacture the chemical substance containing greater than 0.1 percent residual isocyanate.

    (ii) [Reserved]

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a), (b), (c), and (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    20. Add §  721.11113 to subpart E to read as follows:
    §  721.11113 Branched alkyl (C = 17) carboxylic acid (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as branched alkyl (C = 17) carboxylic acid (PMN P-17-247) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (ii), (iii), (a)(3), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (b)(concentration set 1.0 percent), and (c).

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 1.0 percent), (f), (g)(1)(irritation), (sensitization), (g)(1)(iv), (vi), (ix), (g)(2)(i), (ii), (iii), (v), (g)(3)(i), (ii), (g)(4)(iii), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(f), (g) and (q). It is a significant new use to modify the manufacture, process or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols to the substance.

    (iv) Release to water. Requirements as specified in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) and (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    21. Add §  721.11114 to subpart E to read as follows:
    §  721.11114 Branched alkyl (C = 18) alcohol (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as branched alkyl (C = 18) alcohol (PMN P-17-248) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Protection in the workplace. Requirements as specified in § 721.63(a)(1), (a)(2)(i), (ii), (iii), (a)(3), when determining which persons are reasonably likely to be exposed as required for § 721.63(a)(1) engineering control measures (e.g., enclosure or confinement of the operation, general and local ventilation) or administrative control measures (e.g., workplace policies and procedures) shall be considered and implemented to prevent exposure, where feasible, (b)(concentration set 1.0 percent), and (c).

    (ii) Hazard communication. Requirements as specified in § 721.72(a) through (e)(concentration set 1.0 percent), (f), (g)(1)(irritation), (sensitization), (g)(1)(iv), (vi), (ix), (g)(2)(i), (ii),)(iii), (v), (g)(3)(i), (ii), (g)(4)(iii), and (g)(5). Alternative hazard and warning statements that meet the criteria of the Globally Harmonized System (GHS) and OSHA Hazard Communication Standard may be used.

    (iii) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(f), (g) and (q). It is a significant new use to modify the manufacture, process or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols to the substance.

    (iv) Release to water. Requirements as specified in § 721.90(a)(1), (b)(1), and (c)(1).

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a) through (i) and (k) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(iii) of this section.

    22. Add §  721.11115 to subpart E to read as follows:
    §  721.11115 Alkoxy silane modified butadiene styrene copolymer (generic).

    (a) Chemical substance and significant new uses subject to reporting. (1) The chemical substance identified generically as alkoxy silane modified butadiene styrene copolymer (PMN P-17-260) is subject to reporting under this section for the significant new uses described in paragraph (a)(2) of this section. The requirements of this section do not apply to quantities of the substance after they have been reacted (cured).

    (2) The significant new uses are:

    (i) Industrial, commercial, and consumer activities. Requirements as specified in § 721.80(k). It is a significant new use to modify the manufacture, process or use activities if it results in inhalation exposure to vapor, dust, mist or aerosols to the substance.

    (ii) [Reserved]

    (b) Specific requirements. The provisions of subpart A of this part apply to this section except as modified by this paragraph.

    (1) Recordkeeping. Recordkeeping requirements as specified in § 721.125(a), (b), (c), and (i) are applicable to manufacturers and processors of this substance.

    (2) Limitations or revocation of certain notification requirements. The provisions of § 721.185 apply to this section.

    (3) Determining whether a specific use is subject to this section. The provisions of § 721.1725(b)(1) apply to paragraph (a)(2)(i) of this section.

    [FR Doc. 2018-18403 Filed 8-24-18; 8:45 am] BILLING CODE 6560-50-P
    FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [MB Docket Nos. 18-214, 12-268; FCC 18-113] LPTV, TV Translator, and FM Broadcast Station Reimbursement; Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions AGENCY:

    Federal Communications Commission.

    ACTION:

    Final action.

    SUMMARY:

    In this document, the Commission directs the Media Bureau to engage a contractor to assist in the reimbursement process and administration of the Reimbursement Fund for LPTV, TV translator, and FM stations, and also directs the Bureau to make determinations regarding eligible costs and the reimbursement process, such as calculating the amount of allocations to eligible entities and seeking comment on a revised Catalog of Eligible Expenses. The Commission also determines that the Media Bureau will announce, pursuant to the requirements in the Reimbursement Expansion Act, when the reimbursement program for all entities eligible for reimbursement pursuant to the Spectrum Act and the Reimbursement Expansion Act will end. Finally, the Commission interprets the Reimbursement Expansion Act as providing at least $50 million for use by the Commission to fund its efforts to educate consumers about the reorganization of broadcast television spectrum under the United States Code.

    DATES:

    This action is effective August 27, 2018.

    FOR FURTHER INFORMATION CONTACT:

    Maria Mullarkey, [email protected], of the Media Bureau, Policy Division, (202) 418-2120. For additional information concerning the Paperwork Reduction Act information collection requirements contained in this document, contact Cathy Williams at (202) 418-2918 or send an email to [email protected]

    SUPPLEMENTARY INFORMATION:

    This is a summary of the Commission's Order, FCC 18-113, adopted on August 2, 2018, and released on August 3, 2018. The full text of this document is available electronically via the FCC's Electronic Document Management System (EDOCS) website at http://fjallfoss.fcc.gov/edocs_public/ or via the FCC's Electronic Comment Filing System (ECFS) website at http://fjallfoss.fcc.gov/ecfs2/. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. This document is also available for public inspection and copying during regular business hours in the FCC Reference Information Center, Federal Communications Commission, 445 12th Street SW, CY-A257, Washington, DC 20554. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format), by sending an email to [email protected] or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

    The Order does not contain new or modified information collection requirements subject to the Paperwork Reduction Act of 1995. In addition, therefore, it does not contain any new or modified information collection burdens for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002.

    I. Order

    1. Reimbursement Contractor. Similar to the approach the Commission took with respect to full power, Class A, and MVPD entities,1 we direct the Media Bureau to engage a contractor to assist in the reimbursement process and administration of the Reimbursement Fund for LPTV/translator and FM stations. We direct the Media Bureau to engage a third-party contractor to assist in the reimbursement process, which will be overseen by the Bureau.

    1See Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, Report and Order, 29 FCC Rcd 6567, 6820, paras. 618-19 (2014), 79 FR 48442 (Aug. 15, 2014), (Incentive Auction R&O).

    2. Reimbursement Process. We direct the Media Bureau to revise the forms to be used by eligible LPTV/translator and FM stations to claim reimbursement from the Reimbursement Fund and for any other Reimbursement Fund-related purposes. We also direct the Media Bureau to calculate the amount of the allocations to eligible entities from the Reimbursement Fund, develop a revised Catalog of Eligible Expenses, and make other determinations regarding eligible costs and the reimbursement process. Finally, we direct the Media Bureau to implement the necessary policies and procedures relating to eligibility certifications, allocations, draw downs, payments, obligations, and expenditures of money from the Reimbursement Fund in order to protect against waste, fraud, and abuse and in the event of bankruptcy. Given the importance of maintaining the integrity of the Fund, the Media Bureau will consult with the Office of General Counsel and the Office of the Managing Director in acting pursuant to this direction.

    3. Reimbursement Period. The Reimbursement Expansion Act 2 provides that the Commission must make all reimbursements using the additional funds appropriated by the Reimbursement Expansion Act to the Reimbursement Fund by July 3, 2023.3 With respect to LPTV/translators and FM stations, we authorize the Media Bureau to announce, in one or more public notices to be issued following the adoption of an Order, the date by which these entities must file their Eligibility Certification, when allocations to these entities will be made, the deadline by which these entities must file any remaining requests for reimbursement, and the final date when reimbursement funds will be issued.

    2See Consolidated Appropriations Act, 2018, Public Law 115-141, at Division E, Title V, sec. 511, 132 Stat. 348 (2018) (codified at 47 U.S.C. 1452(j)-(n)).

    3See 47 U.S.C. 1452(j)(3)(B). Section 511(j)(3)(C) provides that, if all reimbursements pursuant to the Spectrum Act and the Reimbursement Expansion Act have been made before July 3, 2023, “the Commission shall submit to the Secretary of the Treasury a certification that all such reimbursements have been made.” Id. sec. 1452(j)(3)(C). In addition, the Reimbursement Expansion Act provides that reimbursement payments to LPTV/translator and FM stations may not be made after April 13, 2020 unless the Commission “submits to Congress a certification that such payments are necessary to reimburse costs reasonably incurred” by such stations. See id. sec. 1452(j)(2)(C)(ii), (iii).

    4. The Commission indicated in the Incentive Auction R&O that the Media Bureau will announce the date by which full power, Class A, and MVPD entities must submit their final expense documentation to the Commission.4 At the time of that delegation, the Spectrum Act imposed a deadline for the Commission to make all required reimbursements to full power, Class A, and MVPD entities of April 13, 2020.5 The Reimbursement Expansion Act permits the Commission to extend the deadline for reimbursements to full power, Class A, and MVPD entities, from the funds appropriated for this purpose by the Reimbursement Expansion Act, beyond April 13, 2020,6 but no later than July 3, 2023, as long as the certification requirements set forth in the Reimbursement Expansion Act are met.7 The Incentive Auction R&O stated that the Media Bureau may announce the final date reimbursement funds will be issued to full power and Class A stations and MVPDs and a deadline for the submission of final expense documentation, and we clarify that the Bureau also is authorized to set deadlines for funds appropriated by the Reimbursement Expansion Act.

    4See Incentive Auction R&O, 29 FCC Rcd at 6819, para. 617.

    5 The deadline for full power and Class A stations to transition to their new channels is July 13, 2020.

    6 47 U.S.C. 1452(j)(2)(C)(i).

    7Id. sec. 1452(j)(3)(B).

    5. Consumer Education. The Reimbursement Expansion Act provides that at least $50 million from the funds appropriated to the Reimbursement Fund will be available to the Commission to make “payments solely for the purposes of consumer education relating to the reorganization of broadcast television spectrum” under 47 U.S.C. 1452(b).8 We interpret this provision as providing at least $50 million for use by the Commission to fund its efforts to educate consumers about the reorganization of broadcast television spectrum under 47 U.S.C. 1452(b), with any unused funds to be returned to the U.S. Treasury. We anticipate, among other initiatives, hosting a dedicated consumer service call center to provide consumers technical support and assistance on such matters as rescanning and other means to resolve potential reception issues. We also intend to perform targeted outreach to specific communities about rescanning, and, where appropriate, we may use local media or other outreach to disseminate rescanning information. Consumer education funding could also be used in developing additional online resources to support consumers. In all our activities, we will coordinate closely with industry stakeholders to ensure that our consumer education efforts are complementary to, and not duplicative of, industry efforts. In so doing, we will guard against unnecessary or wasteful spending. We welcome input from consumers and industry on other ways we can best use the funding to help mitigate disruption by consumers during the transition period.

    8Id. sec. 1452(j)(2)(A)(iv).

    II. Procedural Matters A. Final Regulatory Flexibility Act Analysis

    6. Because the actions taken in the Order do not require notice and comment, the Regulatory Flexibility Act does not apply.

    III. Ordering Clauses

    7. It is ordered that, pursuant to the authority contained in Sections 1, 4, 5(b), 5(c), 303, and 336(f) of the Communications Act of 1934, as amended, Section 6403 of the Middle Class Tax Relief and Job Creation Act of 2012, and Section 511, Division E, Title V of the Consolidated Appropriations Act, 2018, Pub. L. 115-141 (2018), 47 U.S.C. 151, 154, 155(b), 155(c), 303, 336(f), 1452, the Order is adopted and will become effective on August 27, 2018.

    8. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, shall send a copy of this Order to the Chief Counsel for Advocacy of the Small Business Administration.

    9. It is further ordered that the Commission will send a copy of the Order in a report to Congress and the Government Accountability Office pursuant to the Congressional Review Act (CRA), see 5 U.S.C. 801(a)(1)(A).

    Federal Communications Commission. Cecilia Sigmund, Federal Register Liaison Officer.
    [FR Doc. 2018-17945 Filed 8-24-18; 8:45 am] BILLING CODE 6712-01-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 622 [Docket No. 101206604-1758-02] RIN 0648-XG435 Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; 2018 Commercial Accountability Measures and Closure for Atlantic Migratory Group Cobia AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Temporary rule; closure.

    SUMMARY:

    NMFS implements an accountability measure (AM) for Atlantic migratory group (Atlantic) cobia that are sold (commercial) and harvested from the exclusive economic zone (EEZ) of the Atlantic. NMFS projects that commercial landings of Atlantic cobia have reached the commercial quota. Therefore, NMFS closes the commercial sector for Atlantic cobia in the EEZ on September 5, 2018, and it will remain closed until the next fishing year that begins on January 1, 2019. This closure is necessary to protect the Atlantic cobia resource.

    DATES:

    This rule is effective from 12:01 a.m., local time, September 5, 2018, until 12:01 a.m., local time, on January 1, 2019.

    FOR FURTHER INFORMATION CONTACT:

    Frank Helies, NMFS Southeast Regional Office, telephone: 727-824-5305, email: [email protected]

    SUPPLEMENTARY INFORMATION:

    The fishery for coastal migratory pelagic fish includes king mackerel, Spanish mackerel, and cobia, and is managed under the Fishery Management Plan for Coastal Migratory Pelagic Resources in the Gulf of Mexico and Atlantic Region (FMP). The FMP was prepared by the Gulf of Mexico and South Atlantic Fishery Management Councils and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

    Separate migratory groups of cobia were established in Amendment 18 to the FMP (76 FR 82058, December 29, 2011), and then revised in Amendment 20B to the FMP (80 FR 4216, January 27, 2015). The southern boundary for Atlantic cobia occurs at a line that extends due east of the Florida and Georgia state border at 30°42′45.6″ N lat. The northern boundary for Atlantic migratory is the jurisdictional boundary between the Mid-Atlantic and New England Fishery Management Councils, as specified in 50 CFR 600.105(a).

    Atlantic cobia are unique among federally managed species in the southeast region, because no commercial permit is required to harvest and sell them. The distinction between commercial and recreational sectors is not as clear as other federally managed species in the southeast region. For example, regulations at 50 CFR part 622 specify quotas, annual catch limits, and AMs for cobia that are sold and cobia that are not sold. However, for purposes of this temporary rule, Atlantic cobia that are sold are considered commercially caught, and those that are not sold are considered recreationally caught.

    The commercial quota for Atlantic cobia is 50,000 lb (22,680 kg), round or gutted weight, for the 2018 fishing year, which runs from January 1 through December 31 (50 CFR 622.384(d)(2)).

    The AM for the commercial sector of Atlantic cobia, specified at 50 CFR 622.388(f)(1)(i), requires that NMFS file a notification with the Office of the Federal Register to prohibit the sale and purchase of cobia for the remainder of the fishing year if commercial landings reach or are projected to reach the commercial quota specified in § 622.384(d)(2). The commercial AM is triggered for 2018, because NMFS projects that commercial landings of Atlantic cobia will reach the commercial quota on September 5, 2018. Accordingly, the commercial sector for Atlantic cobia is closed in the EEZ at 12:01 a.m., local time, on September 5, 2018, and remains closed until the start of the next fishing year on January 1, 2019.

    During the commercial closure, the sale and purchase of Atlantic cobia is prohibited. The recreational bag and possession limits for Atlantic cobia apply while the recreational sector is open. The prohibition on sale and purchase does not apply to Atlantic cobia that were harvested, landed ashore, and sold prior to 12:01 a.m., local time, on September 5, 2018, and were held in cold storage by a dealer or processor.

    Classification

    The Regional Administrator for the NMFS Southeast Region has determined this temporary rule is necessary for the conservation and management of Atlantic cobia and is consistent with the Magnuson-Stevens Act and other applicable laws.

    This action is taken under 50 CFR 622.388(f)(1)(i) and is exempt from review under Executive Order 12866.

    These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.

    This action is based on the best scientific information available. The Assistant Administrator for NOAA Fisheries (AA) finds good cause to waive the requirements to provide prior notice and opportunity for public comment, pursuant to the authority set forth at 5 U.S.C. 553(b)(B), as such prior notice and opportunity for public comment is unnecessary and contrary to the public interest. Such procedures are unnecessary because the AM for Atlantic cobia has already been subject to notice and comment, and all that remains is to notify the public of the commercial closure for the remainder of the 2018 fishing year. Prior notice and opportunity for public comment on this action is contrary to the public interest, because of the need to immediately implement the commercial closure to protect Atlantic cobia, since the capacity of the fishing fleet allows for rapid harvest of the commercial quota. Prior notice and opportunity for public comment would require time and would potentially result in a harvest that exceeds the commercial quota.

    For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: August 22, 2018. Margo B. Schulze-Haugen, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2018-18500 Filed 8-24-18; 8:45 am] BILLING CODE 3510-22-P
    83 166 Monday, August 27, 2018 Proposed Rules DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2018-0696; Product Identifier 2017-SW-101-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Helicopters Deutschland GmbH Helicopters AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for Airbus Helicopters Deutschland GmbH (Airbus Helicopters) Model MBB-BK 117 D-2 helicopters. This proposed AD would require replacing the rescue hoist cable cut pushbutton flip guard (flip guard). This proposed AD is prompted by reports of unintended lifting of several flip guards. The actions of this proposed AD are intended to correct an unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by October 26, 2018.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Docket: Go to http://www.regulations.gov. Follow the online instructions for sending your comments electronically.

    Fax: 202-493-2251.

    Mail: Send comments to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590-0001.

    Hand Delivery: Deliver to the “Mail” address between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Examining the AD Docket

    You may examine the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2018-0696; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the European Aviation Safety Agency (EASA) AD, the economic evaluation, any comments received, and other information. The street address for Docket Operations (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    For service information identified in this proposed rule, contact Airbus Helicopters, 2701 N Forum Drive, Grand Prairie, TX 75052; telephone (972) 641-0000 or (800) 232-0323; fax (972) 641-3775; or at http://www.helicopters.airbus.com/website/en/ref/Technical-Support_73.html. You may review the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

    FOR FURTHER INFORMATION CONTACT:

    Clark Davenport, Flight Test Engineer, Flight Test Branch, Compliance and Airworthiness Division, FAA, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone 817 222 5151; email [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

    We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

    Discussion

    EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD No. 2017-0038, dated February 22, 2017 (AD No. 2017-0038), to correct an unsafe condition for Airbus Helicopters Models MBB-BK 117 D-2 and MBB-BK 117 D-2m helicopters. The EASA AD advises that multiple events were reported of unintended lifting of the flip guard and that the flip guard has two stable positions, open and closed. AD No. 2017-0038 states that if the unintended lifting is not detected, the requirement for dual action when activating the rescue hoist cable cut is not guaranteed. According to EASA, this condition, if not corrected, could result in inadvertent cutting of the rescue hoist cable and subsequent personal injury.

    EASA further advises that Airbus Helicopters has developed an improved mono-stable (closed) flip guard, and AD No. 2017-0038 requires installing the new flip guard and re-identifying the collective lever switch unit.

    FAA's Determination

    These helicopters have been approved by the aviation authority of Germany and are approved for operation in the United States. Pursuant to our bilateral agreement with Germany, EASA, its technical representative, has notified us of the unsafe condition described in its AD. We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of the same type design.

    Related Service Information

    Airbus Helicopters has issued Alert Service Bulletin No. MBB-BK117 D-2-67A-002, Revision 0, dated January 23, 2017, which contains procedures for replacing flip guard part number (P/N) 79552176 with improved flip guard P/N 79553511 and for identifying the collective lever switch unit with the Alert Service Bulletin number.

    Proposed AD Requirements

    This proposed AD would require before the next hoist operation or within 440 hours time in service (TIS), whichever occurs first, replacing the flip guard with flip guard P/N 79553511 on the collective lever switch unit.

    Differences Between This Proposed AD and the EASA AD

    The EASA AD applies to Model MBB-BK 117 D-2m helicopters; this proposed AD would not as these models are not type certificated in the U.S. Also, the EASA AD requires compliance within 440 hours TIS, this proposed AD would require compliance before the next hoist operation or within 440 hours TIS, whichever occurs first. Finally, the EASA AD requires identifying the collective lever switch unit with the service information number; this proposed AD would not.

    Costs of Compliance

    We estimate that this proposed AD would affect 21 helicopters of U.S. Registry.

    At an average labor rate of $85 per hour, we estimate that operators would incur the following costs in order to comply with this proposed AD. Replacing the flip guard would require about 14 hours, and required parts would cost $735, for a cost per helicopter of $1,925 and a cost of $40,148 to the U.S. fleet.

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

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed, I certify this proposed regulation:

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

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

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

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

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

    List of Subjects in 14 CFR Part 39

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

    The Proposed Amendment

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

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

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

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Airbus Helicopters Deutschland GmbH: Docket No. FAA-2018-0696; Product Identifier 2017-SW-101-AD. (a) Applicability

    This AD applies to Airbus Helicopters Deutschland GmbH Model MBB-BK 117 D-2 helicopters, certificated in any category, with a cable cut flip guard (flip guard) part number (P/N) 79552176 installed.

    (b) Unsafe Condition

    This AD defines the unsafe condition as unintended lifting of a flip guard. This condition could result in inadvertent cutting of the rescue hoist cable and subsequent personal injury.

    (c) Comments Due Date

    We must receive comments by October 26, 2018.

    (d) Compliance

    You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.

    (e) Required Actions

    Before the next hoist operation or within 440 hours time in service (TIS), whichever occurs first, remove flip guard P/N 79552176 from service and install flip guard P/N 79553511 on the collective lever switch unit.

    (f) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Safety Management Section, Rotorcraft Standards Branch, FAA, may approve AMOCs for this AD. Send your proposal to: Clark Davenport, Flight Test Engineer, Flight Test Branch, Compliance and Airworthiness Division, FAA, 10101 Hillwood Parkway, Fort Worth, TX 76177; telephone 817 222 5151; email [email protected]

    (2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.

    (g) Additional Information

    (1) Airbus Helicopters Alert Service Bulletin No. MBB-BK117 D-2-67A-002, Revision 0, dated January 23, 2017, which is not incorporated by reference, contains additional information about the subject of this AD. For service information identified in this AD, contact Airbus Helicopters, 2701 N Forum Drive, Grand Prairie, TX 75052; telephone (972) 641-0000 or (800) 232-0323; fax (972) 641-3775; or at http://www.helicopters.airbus.com/website/en/ref/Technical-Support_73.html. You may review the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

    (2) The subject of this AD is addressed in European Aviation Safety Agency (EASA) AD No. 2017-0038, dated February 22, 2017. You may view the EASA AD on the internet at http://www.regulations.gov in the AD Docket.

    (h) Subject

    Joint Aircraft Service Component (JASC) Code: 6700 Rotorcraft Flight Control.

    Issued in Fort Worth, Texas, on August 13, 2018. Mitchell Soth, Acting Director, Compliance & Airworthiness Division, Aircraft Certification Service.
    [FR Doc. 2018-18346 Filed 8-24-18; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2018-0737; Product Identifier 2017-SW-096-AD] RIN 2120-AA64 Airworthiness Directives; Leonardo S.p.A. Helicopters AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for Leonardo S.p.A. (Type Certificate Previously Held by Finmeccanica S.p.A., AgustaWestland S.p.A.) Model AW139 helicopters. This proposed AD would require inspecting and altering the number 1 driveshaft (driveshaft). This proposed AD is prompted by reports of scratches that were found on the driveshaft. The actions of this proposed AD are intended to prevent an unsafe condition on these products.

    DATES:

    We must receive comments on this proposed AD by October 26, 2018.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Docket: Go to http://www.regulations.gov. Follow the online instructions for sending your comments electronically.

    Fax: 202-493-2251.

    Mail: Send comments to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE, Washington, DC 20590-0001.

    Hand Delivery: Deliver to the “Mail” address between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Examining the AD Docket

    You may examine the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2018-0737; or in person at Docket Operations between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the European Aviation Safety Agency (EASA) AD, the economic evaluation, any comments received, and other information. The street address for Docket Operations (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    For service information identified in this proposed rule, contact Leonardo S.p.A. Helicopters, Matteo Ragazzi, Head of Airworthiness, Viale G. Agusta 520, 21017 C. Costa di Samarate (Va) Italy; telephone +39-0331-711756; fax +39-0331-229046; or at http://www.leonardocompany.com/-/bulletins. You may review the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

    FOR FURTHER INFORMATION CONTACT:

    David Hatfield, Aviation Safety Engineer, Safety Management Section, Rotorcraft Standards Branch, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone (817) 222-5110; email [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

    We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

    Discussion

    EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD No. 2017-0011, dated January 25, 2017, to correct an unsafe condition for certain serial-numbered Leonardo S.p.A. (formerly Finmeccanica S.p.A, AgustaWestland S.p.A.) Model AW139 helicopters. EASA advises of several helicopters found with scratches on the driveshaft part-number (P/N) 3G6510A01132 and that an investigation determined only helicopters equipped with rear exhaust module assembly P/N 3G7810A00431 and tunnel assembly P/N 3G7130A13431 are affected. According to EASA, the scratches resulted from insufficient clearance between the driveshaft and the rear exhaust module and tunnel assemblies. EASA further advises that if not corrected, these scratches could lead to a crack in the driveshaft, failure of the tail rotor drive system, and subsequent reduced control of the helicopter. To prevent this potential unsafe condition, the EASA AD requires repetitive inspections of the driveshaft for a crack until the exhaust module and tunnel assembly are modified to increase the clearance.

    FAA's Determination

    These helicopters have been approved by the aviation authority of Italy and are approved for operation in the United States. Pursuant to our bilateral agreement with Italy, EASA, its technical representative, has notified us of the unsafe condition described in its AD. We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of the same type design.

    Related Service Information Under 1 CFR Part 51

    We reviewed Leonardo Helicopters Bollettino Tecnico No. 139-465, Revision A, dated January 25, 2017, which contains procedures for visual and eddy-current inspections of the driveshaft. This service information also contains procedures for modifying the exhaust module and tunnel assemblies.

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

    Proposed AD Requirements

    This proposed AD would require, within 30 hours time-in-service (TIS) and thereafter at intervals not exceeding 100 hours TIS, inspecting the driveshaft tube P/N 3G6510A00832 for a scratch and indentation. If there is a scratch or indentation, the proposed AD would require, before further flight, repairing the driveshaft tube and performing a depth check of the repaired area. If the repaired area depth is more than 0.2 mm, the proposed AD would require replacing the driveshaft tube and altering the rear exhaust module and tunnel assembly before further flight. If the depth of the repaired area of the tube is 0.2 mm or less, the proposed AD would require, before further flight, performing an eddy current inspection of the tube for a crack. If there is a crack, the proposed AD would require replacing the driveshaft tube and altering the rear exhaust module and tunnel assembly before further flight.

    This proposed AD would also require, within 300 hours TIS, altering the rear exhaust module and tunnel assembly, if not previously done as a result of the inspections. Because this proposed AD would also require re-identifying the tunnel assembly part number after it is altered, this would be terminating action for the repetitive inspections.

    Costs of Compliance

    We estimate that this proposed AD would affect 55 helicopters of U.S. Registry.

    We estimate that operators may incur the following costs in order to comply with this AD, based on an average labor rate of $85 per work-hour. Inspecting, repairing, and eddy-current inspecting the driveshaft tube would require about 6 work-hours, and required parts cost would be minimal, for a cost of $510 per helicopter and $28,050 for the U.S. fleet per inspection cycle. Altering the rear exhaust module and tunnel assembly would require about 20 work-hours, and required parts would cost $1,500, for a cost of $3,200 per helicopter and $176,000 for the U.S. fleet.

    If required, replacing a driveshaft tube would require 1 work-hour, and required parts would cost $6,500, for a cost per helicopter of $6,585.

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

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed, I certify this proposed regulation:

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

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

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

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

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

    List of Subjects in 14 CFR Part 39

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

    The Proposed Amendment

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

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

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

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Leonardo S.p.A. (Type Certificate Previously Held by Finmeccanica S.p.A, AgustaWestland S.p.A.): Docket No. FAA-2018-0737; Product Identifier 2017-SW-096-AD. (a) Applicability

    This AD applies to Model AW139 helicopters, serial numbers 31499, 31504, 31507, 31509, 31512, 31518, 31519, 31524, 31529, 31533, 31535 through 31564, 31567, 31569, 31570, 31589, 41363, 41368 through 41370, 41372 through 41375, 41378, 41381, and 41384, with a tunnel assembly part number 3G7130A13431 installed, certificated in any category.

    (b) Unsafe Condition

    This AD defines the unsafe condition as a crack in a tail rotor driveshaft, which could result in failure of the tail rotor drive system and subsequent loss of control of the helicopter.

    (c) Comments Due Date

    We must receive comments by October 26, 2018.

    (d) Compliance

    You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.

    (e) Required Actions

    (1) Within 30 hours time-in-service (TIS) and thereafter at intervals not to exceed 100 hours TIS, inspect the number 1 driveshaft tube shaft, P/N 3G6510A00832, for a scratch and indentation in the area depicted in Figure 1 of Leonardo Helicopters Bollettino Tecnico No. 139-465, Revision A, dated January 25, 2017 (BT 139-465). If there is a scratch or indentation, before further flight:

    (i) Repair the tube shaft in accordance with the Compliance Instructions, Part I, paragraphs 7.1 through 7.3, of BT 139-465.

    (ii) Measure the depth of the repaired areas as depicted in Figure 2 of BT 139-465.

    (A) If the depth of the reworked area is 0.2 mm (0.079 inch) or less, eddy-current inspect the driveshaft for a crack as described in the Compliance Instructions, Annex A, of BT 139-465. If there is a crack, before further flight, replace the driveshaft, alter the rear exhaust module, and alter and re-identify the tunnel assembly in accordance with the Compliance Instructions, Part II, paragraphs 7 through 12, of BT 139-465.

    (B) If the depth of the reworked area is more than 0.2 mm (0.079 inch), before further flight, replace the driveshaft, alter the rear exhaust module, and alter and re-identify the tunnel assembly in accordance with the Compliance Instructions, Part II, paragraphs 7 through 12, of BT 139-465.

    (2) Within 300 hours TIS, unless already accomplished as required by paragraph (e)(1)(ii) of this AD, alter the rear exhaust module and alter and re-identify the tunnel assembly in accordance with the Compliance Instructions, Part II, paragraphs 7 through 12, of BT 139-465.

    (f) Special Flight Permits

    Special flight permits are prohibited.

    (g) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Safety Management Section, Rotorcraft Standards Branch, FAA, may approve AMOCs for this AD. Send your proposal to: David Hatfield, Aviation Safety Engineer, Safety Management Section, Rotorcraft Standards Branch, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone (817) 222-5110; email [email protected]

    (2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.

    (h) Additional Information

    The subject of this AD is addressed in European Aviation Safety Agency (EASA) AD No. 2017-0011, dated January 25, 2017. You may view the EASA AD on the internet at http://www.regulations.gov in the AD Docket.

    (i) Subject

    Joint Aircraft Service Component (JASC) Code: 6510 Tail Rotor Driveshaft.

    Issued in Fort Worth, Texas, on August 10, 2018. Lance T. Gant, Director, Compliance & Airworthiness Division, Aircraft Certification Service.
    [FR Doc. 2018-18472 Filed 8-24-18; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-112176-18] RIN 1545-BO89 Contributions in Exchange for State or Local Tax Credits AGENCY:

    Internal Revenue Service (IRS), Treasury.

    ACTION:

    Notice of proposed rulemaking and notification of public hearing.

    SUMMARY:

    This document contains proposed amendments to regulations under section 170 of the Internal Revenue Code (Code). The proposed amendments provide rules governing the availability of charitable contribution deductions under section 170 when a taxpayer receives or expects to receive a corresponding state or local tax credit. This document also proposes amendments to the regulations under section 642(c) to apply similar rules to payments made by a trust or decedent's estate. This document provides notification of a public hearing on these proposed regulations.

    DATES:

    Written and electronic comments must be received by October 11, 2018. Requests to speak and outlines of topics to be discussed at the public hearing scheduled for November 5, 2018, must be received by October 11, 2018.

    ADDRESSES:

    Send submissions to Internal Revenue Service, CC:PA:LPD:PR (REG-112176-18), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8:00 a.m. and 4:00 p.m. to CC:PA:LPD:PR (REG-112176-18), Courier's Desk, 1111 Constitution Avenue NW, Washington, DC 20224, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (indicate IRS and REG-112176-18). The public hearing will be held in the IRS Auditorium, Internal Revenue Building, 1111 Constitution Avenue NW, Washington, DC 20224.

    FOR FURTHER INFORMATION CONTACT:

    Concerning the proposed regulations, Merrill D. Feldstein and Mon Lam at (202) 317-4059; concerning submission of comments and requests for a public hearing, Regina Johnson at (202) 317-6901 (not toll-free numbers).

    SUPPLEMENTARY INFORMATION:

    Background

    Section 170(a)(1) generally allows an itemized deduction for any “charitable contribution” paid within the taxable year. Section 170(c) defines “charitable contribution” as a “contribution or gift to or for the use of” any entity listed in that subsection. Section 170(c)(1) includes a contribution or gift to or for the use of a State, a possession of the United States, or any political subdivision of the foregoing, but only if the contribution or gift is made exclusively for public purposes. Section 170(c)(2) includes, in general, a contribution or gift to or for the use of certain corporations, trusts, or community chests, funds, or foundations, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or to foster national or international amateur sports competition, or for the prevention of cruelty to children or animals.

    Section 164 generally allows an itemized deduction for the payment of certain taxes, including state and local, and foreign, real property taxes; state and local personal property taxes; and state and local, and foreign, income, war profits, and excess profits taxes. Section 164(b)(6), as added by section 11042 of “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018” (the Act), Public Law 115-97, limits an individual's deduction for the aggregate amount of state and local taxes paid during the calendar year to $10,000 ($5,000 in the case of a married individual filing a separate return). This new limitation applies to taxable years beginning after December 31, 2017, and before January 1, 2026.

    I. The Charitable Contribution Deduction

    In 1986, the Supreme Court interpreted the phrase “charitable contribution” in section 170. See United States v. American Bar Endowment, 477 U.S. 105, 116-118 (1986). The Court held that the “sine qua non of a charitable contribution is a transfer of money or property without adequate consideration”—that is, without the expectation of a quid pro quo. Id. at 118. A “payment of money generally cannot constitute a charitable contribution if the contributor expects a substantial benefit in return.” Id. at 116. The Court recognized that some payments may have a “dual character”—part charitable contribution and part quid pro quo—whereby the taxpayer receives some “nominal benefit” of lesser value than the payment. Id. at 117. In such cases, the Court reasoned, “it would not serve the purposes of § 170 to deny a deduction altogether.” Id. Instead, the Court held, the charitable contribution deduction is allowed, but only to the extent the amount donated or the fair market value of the property transferred by the taxpayer exceeds the fair market value of the benefit received in return, and only if the excess amount was transferred with the intent of making a gift. Id.

    For the benefit received in return to reduce the allowable charitable contribution deduction under section 170, the benefits received, or expected to be received, by a donor need only be greater than those benefits that inure to the general public from transfers for charitable purposes. See, e.g., Singer Co. v. United States, 449 F.2d 413, 422-423 (Ct. Cl. 1971); American Bar Endowment, 477 U.S. at 116-17 (citing Singer); Hernandez v. Commissioner, 490 U.S. 680 (1989). In addition, the benefits received need not come directly from the donee to reduce the allowable deduction, nor do they need to be specifically quantifiable at the time of transfer. See, e.g., Singer, 449 F.2d at 422. The Treasury Department and the IRS have incorporated many of these principles into regulations under section 170. Section 1.170A-1(h)(1) of the Income Tax Regulations provides, for example, that no part of a payment that a taxpayer makes to or for the use of an organization described in section 170(c) that is in consideration for (as defined in § 1.170A-13(f)(6)) goods or services (as defined in § 1.170A-13(f)(5)) is a contribution or gift within the meaning of section 170(c) unless the taxpayer (i) intends to make a payment in an amount that exceeds the fair market value of the goods or services; and (ii) makes a payment in an amount that exceeds the fair market value of the goods or services. Section 1.170A-13(f)(5) defines goods or services to include cash, property, services, benefits, and privileges, and § 1.170A-13(f)(6) provides that a donee provides goods or services in consideration for a taxpayer's payment if, at the time the taxpayer makes the payment to the donee organization, the taxpayer receives or expects to receive goods or services in exchange for that payment.

    II. State and Local Tax Credit Programs

    In recent years, it has become increasingly common for states and localities to provide state or local tax credits in return for contributions by taxpayers to or for the use of certain entities listed in section 170(c). As the use of these tax credit programs by states and localities became more common, the IRS Office of Chief Counsel (IRS Chief Counsel), in multiple Chief Counsel Advice memoranda (CCAs), considered whether the receipt of state tax credits under these programs were quid pro quo benefits that would affect the amount of taxpayers' charitable contribution deductions under section 170(a). Although CCAs are released to the public for information purposes, it should be noted that CCAs are not official rulings or positions of the IRS, are not ordinarily reviewed by the Treasury Department, and are not precedential.

    In CCAs issued in 2002 and 2004, IRS Chief Counsel reviewed programs involving the issuance of state tax credits in return for the transfer of conservation easements and for payments to certain child care organizations. See CCA 200238041 (July 24, 2002); CCA 200435001 (July 28, 2004). In these CCAs, IRS Chief Counsel recognized that these programs raised complex questions and recommended that the tax credit issue be addressed through official published guidance.

    In 2010, another CCA explained that published guidance on the issue was not contemplated at that time, but it offered further advice. See CCA 201105010 (Oct. 27, 2010) (the 2010 CCA). This 2010 CCA observed that a payment to a state agency or charitable organization in return for a tax credit might be characterized as either a charitable contribution deductible under section 170 or a payment of state tax possibly deductible under section 164. The 2010 CCA advised that taxpayers may take a deduction under section 170 for the full amount of a contribution made in return for a state tax credit, without subtracting the value of the credit received in return. The analysis in the 2010 CCA assumed that after the taxpayer applied the state or local tax credit to reduce the taxpayer's state or local tax liability, the taxpayer would receive a smaller deduction for state and local taxes under section 164. The 2010 CCA cautioned, however, that “there may be unusual circumstances in which it would be appropriate to recharacterize a payment of cash or property that was, in form, a charitable contribution as, in substance, a satisfaction of tax liability.”

    In addition to the CCAs, IRS Chief Counsel has taken the position in the U.S. Tax Court that the amount of a state or local tax credit that reduces a tax liability is not an accession to wealth under section 61 or an amount realized for purposes of section 1001, and the Tax Court has accepted this view. See, e.g., Maines v. Commissioner, 144 T.C. 123, 134 (2015) (holding that the non-refundable portion of a state income tax credit, the amount of which was based on previously-paid property taxes, reduced the current year's tax liability and is not taxable or treated as an item of income); Tempel v. Commissioner, 136 T.C. 341, 351-354 (2011) (holding that state income tax credits received by a donor for the transfer of a conservation easement and sold by the donor were capital assets, but that the donor had no adjusted basis in the credits), aff'd sub nom. Esgar Corp. v. Commissioner, 744 F.3d 648 (10th Cir. 2014). However, the application of sections 61 and 1001 to state or local tax credits presents different issues than the application of section 170, and none of these cases addressed whether a taxpayer's expectation or receipt of a state or local tax credit may reduce a taxpayer's charitable contribution deduction under section 170. Nor has the Treasury Department or the IRS ever addressed this question in published guidance.

    III. New Limitation in Section 164

    At the time the 2010 CCA was issued, section 164 generally allowed an itemized deduction—unlimited in amount—for the payment of state and local taxes. Accordingly, the question of how to characterize transfers pursuant to state tax credit programs had little practical consequence from a federal income tax perspective because, unless the taxpayer was subject to the alternative minimum tax (AMT) under section 55, a deduction was likely to be available under either section 164 or section 170. Permitting a charitable contribution deduction for a transfer made in exchange for a state or local tax credit generally had no effect on federal income tax liability because any increased deduction under section 170 would be offset by a decreased deduction under section 164.

    However, as a result of the new limit on the deductibility of state and local taxes under section 164(b)(6) (as added by the Act), treating a transfer pursuant to a state or local tax credit program as a charitable contribution for federal income tax purposes may reduce a taxpayer's federal income tax liability. When a charitable contribution is made in return for a state or local tax credit and the taxpayer has pre-credit state and local tax liabilities in excess of the $10,000 limitation in section 164(b)(6), a charitable contribution deduction under section 170 would no longer be offset by a reduction in the taxpayer's state and local tax deduction under section 164. Thus, as a consequence, state and local tax credit programs now give taxpayers a potential means to circumvent the $10,000 limitation in section 164(b)(6) by substituting an increased charitable contribution deduction for a disallowed state and local tax deduction. State legislatures are also now considering or have adopted proposals to enact new state and local tax credit programs with the aim of enabling taxpayers to characterize their transfers as fully deductible charitable contributions for federal income tax purposes, while using the same transfers to satisfy or offset their state or local tax liabilities.

    In light of the tax consequences of section 164(b)(6) and the resulting increased interest in preexisting and new state tax credit programs, the Treasury Department and the IRS determined that it was appropriate to review the question of whether amounts paid or property transferred in exchange for state or local tax credits are fully deductible as charitable contributions under section 170.

    IV. Notice 2018-54

    Pursuant to this review, in Notice 2018-54, 2018-24 I.R.B. 750, the Treasury Department and the IRS announced on June 11, 2018, their intention to propose regulations addressing the federal income tax treatment of payments made by taxpayers for which the taxpayers receive a credit against their state and local taxes. The notice stated that federal tax law controls the proper characterization of payments for federal income tax purposes and that proposed regulations would assist taxpayers in understanding the relationship between the federal charitable contribution deduction and the new limitation on the deduction for state and local tax payments.

    Although Notice 2018-54 was issued in response to state legislation proposed after the enactment of the limitation on state and local tax deductions under section 164(b)(6), the rules in these proposed regulations are based on longstanding federal tax law principles, which apply equally to taxpayers regardless of whether they are participating in a new state and local tax credit program or a preexisting one. Accordingly, the proposed regulations, and the analysis underlying the proposed regulations, are intended to apply to transfers pursuant to state and local tax credit programs established under the recent state legislation as well as to transfers pursuant to state and local tax credit programs that were in existence before the enactment of section 164(b)(6).

    V. Proposed Regulations

    After reviewing the issue, and in light of the longstanding principles of the cases and tax regulations discussed above, the Treasury Department and the IRS believe that when a taxpayer receives or expects to receive a state or local tax credit in return for a payment or transfer to an entity listed in section 170(c), the receipt of this tax benefit constitutes a quid pro quo that may preclude a full deduction under section 170(a). In applying section 170 and the quid pro quo doctrine, the Treasury Department and the IRS do not believe it is appropriate to categorically exempt state or local tax benefits from the normal rules that apply to other benefits received by a taxpayer in exchange for a contribution. Thus, the Treasury Department and the IRS believe that the amount otherwise deductible as a charitable contribution must generally be reduced by the amount of the state or local tax credit received or expected to be received, just as it is reduced for many other benefits. Accordingly, the Treasury Department and the IRS propose regulations proposing to amend existing regulations under section 170 to clarify this general requirement, to provide for a de minimis exception from the general rule, and to make other conforming amendments.

    Compelling policy considerations reinforce the interpretation and application of section 170 in this context. Disregarding the value of all state tax benefits received or expected to be received in return for charitable contributions would precipitate significant revenue losses that would undermine and be inconsistent with the limitation on the deduction for state and local taxes adopted by Congress in section 164(b)(6).1 Such an approach would incentivize and enable taxpayers to characterize payments as fully deductible charitable contributions for federal income tax purposes, while using the same payments to satisfy or offset their state or local tax liabilities. Disregarding the tax benefit would also undermine the intent of Congress in enacting section 170, that is, to provide a deduction for taxpayers' gratuitous payments to qualifying entities, not for transfers that result in economic returns. The Treasury Department and the IRS believe that appropriate application of the quid pro quo doctrine to substantial state or local tax benefits is consistent with the Code and sound tax administration.

    1 The Joint Committee on Taxation estimated that the limitation on state and local tax deductions along with certain other reforms of itemized deductions would raise $668 billion over ten years. A substantial amount of this revenue would be lost if state tax benefits received in exchange for charitable contributions were ignored in determining the charitable contribution deduction. This estimate is not a revenue estimate of the proposed regulations, in part because it includes other reforms of itemized deductions but does not reflect certain other provisions of the Act. See Joint Committee on Taxation, “Estimated Budget Effects of the Conference Agreement for H.R. 1, The `Tax Cuts and Jobs Act,' ” JCX-67-17, December 18, 2017 available at https://www.jct.gov/publications.html?func=startdown&id=5053.

    Explanation of Provisions

    The proposed regulations generally provide that if a taxpayer makes a payment or transfers property to or for the use of an entity listed in section 170(c), and the taxpayer receives or expects to receive a state or local tax credit in return for such payment, the tax credit constitutes a return benefit, or quid pro quo, to the taxpayer and reduces the charitable contribution deduction.

    In addition to credits, the proposed regulations also address state or local tax deductions claimed in connection with a taxpayer's payment or transfer. Although deductions could be considered quid pro quo benefits in the same manner as credits, the Treasury Department and the IRS believe that sound policy considerations as well as considerations of efficient tax administration warrant making an exception to quid pro quo principles in the case of dollar-for-dollar state or local tax deductions. Because the benefit of a dollar-for-dollar deduction is limited to the taxpayer's state and local marginal rate, the risk of deductions being used to circumvent section 164(b)(6) is comparatively low. In addition, if state and local tax deductions for charitable contributions were treated as quid pro quo benefits, it would make the accurate calculation of federal taxes and state and local taxes difficult for both taxpayers and the IRS. For example, the value of a deduction could vary based on the taxpayer's marginal or effective state and local tax rates, making for more complex computations and adding to administrative and taxpayer burden. The proposed regulations thus allow taxpayers to disregard dollar-for-dollar state or local tax deductions. However, the proposed regulations state that, if the taxpayer receives or expects to receive a state or local tax deduction that exceeds the amount of the taxpayer's payment or the fair market value of the property transferred, the taxpayer's charitable contribution deduction must be reduced. The Treasury Department and the IRS request comments on how to determine the amount of this reduction.

    To provide consistent treatment for state or local tax deductions and state or local tax credits that provide a benefit that is generally equivalent to a deduction, the proposed regulations include a de minimis exception under which a taxpayer may disregard a state or local tax credit if such credit does not exceed 15 percent of the taxpayer's payment or 15 percent of the fair market value of the property transferred by the taxpayer. The de minimis exception reflects that the combined value of a state and local tax deduction, that is the combined top marginal state and local tax rate, currently does not exceed 15 percent. Accordingly, under the proposed regulations, a state or local tax credit that does not exceed 15 percent does not reduce the taxpayer's federal deduction for a charitable contribution. The Treasury Department and the IRS request comments on this proposed exception.

    In drafting the proposed regulations, the Treasury Department and the IRS also considered whether a taxpayer may decline the receipt or anticipated receipt of a state or local tax credit by taking some affirmative action at the time of the taxpayer's payment or transfer. See Rev. Rul. 67-246, 1967-2 C.B. 104 (allowing a full charitable contribution deduction if the taxpayer does not accept or keep any indicia of a return benefit). Because procedures for declining the state or local tax credit would depend on the procedures of each state and locality in administering the tax credits, the Treasury Department and the IRS request comments regarding a rule that would allow taxpayers to decline state or local tax credits and receive full deductions for charitable contributions under section 170.

    Trusts and decedents' estates may claim an income tax deduction for charitable contributions under section 642(c). For the same reasons provided above, the proposed regulations amend § 1.642(c)-3 to provide that the proposed rules under § 1.170A-1(h)(3) apply to payments made by a trust or decedent's estate in determining its charitable contribution deduction under section 642(c).

    Proposed Applicability Date

    The amendments to these regulations are proposed to apply to contributions after August 27, 2018.

    Special Analyses

    Executive Orders 12866 and 13563 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. These proposed regulations have been designated as subject to review under Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Treasury Department and the Office of Management and Budget (OMB) regarding review of tax regulations. OMB has determined that the proposed regulations are subject to review under section 1(b) of the Memorandum of Agreement. These proposed regulations have been reviewed by OMB. These proposed regulations are anticipated to be regulatory actions under E.O. 13771. The analysis below can provide further detail on this designation.

    I. Need for Regulations

    These proposed regulations provide guidance on the deductibility of charitable contributions when a taxpayer receives or expects to receive a corresponding state or local tax credit. These proposed regulations are intended to clarify the relationship between the federal charitable contribution deduction and the recently-enacted statutory limitation on deductions for state and local taxes paid (the “SALT cap”) and to make the federal tax system more neutral with respect to taxpayers' decisions regarding donations. Compelling policy considerations reinforce the interpretation and application of section 170 in this context. Disregarding the value of all state tax benefits received or expected to be received in return for charitable contributions would precipitate revenue losses that would undermine and be inconsistent with the limitation on the deduction for state and local taxes adopted by Congress in section 164(b)(6).

    Pursuant to section 6(a)(3)(B) of Executive Order 12866, the following qualitative analysis provides further details regarding the anticipated impact of the proposed regulations. After identifying a baseline in Part II, this analysis provides illustrative scenarios in Part III. Part III.A describes the tax effects of the contributions prior to enactment of the SALT cap in the Act. Part III.B provides examples comparing the enactment of the SALT cap but absent the proposed rule (the baseline) to the proposed rule. Finally, Part IV provides a qualitative assessment of the potential costs and benefits of the proposed rule compared to the baseline.

    II. Baseline

    Prior to this proposed rule, there was no authoritative regulatory guidance on the treatment of state or local tax credits arising from charitable contributions to entities listed in section 170(c), and there was no guidance aside from Notice 2018-54 addressing the interaction between section 170 and the newly enacted SALT cap. As a result, there was a degree of taxpayer uncertainty as to whether state and local tax credits are a return benefit that reduces a taxpayer's charitable contribution deduction. For informational and analytical purposes, however, this analysis assumes as a baseline that state and local tax credits are generally not treated as a return benefit or consideration and therefore do not reduce the taxpayer's charitable contribution deduction under section 170(a).

    III. Illustrative Scenarios

    For the following illustrative scenarios, assume the following facts: Charitable organizations A and B are entities listed in section 170(c) and provide similar public goods. Contributions to charity A are eligible for a dollar-for-dollar state tax credit. Contributions to charity B are ineligible for this credit but are deductible from state taxable income. A taxpayer itemizes deductions, and these itemized deductions in aggregate are at least $1,000 more than the standard deduction. The taxpayer has the choice to contribute $1,000 to charity A, and this $1,000 contribution generates a state tax credit of $1,000,2 that is, the tax credit is dollar-for-dollar but does not otherwise figure into the calculation of the taxpayer's state tax liability. The taxpayer has more than $1,000 of state tax liability, so that the taxpayer's state tax liability is reduced by the entire $1,000 of the state tax credit. Finally, if the taxpayer makes the $1,000 contribution that generates a state tax credit of $1,000, the taxpayer reduces by $1,000 the withholdings or other payments of state taxes during the taxable year in question. The state taxes paid by the taxpayer are therefore reduced by the full amount of the state tax credit in the same taxable year as the contribution is made.3 Further assume the taxpayer is in the 24 percent federal tax bracket, itemizes federal tax deductions, and has a state tax rate of 5 percent. If the taxpayer is subject to the AMT, assume an AMT marginal tax rate of 26 percent.

    2 Note that this analysis only addresses state tax credits offering a 100% benefit. The results may differ for credits offering a lower benefit, but the comparative results of the below illustrative examples would be similar.

    3 The results of the examples are generally unchanged if the taxpayer instead receives the credit as a refund of state taxes paid that were deducted from federal taxable income, as such refund would be includible in federal taxable income in the following year.

    The Act and proposed regulations alter the incentives taxpayers face about whether and how much to give to organizations that receive charitable contributions as well as to which organizations. This is illustrated in the following scenarios, which are also summarized in Table 1 (below).

    A. Prior Law: Section 170 Charitable Contributions Prior to the Act

    The tax effects of contributions prior to enactment of the Act are illustrated in the columns labeled “Prior Law” in Table 1.

    1. Taxpayer Not Subject to AMT

    Prior to enactment of the Act, if the taxpayer made a $1,000 contribution to charity A that generated a state tax credit of $1,000, the deduction for charitable contributions under section 170(a) increased by $1,000, and the deduction for state and local taxes paid under section 164 decreased by $1,000. The taxpayer's itemized deductions, taxable income, and federal tax liability were unchanged from what they would have been in the absence of the contribution.4 The taxpayer's state tax liability decreased by $1,000 because of the state tax credit. The combined federal and state tax benefits of the $1,000 contribution were therefore $1,000, and the cost to the taxpayer and to the federal government of making the contribution was $0. This is shown in column A under Prior Law for Example 1 in Table 1 and replicated in the same column for Example 2.

    4 This assumes the taxpayer was not subject to limitations such as the overall limitation on itemized deductions under section 68 or subject to a percentage limitation for the deduction under section 170, an assumption that is maintained throughout the succeeding discussion.

    2. Taxpayer Subject to AMT

    If the taxpayer were subject to the AMT under section 55, however, there was a net benefit to the taxpayer from contributions to charity A, which provided state tax credits. State and local taxes paid are not deductible expenses in determining taxable income under the AMT, but charitable contributions are deductible expenses in determining taxable income under the AMT. If the taxpayer contributed $1,000, taxable income under the AMT was reduced by $1,000 due to the charitable contribution deduction under section 170, but there was no corresponding reduction in the deduction for state and local taxes. Under an AMT marginal tax rate of 26 percent, the federal tax benefit of this $1,000 contribution would be $260. Because of the dollar-for-dollar state tax credit, the taxpayer received a combined federal and state tax benefit of $1,260 for a $1,000 contribution, a net benefit of $260. This is shown in column A under Prior Law for Example 3 in Table 1.

    3. Comparison of Contributions to Different Organizations Under Prior Law

    In combination, state and federal tax laws generally provide a greater incentive to contribute to organizations eligible for state tax credits (charity A) than to other organizations (charity B). The effect of a contribution to charity A are described above.

    Prior to enactment of the Act, for a taxpayer not subject to the AMT, a $1,000 contribution to charity B yielded a smaller combined federal and state tax benefit than to charity A. The state tax benefit was $50 ($1,000 times the 5 percent state tax rate). The taxpayer's itemized deductions at the federal level increased by $950 (the $1,000 charitable contribution deduction less than $50 reduction in state taxes paid). The federal tax benefit of this increase was $228 ($950 times the 24 percent federal tax rate), resulting in a combined federal and state tax benefit of $278. The net cost to the taxpayer of the $1,000 contribution was $722. This is shown in column B under Prior Law for Example 1 in Table 1 and replicated in the same column for Example 2.

    For a taxpayer subject to the AMT, a $1,000 contribution to charity B yielded a combined federal and state benefit of $310—the $1,000 contribution multiplied by the taxpayer's marginal tax rate under the AMT of 26 percent, or $260, plus the value of the deduction from state tax, or $50 ($1,000 times the 5 percent state tax rate). The net cost to the taxpayer of the $1,000 contribution was $690. This is shown in column B under Prior Law for Example 3 in Table 1.

    Contributing to either charity A or charity B reduced the taxpayer's combined federal and state tax liability, but the existence of the state tax credit for contributions to charity A made contributions to that organization more attractive. This is seen by comparing the Total Tax Benefit in column A under Prior Law to the corresponding value in column B for each of the three examples. For taxpayers not subject to the AMT, contributions to charity A yielded a combined federal and state tax benefit of $1,000, compared to a combined federal and state tax benefit of $278 for a contribution to charity B. The AMT increased the disparity for contributions to charity A versus charity B, resulting in a combined federal and state tax benefit of $1,260 for a contribution to charity A versus $310 for a contribution to charity B.

    B. Examples Under Baseline (Current Law and Practices Under the Act) and Proposed Rule

    The enactment of the SALT cap in the Act has, in limited circumstances, altered the federal tax effects of charitable contributions as described in the following examples. These are illustrated in the columns labeled “Baseline” and “Proposed Rule” in Table 1.

    1. Example 1: Taxpayer Is Above the SALT Cap and Not Subject to the AMT a. Baseline

    If a taxpayer that has a state tax liability of more than $1,000 above the SALT cap and is not subject to the AMT makes a $1,000 contribution to charity A, the deduction for charitable contributions under section 170(a) increases by $1,000, but the deduction for state and local taxes paid under section 164 is unchanged. Consequently, itemized deductions increase by $1,000, and taxable income decreases by $1,000. If the taxpayer is in the 24 percent bracket, federal liability will decrease by $240, and state tax liability will decrease by the $1,000 state tax credit. The combined federal and state tax benefits of the $1,000 contribution are therefore $1,240, and the taxpayer receives a $240 net benefit while the federal government has a loss of $240. This is shown in column A under Baseline for Example 1 in Table 1.

    b. Proposed rule

    If the same taxpayer makes the $1,000 contribution to charity A under the proposed rule, the entire $1,000 deduction is not deductible under section 170(a), and the deduction for state and local taxes paid under section 164 is unchanged due to the SALT cap. The taxpayer's itemized deductions, taxable income, and federal tax liability are unchanged from what they would be in the absence of the contribution. The taxpayer's state tax liability decreases by $1,000 because of the state tax credit. The combined federal and state tax benefits of the $1,000 contribution are therefore $1,000, or $240 less than under the baseline. This is shown by comparing the Total Tax Benefit in column A under Proposed Rule with the corresponding value in column A under Baseline for Example 1 in Table 1. However, the benefit of the contribution for this taxpayer is the same as the taxpayer faced prior to enactment of the Act. This is shown by comparing the Total Tax Benefit under column A under Proposed Rule with the corresponding value in column A under Prior Law for Example 1 in Table 1.

    c. Comparison of Contributions to Different Organizations and Proposed Rule

    Under the baseline and the proposed rule, for a taxpayer with state and local taxes paid over the SALT cap, the value of a contribution to charity B, that is a contribution that results in a one-for-one state income tax deduction and not a state tax credit, is slightly higher than it was pre-Act. This increase is because the state deduction does not reduce the federal deduction for state and local taxes for a taxpayer above the SALT cap. As shown in the Total Tax Benefit row under the B columns for Example 1, under the baseline and the proposed rule, the value of a $1,000 contribution to charity B is $290—the charitable contribution deduction from federal tax ($1,000 times the 24 percent federal tax rate, or $240), plus the value of the deduction from state tax ($1,000 times the 5 percent state tax rate, or $50)—compared to $278 for contributions under prior law (described above). By comparison, as shown in the Total Tax Benefit row under the A columns for Example 1, a contribution to charity A, eligible for a state tax credit, yields a $1,240 tax benefit under the baseline and a $1,000 benefit under the proposed rule.

    2. Example 2: Taxpayer Is Below the SALT Cap and Not Subject to the AMT a. Baseline

    If a taxpayer that has state and local taxes paid below the SALT cap and is not subject to the AMT makes the $1,000 contribution to charity A, the deduction for charitable contributions under section 170(a) increases by $1,000, and the deduction for state and local taxes paid under section 164 decreases by $1,000. The taxpayer's itemized deductions, taxable income, and federal tax liability are unchanged from what they would be in the absence of the contribution. The taxpayer's state tax liability decreases by $1,000 because of the state tax credit. The combined federal and state tax benefits of the $1,000 contribution are therefore $1,000, and the cost to the taxpayer and to the federal government of making the contribution was $0. This situation is identical to prior law or what taxpayers faced prior to enactment of the Act. This is shown is column A under Baseline and Prior Law for Example 2 in Table 1.

    b. Proposed Rule

    If the same taxpayer makes the $1,000 contribution to charity A under the proposed rule, the entire $1,000 contribution is not deductible under section 170(a), but the deduction for state and local taxes paid under section 164 still decreases by $1,000 because of the $1,000 state tax credit. If the taxpayer is in the 24 percent bracket, the federal tax liability will increase by $240. The taxpayer's state tax liability decreases by the $1,000 state tax credit. The combined federal and state tax benefits of the $1,000 contribution are therefore $760, or $240 less than the baseline. This is shown by comparing the Total Tax Benefit in column A under Proposed Rule with the corresponding value in column A under Baseline for Example 2. In this case, the proposed rule has the effect of increasing the taxpayer's federal taxable income compared to the baseline if the taxpayer makes a contribution to charity A.

    c. Comparison of Contributions to Different Organizations, Under Prior Law, Baseline, and Proposed Rule

    Under prior law, and both the baseline scenario and the proposed rule, the tax benefit of charitable contributions to charity B, which are not eligible for a state tax credit but are deductible from both federal and state taxable income, is unchanged from prior law for taxpayers below the SALT cap. Thus, in this example, the benefit of making a contribution to charity B remains $278, as described above for contributions under prior law. This is shown in the Total Tax Benefit row under the B columns for Example 2. By comparison, as shown in the Total Tax Benefit row under the A columns for Example 2, a $1,000 contribution to charity A, eligible for a state tax credit, yields a $1,000 tax benefit under the baseline and a $760 benefit under the proposed rule.

    3. Example 3: Taxpayer is Subject to the AMT 5

    5 The Act increased the amount of income exempt from AMT. We estimate that only about 150,000 taxpayers will be subject to the AMT under the Act, compared to more than 4 million under prior law.

    a. Baseline

    If a taxpayer subject to the AMT makes a $1,000 contribution to charity A, the contribution reduces the taxpayer's taxable income under the AMT by $1,000. Under an AMT marginal tax rate of 26 percent, the federal tax benefit of this $1,000 contribution is $260. Because of the dollar-for-dollar state tax credit, the taxpayer would receive a combined federal and state tax benefit of $1,260 for a $1,000 contribution, or a $260 net benefit. This result is identical to the result under prior law (prior to enactment of the Act). This is shown in the A columns under Baseline and Prior Law for Example 3 in Table 1.

    b. Proposed Rule

    If the same taxpayer makes the $1,000 contribution to charity A under the proposed rule, the entire $1,000 is not deductible under section 170(a). Therefore, the taxpayer's taxable income and federal tax liability under the AMT would be unchanged from what they would be in the absence of the contribution. The taxpayer's state tax liability decreases by $1,000 because of the state tax credit. The combined federal and state tax benefits of the $1,000 contribution are therefore $1,000, or $260 less than under the baseline and under the law prior to enactment of the Act. This is shown by comparing the A columns of Example 3 in Table 1. However, under the proposed rule, taxpayers subject to the AMT are in the same position as taxpayers with state and local taxes paid above the SALT cap who are not subject to the AMT. This is shown by comparing the Total Tax Benefit amount under column A for the Proposed Rule for Example 3 to that for Example 1.

    c. Comparison of Contributions to Different Organizations, Under Prior Law, Baseline and Proposed Rule

    Under the baseline and the proposed rule, the treatment of charitable contributions that are deductible from both federal and state taxable income is unchanged from prior law for taxpayers subject to the AMT. This is shown in the B columns for Example 3 in Table 1. In this example, the benefit of making a contribution to charity B remains $310, as described above for contributions under prior law. By comparison, a contribution to a charity A, eligible for a state tax credit, yields a $1,260 tax benefit under the baseline and a $1,000 benefit under the proposed rule. This is shown in column A under Baseline and Proposed Rule for Example 3 in Table 1.

    IV. Expected Benefits and Costs A. Benefits

    These proposed regulations likely reduce economically inefficient choices motivated by the potential tax benefits described above if these proposed regulations were not promulgated. Under the prior law and baseline scenarios, state and local governments have an incentive to fund governmental activities through independent entities that are eligible to receive deductible contributions and to establish tax credits. This incentive is particularly strong under a SALT cap scenario where state and local governments may do so solely to enable some taxpayers to circumvent the SALT cap. These proposed regulations substantially diminish this incentive to engage in socially wasteful tax-avoidance behavior. As a result, it is expected that fewer such credit programs would be established in the future under the proposed regulations than under the baseline.

    To the extent this result occurs, the Treasury Department and IRS estimate that the proposed regulations would reduce overall complexity and paperwork burden for states and for taxpayers who would otherwise engage in charitable contributions solely for the purpose of reducing their state and local tax liability. In addition to reducing paperwork burden, the Treasury Department and IRS anticipate that the proposed regulations will also spare some taxpayers compliance costs associated with complex tax planning designed to avoid the SALT cap.

    In addition, these proposed regulations are expected to make the federal tax system more neutral to taxpayers' decisions regarding donations. Under the baseline scenarios, the combined federal and state tax benefits favor contributions to organizations which give rise to a state tax credit for taxpayers, particularly for taxpayers above the SALT cap. Under the proposed regulations, this economic distortion is expected to be reduced. The Treasury Department and the IRS request comments from the public on the potential extent of this expected reduction in economic distortion.

    Finally, these proposed regulations provide more certainty to taxpayers by clarifying the rules governing the amount that they can claim as a charitable contribution deduction when they receive a state tax credit or a dollar-for-dollar state tax deduction in exchange for the contribution.

    B. Costs

    The proposed regulations may result in some increase in compliance costs for taxpayers who make contributions that generate state tax credits. Under the baseline, for purposes of the charitable contribution deduction under section 170(a), taxpayers did not need to address state tax credits received for purposes of claiming a charitable contribution; however, they would know the amount of credits received as part of the filing process for state returns. In contrast, under the proposed regulations, taxpayers making a contribution to an organization listed in section 170(c) will need to determine the amount of any state tax credits they will receive or expect to receive in order to reduce their charitable contribution deduction under section 170(a). This additional step will generate some additional compliance costs.

    The compliance burden for recipient organizations that directly issue tax credits may increase under the proposed regulations. In order to take a charitable contribution deduction of $250 or more, a taxpayer must have a contemporaneous written acknowledgment (CWA) from the donee entity, usually provided in the form of a letter. The CWA includes the amount received by the entity or a description of property received. The CWA must also disclose whether the donee provided any goods or services in consideration for the contribution and a description and good faith estimate of the value of those goods or services provided. State and local tax credits are not generally provided by the donee entity, but there may be situations in which the entity would be providing the credit and would need to include it in the CWA provided to the donor. The Treasury Department and the IRS request comments on whether additional guidance is needed on substantiation and reporting requirements for donors and donees making or receiving payments or transfers of property in return for state and local tax credits and the extent to which entities do provide tax credits under certain circumstances.

    The Treasury Department and the IRS request comments on other potential compliance savings, compliance costs, costs related to increased tax planning and other avoidance behavior, or any effects on charitable contribution decisions that may occur as a result of these proposed regulations. In particular, the Treasury Department and the IRS request comments as to how the proposed regulations might alter incentives regarding contributions to state and local tax credit programs.

    Based on an analysis of confidential taxpayer return data and forecasts using that data, the Treasury Department and the IRS note that these proposed regulations will leave charitable giving incentives entirely unchanged for the vast majority of taxpayers. After passage of the Act, which significantly increased the standard deduction, it is estimated that ninety percent of taxpayers will not claim itemized deductions of any kind. Those taxpayers are entirely unaffected by these proposed regulations. It is estimated that approximately five percent of taxpayers will itemize and will have state and local income tax deductions above the SALT cap; these taxpayers will receive the same federal tax benefits under the proposed regulations as they received prior to the Act. See Example 1 above. It is estimated that approximately five percent of taxpayers will itemize but will not have state and local income tax deductions above the SALT cap. The federal tax benefits available to this fraction of taxpayers could be affected by the proposed regulations only if they contribute to programs that entitle them to state tax credits of greater than 15 percent. See Example 2 above. The Treasury Department and the IRS believe that most taxpayers in this third category have never used any state tax credit programs affected by the proposed regulations, and that the proposed regulations will have at most a highly limited, marginal effect on taxpayer decisions to donate to tax credit programs that pre-date TCJA, including educational scholarship programs.6 The Treasury Department and the IRS request comments on this important consideration and any potential unintended consequences of the proposed regulations not addressed here.

    6 The Treasury Department and the IRS are aware of potential concerns about educational scholarship programs in particular. Based on projections for 2018, most taxpayers in the third category described above do not reside in states that offer educational scholarship tax credit programs affected by the proposed regulations, and the vast majority of them have never used such programs.

    Table 1—Tax Treatment of $1,000 Contribution to (A) Organization That Gives Rise to $1,000 State Tax Credit and (B) Organization for Which Contribution is Deductible at the State Level Change in Prior law A B Baseline A B Proposed rule A B Example 1: Taxpayer Above the SALT Cap, Not Subject to the AMT State Income Tax Liability −1,000 −50 −1,000 −50 −1,000 −50 Federal Income Tax: Charitable Contribution Deduction 1,000 1,000 1,000 1,000 0 1,000 Deduction for State and Local Taxes −1,000 −50 0 0 0 0 Itemized Deductions 0 950 1,000 1,000 0 1,000 Taxable Income 0 −950 −1,000 −1,000 0 −1,000 Federal Tax Liability 0 −228 −240 −240 0 −240 Total Tax Benefit (Federal + State) 1,000 278 1,240 290 1,000 290 Net Cost to Taxpayer of $1,000 Contribution 0 722 −240 710 0 710 Example 2: Taxpayer Below the SALT Cap, Not Subject to the AMT State Income Tax Liability −1,000 −50 −1,000 −50 −1,000 −50 Federal Income Tax: Charitable Contribution Deduction 1,000 1,000 1,000 1,000 0 1,000 Deduction for State and Local Taxes −1,000 −50 −1,000 −50 −1,000 −50 Itemized Deductions 0 950 0 950 −1,000 950 Taxable Income 0 −950 0 −950 1,000 −950 Federal Tax Liability 0 −228 0 −228 240 −228 Total Tax Benefit (Federal + State) 1,000 278 1,000 278 760 278 Net Cost to Taxpayer of $1,000 Contribution 0 722 0 722 240 722 Example 3: Taxpayer Subject to the AMT State Income Tax Liability −1,000 −50 −1,000 −50 −1,000 −50 Federal Income Tax: Alternative minimum taxable Income −1,000 −1,000 −1,000 −1,000 0 −1,000 Federal Tax Liability −260 −260 −260 −260 0 −260 Total Tax Benefit (Federal + State) 1,260 310 1,260 310 1,000 310 Net Cost to Taxpayer of $1,000 Contribution −260 690 −260 690 0 690 Assumptions: The taxpayer itemizes deductions and has more than $1,000 of state tax liability. Under prior law, the taxpayer is not subject to the overall limitation on itemized deductions under section 68. The taxpayer faces a 24 percent marginal rate under the federal income tax. If the taxpayer is subject to the AMT, the taxpayer faces a 26 percent marginal rate. A $1,000 contribution to charitable organization A generates a $1,000 state tax credit. A $1,000 contribution to charitable organization B is ineligible for a state tax credit but is deductible under the state's income tax. The taxpayer faces a 5 percent marginal rate under the state's income tax. The baseline assumes continuation of the IRS administrative position that state and local tax credits are not reflected as a return benefit or consideration and therefore do not reduce the taxpayer's charitable contribution deduction under section 170(a). Total Tax Benefit refers to the absolute value of the reduction of the taxpayer's combined federal and state tax liability. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply because the proposed regulations primarily affect individuals and do not impose costs, including a collection of information, on small entities. Therefore, a regulatory flexibility analysis is not required. Pursuant to section 7805(f), this notice of proposed rulemaking will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small businesses.

    Comments and Public Hearing

    Before the regulations proposed herein are adopted as final regulations, consideration will be given to any electronic and written comments that are submitted timely to the IRS as prescribed in this preamble under the ADDRESSES heading. The Treasury Department and the IRS request comments on all aspects of the proposed regulations including: (1) Whether there should be recognition of gain or loss when property is transferred in consideration for state or local tax credits that are not de minimis; (2) determination of the basis of a transferable tax credit that a taxpayer sells or exchanges; (3) procedures by which a taxpayer may establish that the taxpayer declined receipt of the state or local tax credit; (4) substantiation and reporting requirements for donors and donees making or receiving payments or transfers of property in return for state and local tax credits; (5) for a taxpayer that receives or expects to receive a state or local tax deduction in an amount that exceeds the amount of the taxpayer's payment or the fair market value of the property transferred to an entity listed in section 170(c), suggestions for calculating the reduction to the charitable contribution deduction; and (6) whether and in what manner the regulations should address other state or local tax benefits, such as tax exclusions, that may be provided as consideration for certain payments or transfers to an entity listed in section 170(c). Finally, the Treasury Department and the IRS request comments on alternative regulatory approaches that would effectively prevent circumvention of the new statutory limitation on state and local tax deductions, consistent with applicable law.

    All comments submitted will be made available at www.regulations.gov or upon request. A public hearing has been scheduled for November 5, 2018, beginning at 10 a.m. in the Auditorium of the Internal Revenue Building, 1111 Constitution Avenue NW, Washington, DC 20224. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For more information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this preamble.

    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit an outline of the topics to be discussed and the time to be devoted to each topic by October 11, 2018. Submit a signed paper or electronic copy of the outline as prescribed in this preamble under the Addresses heading. An agenda showing the scheduling of the speakers will be prepared after the deadline for receiving outlines has passed. Copies of the agenda will be available free of charge at the hearing.

    Drafting Information

    The principal authors of these proposed regulations are personnel from the Office of the Associate Chief Counsel (Income Tax and Accounting). However, other personnel from the IRS and the Treasury Department participated in their development.

    List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

    Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

    PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: Authority:

    26 U.S.C. 7805 * * *

    Par. 2. Section 1.170A-1 is amended by redesignating paragraphs (h)(3) through (h)(5) as paragraphs (h)(4) through (h)(6), and adding a new paragraph (h)(3) to read as follows:
    § 1.170A-1 Charitable, etc., contributions and gifts; allowance of deduction.

    (h) * * *

    (3) Payments resulting in state or local tax benefits. (i) State or local tax credits. Except as provided in paragraph (h)(3)(v) of this section, if a taxpayer makes a payment or transfers property to or for the use of an entity listed in section 170(c), the amount of the taxpayer's charitable contribution deduction under section 170(a) is reduced by the amount of any state or local tax credit that the taxpayer receives or expects to receive in consideration for the taxpayer's payment or transfer.

    (ii) State or local tax deductions. (A) In general. If a taxpayer makes a payment or transfers property to or for the use of an entity listed in section 170(c), and the taxpayer receives or expects to receive a state or local tax deduction that does not exceed the amount of the taxpayer's payment or the fair market value of the property transferred by the taxpayer to such entity, the taxpayer is not required to reduce its charitable contribution deduction under section 170(a) on account of such state or local tax deduction.

    (B) Excess state or local tax deductions. If the taxpayer receives or expects to receive a state or local tax deduction that exceeds the amount of the taxpayer's payment or the fair market value of the property transferred, the taxpayer's charitable contribution deduction under section 170 is reduced.

    (iii) In consideration for. For purposes of paragraph (h)(3)(i) of this section, the term in consideration for shall have the meaning set forth in § 1.170A-13(f)(6), except that the state or local tax credit need not be provided by the donee organization.

    (iv) Amount of reduction. For purposes of paragraph (h)(3)(i) of this section, the amount of any state or local tax credit is the maximum credit allowable that corresponds to the amount of the taxpayer's payment or transfer to the entity listed in section 170(c).

    (v) State or local tax. For purposes of paragraph (h)(3) of this section, the term state or local tax means a tax imposed by a State, a possession of the United States, or by a political subdivision of any of the foregoing, or by the District of Columbia.

    (vi) Exception. Paragraph (h)(3)(i) of this section shall not apply to any payment or transfer of property if the amount of the state or local tax credit received or expected to be received by the taxpayer does not exceed 15 percent of the taxpayer's payment, or 15 percent of the fair market value of the property transferred by the taxpayer.

    (vii) Examples. The following examples illustrate the provisions of this paragraph (h)(3). The examples in paragraph (h)(6) of this section are not illustrative for purposes of this paragraph (h)(3).

    Example 1.

    A, an individual, makes a payment of $1,000 to X, an entity listed in section 170(c). In exchange for the payment, A receives or expects to receive a state tax credit of 70% of the amount of A's payment to X. Under paragraph (h)(3)(i) of this section, A's charitable contribution deduction is reduced by $700 (70% × $1,000). This reduction occurs regardless of whether A is able to claim the state tax credit in that year. Thus, A's charitable contribution deduction for the $1,000 payment to X may not exceed $300.

    Example 2.

    B, an individual, transfers a painting to Y, an entity listed in section 170(c). At the time of the transfer, the painting has a fair market value of $100,000. In exchange for the painting, B receives or expects to receive a state tax credit equal to 10% of the fair market value of the painting. Under paragraph (h)(3)(vi) of this section, B is not required to apply the general rule of paragraph (h)(3)(i) of this section because the amount of the tax credit received or expected to be received by B does not exceed 15% of the fair market value of the property transferred to Y. Accordingly, the amount of B's charitable contribution deduction for the transfer of the painting is not reduced under paragraph (h)(3)(i) of this section.

    Example 3.

    C, an individual, makes a payment of $1,000 to Z, an entity listed in section 170(c). In exchange for the payment, under state M law, C is entitled to receive a state tax deduction equal to the amount paid by C to Z. Under paragraph (h)(3)(ii)(A) of this section, C is not required to reduce its charitable contribution deduction under section 170(a) on account of the state tax deduction.

    (viii) Effective/applicability date. This paragraph (h)(3) applies to amounts paid or property transferred by a taxpayer after August 27, 2018.

    § 1.170A-13 [Amended]
    Par. 3. Section 1.170A-13(f)(7) is amended by removing the cross-reference “§ 1.170A-1(h)(4)” and adding in its place “§ 1.170A-1(h)(5)”. Par. 4. Section 1.642(c)-3 is amended by adding paragraph (g) to read as follows:
    § 1.642(c)-3 Adjustments and other special rules for determining unlimited charitable contributions deduction.

    (g) Payments resulting in state or local tax benefits—(1) In general. If the trust or decedent's estate makes a payment of gross income for a purpose specified in section 170(c), and the trust or decedent's estate receives or expects to receive a state or local tax benefit in consideration for such payment, § 1.170A-1(h)(3) applies in determining the charitable contribution deduction under section 642(c).

    (2) Effective/applicability date. Paragraph (g)(1) of this section applies to payments of gross income after August 27, 2018.

    Kristen Wielobob, Deputy Commissioner for Services and Enforcement.
    [FR Doc. 2018-18377 Filed 8-23-18; 4:15 pm] BILLING CODE 4830-01-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R03-OAR-2017-0598; FRL-9982-85—Region 3] Approval and Promulgation of Air Quality Implementation Plans; Maryland; Regional Haze Five-Year Progress Report AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is proposing to approve a state implementation plan (SIP) revision submitted by the State of Maryland. Maryland's SIP revision, the Regional Haze Five-Year Progress Report, addresses Clean Air Act (CAA) provisions that require the State to submit periodic reports addressing reasonable progress goals (RPGs) established for regional haze and to make a determination of the adequacy of the State's existing regional haze SIP. Maryland's progress report notes that the State has implemented the measures that are specified in the regional haze SIP which were due to be in place by the date of the progress report. The progress report also notes that visibility in federal Class I areas that may have been affected by emissions from Maryland is improving and that these Class I areas have already met the applicable RPGs for 2018. EPA is proposing approval of Maryland's progress report and its determination that the State's regional haze SIP is adequate to meet these RPGs for the first implementation period, which extends through 2018, and requires no substantive revision. This action is being taken under the CAA.

    DATES:

    Written comments must be received on or before September 26, 2018.

    ADDRESSES:

    Submit your comments, identified by Docket ID No. EPA-R03-OAR-2017-0598 at http://www.regulations.gov, or via email to [email protected] For comments submitted at Regulations.gov, follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. For either manner of submission, EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be confidential business information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. EPA will generally not consider comments or comment contents located outside of the primary submission (i.e. on the web, cloud, or other file sharing system). For additional submission methods, please contact the person identified in the “For Further Information Contact” section. For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

    FOR FURTHER INFORMATION CONTACT:

    Erin Trouba, (215) 814-2023, or by email at [email protected]

    SUPPLEMENTARY INFORMATION: I. Background

    States are required to submit a progress report in the form of a SIP revision that evaluates progress towards visibility improvement in the first implementation period, including progress towards the RPGs for each mandatory Class I federal area 1 (Class I area) within the state and in each Class I area outside the state which may be affected by emissions from within the state. 40 CFR 51.308(g). In addition, the provisions of 40 CFR 51.308(h) require states to submit, at the same time as the 40 CFR 51.308(g) progress report, a determination of the adequacy of the state's existing regional haze SIP. The progress report SIP for the first planning period is due five years after submittal of the initial regional haze SIP. On February 13, 2012, Maryland submitted the State's first regional haze SIP in accordance with 40 CFR 51.308.2 On August 9, 2017, Maryland, through the Maryland Department of the Environment (MDE), submitted a progress report, as a revision to its SIP, which detailed the progress made in the first planning period toward implementation of the Long-Term Strategy (LTS) outlined in the 2012 regional haze SIP, the visibility improvement measured at Class I areas affected by emissions from Maryland, and a determination of the adequacy of the State's existing regional haze SIP.

    1 Areas designated as mandatory Class I federal areas consist of national parks exceeding 6,000 acres, wilderness areas and national memorial parks exceeding 5000 acres, and all international parks that were in existence on August 7, 1977 (42 U.S.C. 7472(a)). See 40 CFR part 81, subpart D.

    2 On July 6, 2012 (77 FR 39938), EPA approved Maryland's regional haze SIP submittal addressing the requirements of the first implementation period for regional haze.

    II. Summary of SIP Revision and EPA Analysis

    Maryland's regional haze progress report SIP submittal (2017 progress report) addresses the elements for progress reports required under the provisions of 40 CFR 51.308(g) and includes a determination as required by 40 CFR 51.308(h) that the State's existing regional haze SIP requires no substantive revision to achieve the established regional haze visibility improvement and emissions reduction goals for 2018. This section summarizes Maryland's 2017 progress report and EPA's analysis and proposed approval of Maryland's submittal.

    A. Regional Haze Progress Report

    As required in 40 CFR 51.308(g), Maryland's 2017 progress report evaluated the status of all measures included in the State's 2012 regional haze SIP for achieving RPGs for affected Class I areas. Through consultation, states in the Mid Atlantic/Northeast Visibility Union (MANE-VU),3 including Maryland, were requested to adopt and implement control strategies to assure reasonable progress towards improvement of visibility in the MANE-VU Class I areas. These strategies are commonly referred to as the MANE-VU “Ask.” The MANE-VU “Ask” includes: (1) 90% or more reduction in sulfur dioxide (SO2) emissions at 167 electric generating unit (EGU) “stacks” identified by MANE-VU (or comparable alternative measures), (2) timely implementation of best available retrofit technology (BART) 4 requirements, (3) lower sulfur fuel oil (with limits specified for each state), and (4) continued evaluation of other control measures.5 The strategies from the “Ask” are the measures that Maryland included in the 2012 regional haze SIP and which are addressed in the 2017 progress report. Maryland addressed the measures listed in the 2012 regional haze SIP through implementing the state-wide Healthy Air Act (HAA),6 implementing BART or alternatives to BART, adopting a low-sulfur fuel oil regulation into COMAR 03.03.05.04, and evaluating other control methods to reduce SO2 and nitrogen oxides (NOX).

    3 MANE-VU was formed by the Mid-Atlantic and Northeastern states, tribes, and federal agencies to coordinate regional haze planning activities for the region to meet requirements in the CAA and federal regional haze regulations.

    4 BART eligible sources are those sources which have the potential to emit 250 tons or more of a visibility-impairing air pollutant, were put in place between August 7, 1962 and August 7, 1977, and whose operations fall within one or more of 26 specifically listed source categories.

    5 The MANE-VU “Ask” was structured around the finding that SO2 emissions were the dominate visibility impairing pollutant at the Northeastern Class I areas and that EGUs comprised the largest SO2 emission sector.

    6 The HAA, codified at COMAR 26.11.27, was effective as of July 16, 2007 and was approved by EPA into the Maryland SIP on September 4, 2008 (73 FR 51599).

    In response to the MANE-VU “Ask” to achieve 90% or more reduction in SO2 emissions at 167 EGU “stacks,” Maryland demonstrates, in the 2017 progress report, that the HAA has been implemented and has provided significant reductions in SO2 and NOX from coal-fired EGUs, including several BART-eligible units. At the BART eligible EGUs, the existing controls were considered BART for NOX, SO2, and particulate matter (PM). The HAA addressed 15 coal-fired EGUs in the state, including the twelve identified within the “Ask's” 167 stacks and all seven of the BART-eligible EGUs in the state.7 The HAA established tonnage caps for emissions of NOX and SO2 from 15 coal-fired EGUs, 13 of which are still operating. The HAA's annual SO2 caps were implemented in two phases, first in 2010 and then in 2013. The annual NOX caps were implemented in 2009 and 2012. In the 2017 progress report, Maryland reported that NOX emissions were reduced by 89% from a 2002 baseline from these EGUs and SO2 emissions from these EGUs were reduced by 269,444 tons per year from the 2002 baseline, a 92% reduction from 2002 to 2015. Maryland asserts that the SO2 and NOX emissions reductions under the HAA exceeded reductions that would have been achieved through BART controls alone at the EGUs.

    7 R. Paul Smith Units 3 & 4 have shut down since the approval of Maryland's regional haze SIP in 2012. The HAA originally addressed 15 units, but currently addresses 13 active EGUs in the state.

    The 2017 progress report also addressed implementation of BART and alternatives to BART 8 at Maryland's two non-EGU BART eligible source specific units—Holcim Cement and Verso Luke Paper. In the BART analysis for Holcim's Portland cement kiln in Hagerstown, Maryland, the State determined and EPA approved the addition of selective non-catalytic reduction (SNCR) as BART for PM and NOX and the previously installed controls as BART for SO2. See 77 FR 11827 (February 28, 2012). The SIP-approved regulation, COMAR 26.11.30, pertaining to Reasonably Available Control Technology (RACT) for the 2008 ozone National Ambient Air Quality Standards (NAAQS), establishes more stringent NOX limits for Portland Cement Plants in the State, including Holcim Cement. 83 FR 13192 (March 28, 2018). As a result of the RACT requirements, Holcim upgraded its equipment in 2016 from a long-dry kiln to a pre-heater/pre-calciner kiln and installed a SNCR addressing BART requirements for NOX and PM. Holcim is required to meet a limit of 2.4 pounds (lbs) of NOX per ton of clinker on a 30-day rolling average effective April 1, 2017.

    8 The requirements for alternative measures are established at 40 CFR 51.308(e)(2).

    In June 2012, EPA approved BART emission limits for power boiler 25, a BART subject source, at the Verso Luke Paper Mill. 77 FR 39938 (June 13, 2012). In July 2017, EPA removed the previously approved BART requirements for SO2 and NOX from power boiler 25 (No. 25) and replaced them with new, alternative emission requirements as BART.9 EPA established an annual SO2 cap for power boiler 25 and approved alternative BART emission limits for SO2 and NOX for power boiler 24 (No. 24): (1) A new BART emission limit of 0.28 pounds per million British thermal units (lbs/mmBtu), measured as an hourly average for SO2; and (2) a new BART emission limit of 0.4 lb/mmBtu, measured on a 30-day rolling average for NOX. 82 FR 35451 (July 31, 2017). The BART PM limit on power boiler No. 25 remains at 0.07 lb/MMBtu.

    9 The BART limits for power boiler 25 approved in 2012 were 0.07 pounds per million British thermal units (lb/mmBtu) for PM, 0.40 lb/mmBtu on a rolling 30 day average for NOX and 0.44 lb/mmBtu for SO2.

    Included in the MANE-VU “Ask” and as a measure in the State's 2012 regional haze SIP was a low-sulfur oil strategy. In 2014, Maryland adopted amendments to COMAR 03.03.05.04, “Specifications for No. 1 and No. 2 Fuel Oil.” The amendments, effective October 13, 2014, lowered the maximum allowable amount of sulfur in #1 and #2 fuel oil in two stages, from 3,000 to 2,000 parts per million (ppm) of sulfur in 2014, and then from 2,000 to 500 ppm of sulfur in 2016. While this strategy does not meet the exact specifications or timeline of the “Ask,” MANE-VU left an option for flexibility in reducing SO2 emissions by implementing other strategies. In the 2012 regional haze SIP, Maryland projected that the reductions achieved by implementing the HAA would greatly exceed projected reductions from fully implementing the “Ask's” low-sulfur fuel oil strategy. Maryland stated it intends to submit this regulation, COMAR 03.03.05.04, for future SIP approval.

    In the 2017 progress report, Maryland also mentions EPA approved for the Maryland SIP amendments adopted into COMAR 26.11.38, “Control of NOX emissions from Coal-Fired Electric Generating Units,” which addresses the 2012 regional haze SIP measure to evaluate other control methods to reduce SO2 and NOX. 82 FR 24546 (June 29, 2017). For 13 coal-fired EGUs in the state, Maryland asserts this regulation establishes a system-wide emissions rate of 0.15 lbs/mmBtu on a 30-day rolling average during the ozone season for NOX emissions at all coal-burning EGUs owned by the same company. An additional requirement in COMAR 26.11.38 to optimize controls is monitored by compliance with a 24-hour block emissions limit during ozone season for each coal-burning EGU. Although COMAR 26.11.38 is specifically designed to reduce ozone impacts by reducing NOX emissions, Maryland stated in the 2017 progress report that it believes that this regulation benefits visibility in nearby Class I areas because NOX is a visibility impairing pollutant as well as a precursor to ozone.

    EPA finds that Maryland's analysis in its 2017 progress report adequately addresses the applicable provisions under 40 CFR 51.308(g), as the State demonstrated the implementation of control measures in the Maryland regional haze SIP and in the MANE-VU “Ask.”

    The provisions under 40 CFR 51.308(g) also require the state to provide analysis of emissions trends of visibility-impairing pollutants from the state's sources by type or category over the past five years based on the most recent updated emissions inventory. In Section 4 of the 2017 progress report, Maryland provided an assessment of the following visibility impairing pollutants: SO2, NOX, volatile organic compounds (VOCs), and fine particulate matter (PM2.5) by category. MANE-VU and Maryland determined that SO2 emissions are the most significant pollutant impacting regional haze in MANE-VU Class I areas, therefore, the bulk of visibility improvement was expected to result from reductions in SO2 emissions from sources inside and outside of the State. The emissions reductions data in Table 1 demonstrates that NOX, SO2, VOC, and PM2.5 emissions have decreased from Maryland's baseline emissions in 2002 to 2014, the last year for which a comprehensive national emission inventory (NEI) is available.

    Table 1—Emissions Reductions in Maryland by Sector in 1,000 Tons per Year (tpy) Sector Pollutant 2002 2014 Percent
  • reductions
  • Point NOX 104.56 27.00 74 PM2.5 30.16 10.90 64 SO2 320.76 49.43 85 VOC 12.54 4.11 67 Non-Road NOX 58.35 31.13 47 PM2.5 4.54 2.58 43 SO2 16.65 4.47 73 VOC 56.73 27.61 51 On-Road NOX 167.38 61.64 63 PM2.5 5.79 2.15 63 SO2 4.96 0.52 90 VOC 65.77 30.27 54 Area NOX 12.79 12.64 1 PM2.5 16.48 11.77 29 SO2 11.12 5.94 47 VOC 120.08 47.10 61

    To assess emissions reductions from air pollution control measures being implemented between the baseline period and 2018, MANE-VU developed emissions projections for 2018 for the first round of regional haze SIPs. Section 4 of Maryland's 2017 progress report details emission trends from 2002 to 2014 and compares the trends to MANE-VU's projections of 2018 inventories that were included in Maryland's 2012 regional haze SIP. Maryland asserts in its 2017 progress report and EPA finds that emissions of SO2, NOX, VOC and PM2.5 for all sectors show a downward trend from 2002 through 2014. The 2014 NEI data shows SO2, VOC and PM2.5 emissions significantly below the projected 2018 totals in all categories. NOX emissions declined steeply between 2002 and 2014 largely due to point source and on-road emission reductions. Maryland states in the 2017 progress report that the overall reductions in all pollutants and downward trends far outweigh minimal increases in any sector in years between the baseline and 2018, and the increases do not inhibit the State's ability to improve visibility, reduce emissions of NOX and SO2, and continue to make progress toward the overall regional haze goals. Section 4 of Maryland's 2017 progress report also analyzes emissions in the MANE-VU region. Overall haze-impacting emissions have declined and are projected to continue to decline. Maryland concludes that the general decline in pollutants in the region indicate that changes in anthropogenic emissions have not and will not impede progress to improving visibility or Class I areas meeting their RPGs.

    EPA finds Maryland has adequately addressed the provisions under 40 CFR 51.308(g) relating to emission reductions and emission trends. Maryland detailed the SO2 and NOX reductions in Maryland from the 2002 regional haze baseline to 2014, the most recently available year of data at the time of the development of Maryland's 2017 progress report, discussed overall emission trends for all visibility-impacting pollutants, and discussed the implementation of regional haze SIP measures including BART. EPA agrees with Maryland's conclusion that it is reasonable to conclude anthropogenic emissions will not impede progress to improving visibility in the region given the large overall reductions in pollutant emissions, particularly in SO2 emissions in the State and in the Mid-Atlantic region.

    The provisions under 40 CFR 51.308(g) also require states with Class I areas within their borders to provide information on current visibility conditions and the difference between current visibility conditions and baseline visibility conditions expressed in terms of five-year averages of those annual values. Maryland does not have any Class I areas; however, the 2017 progress report provided visibility condition data to support the assessment that the regional haze SIP is sufficient to enable other states to meet the RPGs for Class I areas affected by Maryland.

    Seven Class I areas in the MANE-VU and Visibility Improvement State and Tribal Association of the Southeast (VISTAS) Regional Planning Organizations (RPOs) 10 are impacted by sulfate emissions from Maryland's sources, as was stated in the State's 2012 regional haze SIP submission which EPA approved in July 2012.11 77 FR 39938. The Interagency Monitoring of Protected Visual Environments (IMPROVE) monitoring program provides data on the air pollutants that contribute to regional haze. Maryland's 2017 progress report included IMPROVE visibility data for each Class I area in the region which is impacted by Maryland sources and addresses the progress from the baseline 2000-2004 five-year average visibility to the 2011-2015 five-year average visibility for all affected Class I areas. Table 2 shows IMPROVE visibility data and shows the progress from the baseline period to the most recent averaging period and the RPG for each Class I area.

    10 Maryland was identified as influencing the visibility impairment of the following Class I areas: Acadia National Park, Brigantine National Wildlife Refuge, and Lye Brook Wilderness Area as well as the Dolly Sods Wilderness, Otter Creek Wilderness, and Shenandoah National Park.

    11 VISTAS is a collaborative effort of state governments, tribal governments, and various federal agencies established to initiate and coordinate activities associated with the management of regional haze, visibility and other air quality issues in the Southeastern United States. Member States and Tribes include: the States of Alabama, Florida, Georgia, Kentucky, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, and West Virginia and the Eastern Band of the Cherokee Indians.

    Table 2—Observed Visibility vs. Reasonable Progress Goals Class I area IMPROVE site 2000-2004
  • 5-year
  • average
  • 2011-2015
  • 5-year
  • average
  • Met 2018
  • RPG already?
  • 2018 RPG
    20% Haziest Days Acadia National Park 22.9 17.4 Yes 19.4 Brigantine Wilderness 29.0 22.6 Yes 25.1 Great Gulf/Presidential Range-Dry River Wilderness 22.8 16.4 Yes 19.1 Lye Brook Wilderness 24.4 18.0 Yes 20.9 Moosehorn Wilderness/Roosevelt Campobello International Park 21.7 16.8 Yes 19.0 Dolly Sods Wilderness/Otter Creek 12 29.5 21.2 Yes 21.7 Shenandoah National Park 29.3 20.7 Yes 21.9 20% Clearest Days Acadia National Park 8.8 6.9 Yes 8.3 Brigantine Wilderness 14.3 12.0 Yes 14.3 Great Gulf/Presidential Range-Dry River Wilderness 7.7 5.7 Yes 7.2 Lye Brook Wilderness 6.4 5.3 Yes 5.5 Moosehorn Wilderness/Roosevelt Campobello International Park 9.2 6.9 Yes 8.6 Dolly Sods Wilderness 12.3 8.2 Yes 11.1 Shenandoah National Park 10.9 7.9 Yes 8.7

    EPA notes the substantial progress made in the IMPOVE visibility data, as the Class I areas affected by emissions from Maryland have already achieved and surpassed the 2018 RPGs set in the first regional haze SIPs in the Mid-Atlantic and Northeast regions. Class I areas affected by emissions from Maryland have current visibility conditions better than baseline conditions and better than RPGs.

    12 The West Virginia 5-year progress report submittal states that the IMPROVE monitor in Dolly Sods is a surrogate for Otter Creek. See 80 FR 32019 (June 5, 2015).

    EPA finds Maryland provided the required information regarding visibility conditions and implementation of all measures included in the State's regional haze SIP to meet the requirements under 40 CFR 51.308(g), specifically providing baseline visibility conditions (2000-2004), current conditions based on the most recently available IMPROVE monitoring data (2011-2015), and an assessment of the change in visibility impairment at its Class I areas.

    As stated, Maryland does not have any Class I areas; therefore, Maryland is not required to monitor for visibility-impairing pollutants. Maryland's visibility monitoring strategy relies upon Class I areas' participation in the IMPROVE network; however, Maryland stated that it does intend to maintain the IMPROVE site at Frostburg Reservoir. EPA finds Maryland has adequately addressed the requirements for a monitoring strategy for regional haze and finds no further modifications to the monitoring strategy are necessary.

    In its 2017 progress report, Maryland concludes the elements and strategies relied on in its regional haze SIP are sufficient to enable neighboring states to meet all established RPGs. As shown in Table 2 above, visibility on least—impaired and most—impaired days from 2000 through 2014 has improved at all Class I areas affected by emissions from Maryland. In addition, all Class I areas impacted by Maryland's emissions have met their RPGs. EPA therefore finds Maryland has adequately addressed the provisions for its progress report in 40 CFR 51.308(g).

    B. Determination of Adequacy of Existing Regional Haze Plan

    In the 2017 progress report, Maryland submitted a negative declaration to EPA regarding the need for additional actions or emission reductions in Maryland beyond those already in its regional haze SIP to address the requirement for a determination of adequacy in 40 CFR 51.308(h). Maryland determined the existing regional haze SIP requires no further substantive revision at this time to achieve the RPGs for Class I areas affected by the State's sources. The basis for the State's negative declaration is that visibility has improved at all Class I areas impacted by Maryland's sources in the MANE-VU and VISTAS regions. In addition, there has been a significant downward trend in emissions of NOX, SO2, VOC, and PM2.5 from the baseline year for Maryland's regional haze SIP (2002) to the latest emission inventory for Maryland in 2014. In addition, SO2, VOC, and PM2.5 emissions are significantly below the 2018 totals projected in Maryland's 2012 regional haze SIP submittal.

    EPA concludes that Maryland has adequately addressed the provisions under 40 CFR 51.308(h) because visibility and emission trends indicate that Class I areas impacted by Maryland's sources are meeting or exceeding the RPGs for 2018, and expect to continue to meet or exceed the RPGs for 2018. Thus, EPA finds Maryland's negative declaration (i.e., that the existing regional haze SIP requires no further substantive revision to achieve goals for visibility improvement and emission reductions) reasonable and in accordance with requirements in 40 CFR 51.308(h).

    III. Proposed Action

    EPA is proposing to approve Maryland's 2017 progress report, submitted on August 9, 2017, as meeting the applicable CAA requirements in section 110 and meeting regional haze requirements set forth in 40 CFR 51.308(g) and 51.308(h).

    IV. Statutory and Executive Order Reviews

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

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

    • Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866.

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

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

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

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

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

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

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

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

    In addition, this proposed rule to approve Maryland's 2017 progress report does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

    List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.

    Authority:

    42 U.S.C. 7401 et seq.

    Dated: August 15, 2018. Cosmo Servidio, Regional Administrator, Region III.
    [FR Doc. 2018-18526 Filed 8-24-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R09-OAR-2018-0133; FRL-9982-76—Region 9] Air Plan Revisions; California; Technical Amendments AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is proposing to delete various local rules from the California State Implementation Plan (SIP) that were approved in error. These rules include general nuisance provisions, certain federal performance requirements, hearing board procedures, variance provisions, and local fee provisions. The EPA has determined that the continued presence of these rules in the SIP is potentially confusing and thus problematic for affected sources, the state, local agencies, and the EPA. The intended effect of this proposal is to delete these rules to make the SIP consistent with the Clean Air Act. The EPA is also proposing to make certain other corrections to address errors made in previous actions taken by the EPA on California SIP revisions.

    DATES:

    Any comments must arrive by September 26, 2018.

    ADDRESSES:

    Submit your comments, identified by Docket ID No. EPA-R09-OAR-2018-0133 at http://www.regulations.gov, or via email to Kevin Gong, at [email protected] For comments submitted at Regulations.gov, follow the online instructions for submitting comments. Once submitted, comments cannot be removed or edited from Regulations.gov. For either manner of submission, the EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (i.e., on the web, cloud, or other file sharing system). For additional submission methods, please contact the person identified in the FOR FURTHER INFORMATION CONTACT section. For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www.epa.gov/dockets/commenting-epa-dockets.

    FOR FURTHER INFORMATION CONTACT:

    Kevin Gong, EPA Region IX, (415) 972-3073, [email protected]

    SUPPLEMENTARY INFORMATION:

    Throughout this document, “we,” “us” and “our” refer to the EPA.

    Table of Contents I. Why is the EPA proposing to correct the SIP? II. What is the EPA's authority to correct errors in SIP rulemakings? III. Which rules are proposed for deletion? IV. What other corrections is the EPA proposing to make? V. Proposed Action and Request for Public Comment VI. Incorporation by Reference VII. Statutory and Executive Order Reviews I. Why is the EPA proposing to correct the SIP?

    The Clean Air Act (CAA or “Act”) was first enacted in 1970. In the 1970s and early 1980s, thousands of state and local agency regulations were submitted to the EPA for incorporation into the SIP to fulfill the new federal requirements. In many cases, states submitted entire regulatory air pollution programs, including many elements not required by the Act. Due to time and resource constraints, the EPA's review of these submittals focused primarily on the new substantive requirements, and we approved many other elements into the SIP with minimal review. We now recognize that many of these elements were not appropriate for approval into the SIP. In general, these elements are appropriate for state and local agencies to adopt and implement, but it is not necessary or appropriate to make them federally enforceable by incorporating them into the applicable SIP. These include:

    A. Rules that prohibit emissions causing general nuisance or annoyance in the community.1 Such rules address local issues but have essentially no connection to the purposes for which SIPs are developed and approved, namely the implementation, maintenance, and enforcement of the national ambient air quality standards (NAAQS). See CAA section 110(a)(1).

    1 An example of such a rule is as follows: A person shall not discharge from any source whatsoever such quantities of air contaminants or other material which cause injury, detriment, nuisance or annoyance to any considerable number of persons or to the public or which endanger the comfort, repose, health or safety of any such persons or the public or which cause or have a natural tendency to cause injury or damage to business or property.

    B. Local adoption of federal New Source Performance Standards (NSPS) or National Emission Standards for Hazardous Air Pollutants (NESHAP) requirements either by reference or by adopting text identical or modified from the requirements found in 40 Code of Federal Regulations (CFR) part 60 or 61. Because the EPA has independent authority to implement 40 CFR parts 60 and 61, it is not appropriate to make parallel local authorities federally enforceable by approving them into the applicable SIP.

    C. Rules that govern local hearing board procedures and other administrative requirements such as fees, frequency of meetings, salaries paid to board members, and procedures for petitioning for a local hearing.

    D. Variance provisions that provide for modification of the requirements of the applicable SIP. State- or district-issued variances provide an applicant with a mechanism to obtain relief from state enforcement of a state or local rule under certain conditions. Pursuant to federal law, specifically section 110(i) of the CAA, 42 U.S.C. 7410(i), neither the EPA nor a state may revise a SIP by issuing an “order, suspension, plan revision or other action modifying any requirement of an applicable implementation plan” without a plan promulgation or revision. The EPA and California have long recognized that a state-issued variance, though binding as a matter of state law, does not prevent the EPA from enforcing the underlying SIP provisions unless and until the EPA approves that variance as a SIP revision. The variance provisions included in this action are deficient for various reasons, including their failure to address the fact that a state- or district-issued variance has no effect on federal enforceability unless the variance is submitted to and approved by the EPA as a SIP revision. Therefore, their inclusion in the SIP is inconsistent with the Act and may be confusing to regulated industry and the general public. Moreover, because state-issued variances require independent EPA approval to modify the substantive requirements of a SIP, removal of these variance provisions from the SIP will have no effect on regulated entities. See Industrial Environmental Association v. Browner, No. 97-71117 (9th Cir., May 26, 2000).

    E. Local fee provisions that are not economic incentive programs and are not designed to replace or relax a SIP emission limit. While it is appropriate for local agencies to implement fee provisions, for example, to recover costs for issuing permits, it is generally not appropriate to make local fee collection federally enforceable.

    II. What is the EPA's authority to correct errors in SIP rulemakings?

    Section 110(k)(6) of the CAA, as amended in 1990, provides that, whenever the EPA determines that the EPA's action approving, disapproving, or promulgating any plan or plan revision (or part thereof), area designation, redesignation, classification or reclassification was in error, the EPA may in the same manner as the approval, disapproval, or promulgation revise such action as appropriate without requiring any further submission from the state. Such determination and the basis thereof must be provided to the state and the public. We interpret this provision to authorize the EPA to make corrections to a promulgated regulation when it is shown to our satisfaction (or we discover) that (1) we clearly erred by failing to consider or by inappropriately considering information made available to the EPA at the time of the promulgation, or the information made available at the time of promulgation is subsequently demonstrated to have been clearly inadequate, and (2) other information persuasively supports a change in the regulation. See 57 FR 56762, at 56763 (November 30, 1992) (correcting designations, boundaries, and classifications of ozone, carbon monoxide, particulate matter and lead areas).

    III. Which rules are proposed for deletion?

    The EPA has determined that the rules listed in Table 1 below are inappropriate for inclusion in the SIP, but were previously approved into the SIP in error. Dates that these rules were submitted by the state and approved by the EPA are provided. We are proposing deletion of these rules and any earlier versions of these rules from the individual air pollution control district portions of the California SIP under CAA section 110(k)(6) as inconsistent with the requirements of CAA section 110. A brief discussion of the proposed deletions is provided in the following paragraphs.

    Table 1—Local Air District Rules Proposed for Deletion Rule or regulation Title Submittal date EPA approval Amador County Air Pollution Control District (APCD) Rule 5 Nuisance June 30, 1972 37 FR 19812 (September 22, 1972). Rule 6 Additional Exception June 30, 1972 37 FR 19812 (September 22, 1972). Antelope Valley Air Quality Management District (AQMD) Los Angeles County APCD Rule 51 Nuisance June 30, 1972 37 FR 19812 (September 22, 1972). Bay Area AQMD Division 11 Hydrogen Sulfide February 21, 1972 37 FR 10842 (May 31, 1972). Section 11101 [establishes hydrogen sulfide limits] November 2, 1973 42 FR 23802 (May 11, 1977); corrected at 42 FR 42219 (August 22, 1977). Regulation 8 Emission Standards for Hazardous Pollutants January 10, 1975 42 FR 23802 (May 11, 1977). Butte County AQMD Section 2-1 [general nuisance provision] February 21, 1972 37 FR 10842 (May 31, 1972). Rule 619 Effective Date of Decision February 10, 1986 52 FR 3226 (February 3, 1987). Calaveras County APCD Rule 205 Nuisance July 22, 1975 42 FR 23803 (May 11, 1977); corrected at 42 FR 42219 (August 22, 1977). Rule 603 Hearing Board Fees July 22, 1975 42 FR 23803 (May 11, 1977); corrected at 42 FR 42219 (August 22, 1977). Colusa County APCD Rule 4.5 Nuisance June 30, 1972 37 FR 19812 (September 22, 1972). Rule 4.6 Additional Exception June 30, 1972 37 FR 19812 (September 22, 1972). Eastern Kern APCD Kern County APCD Rule 419 Nuisance June 30, 1972 37 FR 19812 (September 22, 1972). Kern County APCD Rule 420 Exception June 30, 1972 37 FR 19812 (September 22, 1972). El Dorado County AQMD Rule 52 Nuisance February 21, 1972 37 FR 10842 (May 31, 1972). Rule 53 Exceptions to Rule 52 February 21, 1972 37 FR 10842 (May 31, 1972). Rule 706 Failure to Comply with Rules May 23, 1979 46 FR 27115 (May 18, 1981). Feather River AQMD Yuba County Rule 9.7 Permit Actions March 30, 1981 47 FR 15585 (April 12, 1982). Yuba County Rule 9.8 Variance Actions March 30, 1981 47 FR 15585 (April 12, 1982). Glenn County APCD Rule 78 Nuisance June 30, 1972 37 FR 19812 (September 22, 1972). Rule 79 Exceptions June 30, 1972 37 FR 19812 (September 22, 1972). Great Basin Unified APCD Rule 402 Nuisance April 21, 1976 42 FR 28883 (June 6, 1977). Rule 617 Emergency Variances December 17, 1979 46 FR 8471 (January 27, 1981). Imperial County APCD Rule 117 Nuisances February 21, 1972 37 FR 10842 (May 31, 1972). Rule 513 Record of Proceedings November 4, 1977 43 FR 35694 (August 11, 1978). Lake County AQMD Section 1602 Petition Procedures March 30, 1981 47 FR 15784 (April 13, 1982). Section 1701.Q [excess emissions estimate for variance petitions] February 10, 1986 52 FR 3226 (February 3, 1987). Lassen County APCD Rule 3:2 Permit Fees June 30, 1972 37 FR 19812 (September 22, 1972). Rule 3:3 Permit Fee Schedules June 30, 1972 37 FR 19812 (September 22, 1972). Rule 3:4 Analysis Fees June 30, 1972 37 FR 19812 (September 22, 1972). Rule 3:5 Technical Reports, Charges For June 30, 1972 37 FR 19812 (September 22, 1972). Rule 4:2 Nuisance June 30, 1972 37 FR 19812 (September 22, 1972). Mariposa County APCD Rule 205 Nuisance January 10, 1975 42 FR 42219 (August 22, 1977). Mendocino County APCD Rule 4.A General February 21, 1972 37 FR 10842 (May 31, 1972). Rule 620 Hearing Procedures August 6, 1982 47 FR 50864 (November 10, 1982). Modoc County APCD Rule 3:2 Nuisance June 30, 1972 37 FR 19812 (September 22, 1972). Rule 3:6 Additional Exception June 30, 1972 37 FR 19812 (September 22, 1972). Mojave Desert AQMD Riverside County Rule 51 Nuisance February 21, 1972 37 FR 10842 (May 31, 1972). Riverside County APCD Rule 106 Record of Proceedings February 21, 1972 37 FR 10842 (May 31, 1972). South Coast AQMD Rule 1231 Judicial Review January 2, 1979 45 FR 30626 (May 9, 1980). Monterey Bay Air Resources District Monterey-Santa Cruz County Unified APCD Rule 402 Nuisance February 21, 1972 37 FR 10842 (May 31, 1972). San Benito County APCD Rule 403 Nuisance February 21, 1972 37 FR 10842 (May 31, 1972). North Coast Unified AQMD Del Norte County APCD Regulation IV, introductory paragraph [untitled but represents a general nuisance type of provision] February 21, 1972 37 FR 10842 (May 31, 1972). Del Norte County APCD Rule 340 Technical Report Charges November 10, 1976 43 FR 25677 (June 14, 1978). Del Norte County APCD Rule 620 Hearing Procedures November 10, 1976 43 FR 25677 (June 14, 1978). Del Norte County APCD Rule 620 Hearing Procedures August 6, 1982 47 FR 50864 (November 10, 1982). Del Norte County APCD Rule 630 Decisions November 10, 1976 43 FR 25677 (June 14, 1978). Del Norte County APCD Rule 640 Record of Proceedings November 10, 1976 43 FR 25677 (June 14, 1978). Del Norte County APCD Rule 650 Appeal of Decision November 10, 1976 43 FR 25677 (June 14, 1978). Humboldt County APCD Rule 51 Prohibited Emissions February 21, 1972 37 FR 10842 (May 31, 1972). Trinity County APCD Regulation IV, introductory paragraph [untitled but represents a general nuisance type of provision] June 30, 1972 37 FR 19812 (September 22, 1972). Trinity County APCD Rule 56 Failure to Comply with Rules June 30, 1972 37 FR 19812 (September 22, 1972). Trinity County APCD Rule 62 Preliminary Matters June 30, 1972 37 FR 19812 (September 22, 1972). Trinity County APCD Rule 67 Lack of Permit June 30, 1972 37 FR 19812 (September 22, 1972). Trinity County APCD Rule 68 Issuance of Subpoenas, Subpoenas Duces Tecum June 30, 1972 37 FR 19812 (September 22, 1972). Trinity County APCD Rule 620 Hearing Procedures August 6, 1982 47 FR 50864 (November 10, 1982). Northern Sierra AQMD Nevada County APCD Rule 700 Applicable Articles of the Health and Safety Code June 6, 1977 43 FR 41039 (September 14, 1978). Nevada County APCD Rule 703 (paragraphs (E) and (I)) Contents of Petitions June 6, 1977 43 FR 41039 (September 14, 1978). Nevada County APCD Rule 711 Evidence April 10, 1975 43 FR 25687 (June 14, 1978). Plumas County APCD Rule 51 Prohibited Emissions June 30, 1972 37 FR 19812 (September 22, 1972). Plumas County APCD Rule 516 (paragraph (C)) Emergency Variance Provisions June 22, 1981 47 FR 17486 (April 23, 1982). Plumas County APCD Rule 701 General January 10, 1975 43 FR 25680 (June 14, 1978). Plumas County APCD Rule 702 Filing Petitions January 10, 1975 43 FR 25680 (June 14, 1978). Plumas County APCD Rule 703 Contents of Petitions June 22, 1981 47 FR 17486 (April 23, 1982). Plumas County APCD Rule 704 Petitions for Variances January 10, 1975 43 FR 25680 (June 14, 1978). Plumas County APCD Rule 710 Notice of Public Hearing June 22, 1981 47 FR 17486 (April 23, 1982). Plumas County APCD Rule 711 Evidence January 10, 1975 43 FR 25680 (June 14, 1978). Plumas County APCD Rule 712 Preliminary Matters January 10, 1975 43 FR 25680 (June 14, 1978). Plumas County APCD Rule 713 Official Notice January 10, 1975 43 FR 25680 (June 14, 1978). Plumas County APCD Rule 714 Continuances January 10, 1975 43 FR 25680 (June 14, 1978). Plumas County APCD Rule 715 Decision January 10, 1975 43 FR 25680 (June 14, 1978). Plumas County APCD Rule 716 Effective Date of Decision January 10, 1975 43 FR 25680 (June 14, 1978). Sierra County APCD Rule 516 (paragraph (C)) Emergency Variance Provisions June 22, 1981 47 FR 17486 (April 23, 1982). Sierra County APCD Rule 703 Contents of Petitions June 22, 1981 47 FR 17486 (April 23, 1982). Sierra County APCD Rule 710 Notice of Public Hearing June 22, 1981 47 FR 17486 (April 23, 1982). Northern Sonoma County APCD 52 Nuisance June 30, 1972 37 FR 19812 (September 22, 1972). 85 Failure to Comply with Rules June 30, 1972 37 FR 19812 (September 22, 1972). 91 Preliminary Matters June 30, 1972 37 FR 19812 (September 22, 1972). 96 Lack of Permit June 30, 1972 37 FR 19812 (September 22, 1972). 600 Authorization October 16, 1985 52 FR 12522 (April 17, 1987). 610 Petition Procedure October 16, 1985 52 FR 12522 (April 17, 1987). 620 Hearing Procedures August 6, 1982 47 FR 50864 (November 10, 1982). Amador County APCD

    Amador County APCD Rule 5 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 5 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Amador County APCD Rule 6 (Additional Exception) provides an exception to Amador County APCD Rule 5 and should be deleted if Rule 5 is deleted. In this action, we are proposing to delete Amador County APCD Rules 5 and 6 from the Amador County portion of the California SIP.

    Antelope Valley AQMD

    Formed in 1997, the Antelope Valley AQMD administers air quality management programs in the Southeast Desert portion of Los Angeles County that is referred to as “Antelope Valley.” The Antelope Valley AQMD portion of the California SIP includes rules adopted by various air pollution control agencies that had jurisdiction over stationary sources in Antelope Valley since 1972, including the Los Angeles County APCD, the Southern California APCD, the South Coast AQMD, and the Antelope Valley AQMD. Los Angeles County APCD Rule 51 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 51 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Although Rule 51 was rescinded in the South Coast AQMD portion of Los Angeles County at 64 FR 71660 (December 22, 1999), the rescission did not apply within the Antelope Valley AQMD portion of the county because, by the time of the 1999 action, the South Coast AQMD no longer had jurisdiction within the Antelope Valley portion of Los Angeles County. In this action, we propose to delete Los Angeles County APCD Rule 51 (Nuisance) from the Antelope Valley AQMD portion of the California SIP.

    Bay Area AQMD

    Bay Area AQMD Division 11 (Hydrogen Sulfide) (including sections 11100, 11101, 11102, 11102.1-11102.8) was approved as part of the original SIP for the Bay Area AQMD portion of the California SIP. Section 11101, which is untitled but establishes hydrogen sulfide limits, was superseded by approval of Section 11101 at 42 FR 23802 (May 11, 1977), as corrected and recodified at 42 FR 42219 (August 22, 1977). There has never been a NAAQS for hydrogen sulfide, and thus, Bay Area AQMD Division 11 (including sections 11100, 11101, 11102, 11102.1-11102.8) does not relate to the NAAQS and was approved in error.

    Bay Area AQMD Regulation 8 (Emission Standards for Hazardous Pollutants), as approved in 1977, includes certain definitions and four substantive rules: Rule 1 (NESHAPS General Provisions), Rule 2 (Emission Standard for Asbestos), Rule 3 (Emission Standard for Beryllium), and Rule 4 (Emission Standard for Beryllium Rocket Motor Firing). Bay Area AQMD Regulation 8 adopts text identical or modified from the requirements found in 40 CFR part 60 or 61, and because the EPA has independent authority to implement 40 CFR parts 60 and 61, it was not appropriate to make parallel local authorities federally enforceable by approving Regulation 8 into the Bay Area AQMD portion of the California SIP. In this action, we are proposing to delete Division 11 (including the amended version of section 11101), and Regulation 8 from the BAAQMD portion of the California SIP.

    Butte County AQMD

    Butte County AQMD Section 2-1 is a general-nuisance type of prohibitory rule. As such, Section 2-1 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Butte County AQMD Rule 619 (Effective Date of Decision) relates to hearing board procedures, and as such, was inappropriate for inclusion in the SIP and was thus approved by the EPA in error. In this action, we are proposing to delete Section 2-1 and Rule 619 from the Butte County AQMD portion of the California SIP.

    Calaveras County APCD

    Calaveras County APCD Rule 205 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 205 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Calaveras County APCD Rule 603 (Hearing Board Fees) relates to hearing board procedures, and as such, was inappropriate for inclusion in the SIP and was thus approved by the EPA in error. In this action, we are proposing to delete Rules 205 and 603 from the Calaveras County APCD portion of the California SIP.

    Colusa County APCD

    Colusa County APCD Rule 4.5 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 4.5 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Colusa County APCD Rule 4.6 (Additional Exception) provides an exception to Colusa County APCD Rule 4.5 and should be deleted if Rule 4.5 is deleted. In this action, we are proposing to delete Rules 4.5 and 4.6 from the Colusa County APCD portion of the California SIP.

    Eastern Kern APCD

    Kern County APCD Rule 419 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 419 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Kern County APCD Rule 420 (Exception) provides an exception to Kern County APCD Rule 419 and should be deleted if Rule 419 is deleted. In this action, we are proposing to delete Rules 419 and 420 from the Eastern Kern APCD portion of the California SIP.

    El Dorado County AQMD

    El Dorado County AQMD Rule 52 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 52 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. El Dorado County AQMD Rule 53 (Exceptions to Rule 52) provides an exception to El Dorado County AQMD Rule 52 and should be deleted if Rule 52 is deleted. El Dorado County AQMD Rule 706 (Failure to Comply with Rules) establishes certain hearing board procedures, and as such, was inappropriate for inclusion in the SIP and was thus approved by the EPA in error. In this action, we are proposing to delete Rules 52, 53, and 706 from the El Dorado County AQMD portion of the California SIP.

    Feather River AQMD

    Formed in 1991, the Feather River AQMD administers air quality management programs in Yuba County and Sutter County. The Feather River AQMD portion of the California SIP includes rules adopted by the predecessor agencies, the Yuba County APCD and the Sutter County APCD, to the extent that such rules have not been superseded or removed through EPA approval of rules or rescissions adopted by the Feather River AQMD. Yuba County APCD Rules 9.7 (Permit Actions) and 9.8 (Variance Actions) establish certain hearing board procedures, and as such, were inappropriate for inclusion in the SIP and were thus approved by the EPA in error. In this action, we are proposing to delete Rules 9.7 and 9.8 from the Feather River AQMD portion of the California SIP.

    Glenn County APCD

    Glenn County APCD Rule 78 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 78 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Glenn County APCD Rule 79 (Exceptions) provides an exception to Glenn County APCD Rule 78 and should be deleted if Rule 78 is deleted. In this action, we are proposing to delete Rules 78 and 79 from the Glenn County APCD portion of the California SIP.

    Great Basin Unified APCD

    Great Basin Unified APCD Rule 402 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 402 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Great Basin Unified APCD Rule 617 (Emergency Variance) allows an owner or operator of stationary sources to file a petition for an emergency variance under certain circumstances and provides for review and action on the petition by the APCO and hearing board. As described above, such provisions are inconsistent with section 110(i) of the CAA and were thus approved by the EPA in error. In this action, we are proposing to delete Rules 402 and 617 from the Great Basin Unified APCD portion of the California SIP.

    Imperial County APCD

    Imperial County APCD Rule 117 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 117 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Imperial County APCD Rule 513 (Record of Proceedings) establishes certain hearing board procedures, and as such, was inappropriate for inclusion in the SIP and was thus approved by the EPA in error. In this action, we are proposing to delete Rules 117 and 513 from the Imperial County APCD portion of the California SIP.

    Lake County AQMD

    Lake County AQMD Section 1602 (Petition Procedures) establishes certain hearing board procedures, and as such, was inappropriate for inclusion in the SIP and was thus approved by the EPA in error. Lake County AQMD Section 1701.Q requires that petitions for variances include an excess emission estimate and supporting documentation. As described above, variance provisions are inconsistent with section 110(i) of the CAA and were thus approved by the EPA in error. In this action, we are proposing to delete Sections 1602 and 1701.Q from the Lake County AQMD portion of the California SIP.

    Lassen County APCD

    Lassen County APCD Rules 3:2, 3:3, 3:4, and 3:5 are local fee provisions that were not appropriate for inclusion in the SIP and thus were approved by the EPA in error. On January 18, 2002 (67 FR 2573), the EPA deleted without replacement earlier versions of these same rules that had been submitted as part of the original California SIP on February 21, 1972 and approved on May 31, 1972 (37 FR 10842), but we did not recognize at the time of our 2002 action that the subject rules had been superseded by rules submitted on June 30, 1972 and approved on September 22, 1972 (37 FR 19812). In this action, we propose to delete the later-submitted and approved fee rules for Lassen County. Lassen County APCD Rule 4:2 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 4:2 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. In this action, we are proposing to delete Rule 4:2 and the fee rules discussed above from the Lassen County APCD portion of the California SIP.

    Mariposa County APCD

    Mariposa County APCD Rule 205 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 205 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. In this action, we are proposing to delete Rule 205 from the Mariposa County APCD portion of the California SIP.

    Mendocino County APCD

    Mendocino County APCD Rule 4.A (General) is a general-nuisance type of prohibitory rule. As such, Rule 4.A was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Mendocino County APCD Rule 620 (Hearing Procedures) establishes certain hearing board procedures, and as such, was inappropriate for inclusion in the SIP and was thus approved by the EPA in error. In this action, we are proposing to delete Rules 4.A and 620 from the Mendocino County APCD portion of the California SIP.

    Modoc County APCD

    Modoc County APCD Rule 3:2 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 3:2 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Modoc County APCD Rule 3:6 (Additional Exception) provides an exception to Modoc County APCD Rule 3:2 and should be deleted if Rule 3:2 is deleted. In this action, we are proposing to delete Rules 3:2 and 3:6 from the Modoc County APCD portion of the California SIP.

    Mojave Desert AQMD

    Regulation of stationary air pollution sources in Riverside County is split between the South Coast AQMD (which has jurisdiction over all Riverside County except the Palo Verde Valley) and the Mojave Desert AQMD (which has jurisdiction over the Palo Verde Valley portion of Riverside County). The Palo Verde Valley portion of Riverside County left the South Coast AQMD and joined the Mojave Desert AQMD on July 1, 1994. The applicable SIP for the Riverside County portion of the Mojave Desert AQMD (i.e., the Palo Verde Valley) consists, in part, of rules that were adopted originally by the Riverside County APCD and by the South Coast AQMD and then approved by the EPA prior to July 1, 1994, and that have not yet been superseded or rescinded through EPA approval of SIP revisions adopted by the Mojave Desert AQMD.

    Riverside County APCD Rule 51 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 51 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Riverside County APCD Rule 106 (Record of Proceedings) is proposed herein for deletion because it establishes certain hearing board procedures and was thus inappropriate for inclusion in the SIP and approved by the EPA in error. South Coast AQMD Rule 1231 (Judicial Review), also proposed herein for deletion, establishes certain district board procedures, and as such, was inappropriate for inclusion in the SIP and approved by the EPA in error.2 In this action, we are proposing to delete Riverside County Rules 51 and 106 and South Coast AQMD Rule 1231 from the Riverside County portion of the Mojave Desert AQMD portion of the California SIP.

    2 The EPA approved the rescission of South Coast AQMD Rule 1231 at 64 FR 71660 (December 22, 1999), but the rescission was not applicable within the Palo Verde Valley portion of Riverside County because the Palo Verde Valley had joined Mojave Desert AQMD several years before the rescission was approved.

    Monterey Bay Air Resources District

    The Monterey Bay Air Resources District (formerly named the Monterey Bay Unified APCD) was formed in 1974 when the Monterey-Santa Cruz County Unified APCD merged with the San Benito County APCD. The rules adopted by the predecessor agencies remain in the SIP to the extent they have not been superseded or rescinded through EPA approvals of rules or rescissions adopted by the unified air district. Monterey-Santa Cruz County Unified APCD Rule 402 (Nuisance) and San Benito County APCD Rule 403 (Nuisance) are general-nuisance type of prohibitory rules. As such, Rules 402 and 403 were inappropriate for inclusion in the SIP and, thus, were approved by the EPA in error. In this action, we are proposing to delete Rules 402 and 403 from the Monterey Bay Air Resources District portion of the California SIP.

    North Coast Unified AQMD

    Established in 1982, the North Coast Unified AQMD has jurisdiction over Del Norte, Humboldt and Trinity counties, and the North Coast Unified AQMD portion of the applicable California SIP includes rules that were adopted by these counties and approved by the EPA and not superseded or rescinded through subsequent SIP actions. The introductory paragraphs for Del Norte County APCD's Regulation VI (Prohibitions) and Trinity County APCD's Regulation IV (Prohibitions) and Humboldt County APCD Rule 51 (Prohibited Emissions) are general-nuisance type of prohibitory rules. As such, the introductory paragraphs of Regulation IV and Rule 51 were inappropriate for inclusion in the SIP and, thus, were approved by the EPA in error. Del Norte County APCD Rules 620 (Hearing Procedures), 630 (Decisions), 640 (Record of Proceedings) and 650 (Appeal of Decision) and Trinity County APCD Rules 56 (Failure to Comply with Rules), 62 (Preliminary Matters), 67 (Lack of Permit), 68 (Issuance of Subpoenas, Subpoenas Duces Tecum) and 620 (Hearing Procedures) establish certain hearing board procedures, and as such, were inappropriate for inclusion in the SIP and were approved by the EPA in error. Del Norte County APCD Rule 340 (Technical Report Charges) is a local fee provision that also was not appropriate for inclusion in the SIP and was approved in error. In this action, we are proposing to delete the various rules listed above from the North Coast Unified AQMD portion of the California SIP.

    Northern Sierra AQMD

    Established in 1986, the Northern Sierra AQMD has jurisdiction over Nevada, Plumas, and Sierra counties, and the Northern Sierra AQMD portion of the applicable California SIP includes rules that were adopted by these counties and approved by the EPA and not superseded or rescinded through subsequent SIP actions. Plumas County APCD Rule 51 (Prohibited Emissions) is a general-nuisance type of prohibitory rule. As such, Rule 51 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Nevada County APCD Rules 700 (Applicable Articles of the Health and Safety Code), 703 (Contents of Petitions) (paragraphs (E) and (I)) and 711 (Evidence); Plumas County APCD Rules 701 (General), 702 (Filing Petitions), 703 (Contents of Petitions), 704 (Petitions for Variances), 710 (Notice of Hearing), 711 (Evidence), 712 (Preliminary Matters), 713 (Official Notice), 714 (Continuances), 715 (Decision) and 716 (Effective Date of Decision); and Sierra County APCD Rules 703 (Contents of Petitions) and 710 (Notice of Public Hearing) establish certain hearing board procedures, and as such, were inappropriate for inclusion in the SIP and were thus approved by the EPA in error. Plumas County APCD Rule 516 (Upset and Breakdown Conditions) (paragraph C (“Emergency Variance Provisions”)) and Sierra County APCD Rule 516 (Upset and Breakdown Conditions) (paragraph C (“Emergency Variance Provisions”)) allow an owner or operator of stationary sources to file a petition for an emergency variance under certain circumstances and provides for review and action on the petition by the APCO and hearing board. As described above, such provisions are inconsistent with section 110(i) of the CAA and were thus not appropriate for inclusion in the SIP and were approved by the EPA in error. In this action, we are proposing to delete the various rules listed above from the Northern Sierra AQMD portion of the California SIP.

    Northern Sonoma County APCD

    Northern Sonoma County APCD Rule 52 (Nuisance) is a general-nuisance type of prohibitory rule. As such, Rule 52 was inappropriate for inclusion in the SIP and, thus, was approved by the EPA in error. Northern Sonoma County APCD Rules 85 (Failure to Comply with Rules), 91 (Preliminary Matters), 96 (Lack of Permit), 600 (Authorization), 610 (Petition Procedure) and 620 (Hearing Procedures) establish certain hearing board procedures, and as such, were inappropriate for inclusion in the SIP and were thus approved by the EPA in error. In this action, we are proposing to delete Rules 52, 85, 91, 96, 600, 610 and 620 from the Northern Sonoma County APCD portion of the California SIP.

    IV. What other corrections is the EPA proposing to make?

    The EPA is also proposing certain error corrections not because the rules were originally approved into the SIP in error but because of other types of errors made in the course of the SIP rulemaking action. Each such proposal is described in the following paragraphs.

    Antelope Valley AQMD

    With respect to the Antelope Valley AQMD portion of the California SIP, we are proposing three additional corrections related to the following: Los Angeles County APCD Regulation VI (Orchard or Citrus Grove Heaters), South Coast AQMD Rule 1186 (PM10 Emissions from Paved and Unpaved Roads, and Livestock Operations), and Antelope Valley AQMD Rules 107 (Certification of Submissions and Emission Statements) and 1151 (Motor Vehicle and Mobile Equipment Coating Operations).

    Rescission of Los Angeles County APCD Regulation VI (Orchard or Citrus Grove Heaters): Los Angeles County APCD Regulation VI includes the following rules: Rule 100 (Definitions), Rule 101 (Exceptions), Rule 102 (Permits Required), Rule 103 (Transfer), Rule 105 (Application for Permits), Rule 106 (Action on Applications), Rule 107 (Standards for Granting Permits), Rule 108 (Conditional Approval), Rule 109 (Denial of Applications), Rule 110 (Appeals), Rule 120 (Fees), and Rule 130 (Prohibitions). California submitted Los Angeles County APCD Regulation VI on June 30, 1972, and the EPA approved it on September 22, 1972 (37 FR 19812). Rule 120 was deleted without replacement at 67 FR 2573 (January 18, 2002), but the other Regulation VI rules remain in the SIP.

    Regulation VI was rescinded in the Southeast Desert portion of Los Angeles County at 43 FR 40011 (September 8, 1978), but was reinstated throughout Los Angeles County when the EPA approved a SIP revision extending the jurisdiction of the South Coast AQMD to the Southeast Desert portion of the county and replacing the SIP rules that had been in effect for the Southeast Desert portion of Los Angeles County with those that applied in the South Coast AQMD. See 48 FR 52451 (November 18, 1983). At that time, the applicable SIP for the South Coast AQMD included Regulation VI because the EPA inadvertently failed to codify the rescission of the rules in an action affecting the South Coast AQMD portion of Los Angeles County published at 43 FR 25684 (June 14, 1978). In the final action on June 14, 1978, the EPA indicated: “The changes to Regulation VI, Orchard Grove Heaters, contained in the above mentioned submittals and being acted upon by this notice include total replacement of county rules by California Health and Safety Code sections covering Orchard Heaters.” 43 FR at 25685. However, the regulatory text deleting Regulation VI without replacement was not included in the final rule, and thus, Regulation VI became part of the legacy SIP inherited by the Antelope Valley AQMD when it was established in 1997 in the Southeast Desert portion of Los Angeles County. In this action, we are proposing to add regulatory text deleting Regulation VI consistent with our action as described in the preamble to the June 14, 1978 final rule and to delete Los Angeles County APCD Regulation VI from the South Coast AQMD portion of the California SIP and to thereby delete Los Angeles County APCD Regulation VI from the Antelope Valley AQMD portion of the California SIP.

    Deletion of South Coast Rule 1186 (PM 10 Emissions from Paved and Unpaved Roads, and Livestock Operations) for Implementation in the Antelope Valley AQMD: In a final rule published at 72 FR 64946 (November 19, 2007), the EPA added a paragraph to 40 CFR 52.220(c)(278)(i)(A) deleting South Coast AQMD Rule 1186 without replacement for implementation in the Antelope Valley AQMD. This paragraph was added in error. Originally adopted on February 14, 1997, no version of South Coast AQMD Rule 1186 has been approved by the EPA for implementation in the Antelope Valley. See footnote 4 in the proposed rule (63 FR 42786, August 11, 1998).3 Thus, we are proposing to delete the erroneous regulatory language that was added by the November 19, 2007 final rule.

    3 Footnote 4 states: “As indicated above, the SCAQMD has jurisdiction over the South Coast Air Basin (SCAB) and Coachella Valley PM-10 serious nonattainment areas. This Federal Register action for the SCAQMD excludes the Los Angeles County portion of the Southeast Desert AQMA, otherwise known as the Antelope Valley Region in Los Angeles County, which is now under the jurisdiction of the Antelope Valley Air Pollution Control District as of July 1, 1997.” 63 FR 42786, at 42788 (August 11, 1998).

    Reorganization of the CFR Affecting Antelope Valley AQMD Rules 107 and 1151: In a final rule published at 80 FR 13495 (March 16, 2015), we approved a rule adopted by the Sacramento Metropolitan AQMD but the amendatory instructions revising paragraph 40 CFR 52.220(c)(423) were in error such that rules that had been approved and listed under “(i) Incorporation by reference,” were erroneously moved under the “(ii) Additional materials” portion of paragraph 40 CFR 52.220(c)(423), including Antelope Valley AQMD Rules 107 (Certification of Submissions and Emission Statements) and 1151 (Motor Vehicle and Mobile Equipment Coating Operations), which were approved in 2013. See 78 FR 21545 (April 11, 2013) (approval of Rule 107) and 78 FR 58459 (September 24, 2013) (approval of Rule 1151). We are proposing to revise paragraph 40 CFR 52.220(c)(423) consistent with the rulemakings affecting that paragraph.

    Eastern Kern APCD

    Approval of 15% and Post-1996 Rate-of-Progress (ROP) Elements for the 1-Hour Ozone NAAQS: On January 8, 1997 (62 FR 1150), the EPA took final action to approve revisions to the California SIP for ozone for six nonattainment areas, including the San Joaquin Valley ozone nonattainment area, which at the time was defined to include all of Kern County (as well as seven other counties in the Central Valley) and thus subject to the jurisdiction of two air districts: The San Joaquin Valley Unified APCD and the Eastern Kern APCD. Among other elements, the EPA approved “the ROP plans (the original 1994 submittal for 15% ROP requirements and the Kern District portion of the San Joaquin Valley, and the 1996 substitute submittal for post-1996 requirements) as meeting the 15% ROP requirements of section 182(b)(1) and the post-1996 ROP requirements of section 182(c)(2) of the Act.” 62 FR at 1172. In the corresponding regulatory language of the January 8, 1997 final rule, the EPA explicitly identified the approved 15% and post-1996 ROP elements from the San Joaquin Valley Unified APCD but failed to do the same for the Eastern Kern APCD. Compare 40 CFR 52.220(c)(204)(i)(D)(1) (for the San Joaquin Valley Unified APCD) with 40 CFR 52.220(c)(205)(i)(A)(1) (for the Eastern Kern APCD). 62 FR at 1186. To clarify that, in our 1997 final rule, the EPA approved the 15% and post-1996 ROP demonstrations from the Eastern Kern APCD for the 1-hour ozone standard, we propose to revise 40 CFR 52.220(c)(205)(i)(A)(1) to explicitly add the 15% ROP and post-1996 ROP plans to the existing list of approved elements.

    Incorporation by Reference of Approved Rules 108 and 417: On April 22, 2004 (69 FR 21713), the EPA took final action to approve certain rules adopted by the Eastern Kern APCD, including Rules 108 (Stack Sampling) and 417 (Agricultural and Prescribed Burning). Due to erroneous amendatory instructions, the CFR was not updated to reflect this final action. More specifically, the amendatory instructions on page 21715 of the April 22, 2004 final rule should have added paragraph (c)(321)(i)(A) to section 40 CFR 52.220 instead of paragraph (c)(321)(i)(B) because the latter was already in use to identify certain rules adopted by the San Joaquin Valley Unified APCD. We propose to fix this error by correcting the amendatory instructions.

    El Dorado County AQMD

    Reorganization of the CFR Affecting El Dorado County AQMD Rule 101: On October 10, 2001 (66 FR 51578), the EPA approved revisions to the El Dorado County AQMD portion of the California SIP. Among the approved revisions was El Dorado County AQMD Rule 101 (General Provisions and Definitions). The final rule codifies the approval of Rule 101 in paragraph 40 CFR 52.220(c)(280)(i)(B), which lists approved rules adopted by the El Dorado County AQMD, but due to a publishing error, the codification of the approval of Rule 101 is found in paragraph 40 CFR 52.220(c)(280)(i)(C), which lists EPA-approved rules adopted by the Yolo-Solano AQMD. We propose to fix this error accordingly.

    Approval of El Dorado County AQMD Rule 1000.1 (Emission Statement Waiver): On May 26, 2004 (69 FR 29880), the EPA approved emissions statement rules for seven air districts in California, including Rule 1000 (Emission Statement) submitted for the El Dorado County AQMD portion of the California SIP. All but one of the emissions statement rules that were approved on May 26, 2004 include language providing a waiver to any class or category of stationary sources that emit less than 25 tons per year of volatile organic compounds (VOC) or oxides of nitrogen (NOX) if certain conditions are met, which is consistent with CAA section 182(a)(3)(B)(ii). Unlike the rules that provide for the waiver as a paragraph within the emissions statement rule itself, the El Dorado County AQMD provides for the exemption in a separate rule, namely, Rule 1000.1 (Emission Statement Waiver).4 Although Rule 1000.1 was submitted along with Rule 1000 on November 12, 1992, we only listed the latter rule as approved in our May 26, 2004 final action but should have listed both. We propose to add Rule 1000.1 (Emission Statement Waiver) in paragraph 40 CFR 52.220(c)(190)(i)(C)(1) to clarify that our May 26, 2004 approval included both Rule 1000 and Rule 1000.1.

    4 El Dorado County AQMD Rule 1000.1 provides: “The APCO may waive this requirement to any class or category of stationary sources which emit less than 25 tons per year of oxides of nitrogen or reactive organic gas if the district provides the Air Resources Board with an emission inventory of sources emitting greater than 10 tons per year of nitrogen oxides or reactive organic gas based on the use of emission factors acceptable to the Air Resources Board.”

    Reorganization of the CFR Affecting El Dorado County AQMD Actions Listed in 40 CFR 52.220(c)(27)(viii): On July 9, 2008 (73 FR 39237), the EPA approved revisions to the Northern Sierra AQMD portion of the California SIP, including rescission of certain rules that had been adopted by the Nevada County APCD. In the July 9, 2008 final rule, we added regulatory language to reflect the rule rescissions in paragraph 40 CFR 52.220(c)(27)(vii), which lists rules and rule rescissions applicable to the Nevada County APCD portion of the California SIP, but due to a publisher's error, the regulatory language is found in paragraph 40 CFR 52.220(c)(27)(viii), which lists rules and rule rescissions applicable to the El Dorado County AQMD portion of the California SIP. We propose to fix this error accordingly.

    Great Basin Unified APCD

    Disapproval of Great Basin Unified APCD Rule 401 (Fugitive Dust): On August 13, 2009 (74 FR 40750), the EPA took final action to disapprove revisions to the Great Basin Unified APCD portion of the California SIP. Specifically, the EPA disapproved Great Basin Unified APCD Rule 401 (Fugitive Dust); however, we mistakenly added a paragraph incorporating this rule by reference in 40 CFR 52.220 (“Identification of plan”) as if we had approved the rule as part of the California SIP. To correct this error, we propose to remove the corresponding paragraph (i.e., 40 CFR 52.220(c)(350)(i)(A)(2)) from 40 CFR 52.220.

    Lake County AQMD

    Reinstatement of Lake County AQMD Tables I through IV: On June 27, 1997 (62 FR 34641), the EPA took final action to correct certain errors in previous actions on SIPs and SIP revisions by deleting without replacement the affected local rules. With respect to certain rules that were adopted by the Lake County AQMD, submitted by California on February 10, 1977, and approved by the EPA on August 4, 1978 (43 FR 34463), we added a paragraph, i.e., (c)(37)(iv)(D), to 40 CFR 52.220 (Identification of plan) that states: “Previously approved on August 4, 1978 and now deleted without replacement Rules . . . , and Tables I to V.” 62 FR at 34645. First, Lake County AQMD Table V (Table of Standards, Applicable Statewide) was disapproved on August 4, 1978 (43 FR 34463), and because it was disapproved, it was not part of the SIP and need not be deleted. Second, Lake County AQMD Table I (Agencies Designated to Issue Agricultural Burning Permits), Table II (Daily Quota of Agricultural Material that May Be Burned by Watershed), Table III (Guides for Estimating Dry Weights of Several California Fuel Types), and Table IV (Particulate Matter Emissions Standard for Process Units and Process Equipment) are substantive provisions relied upon by certain prohibitory rules and were not approved “in error.” We are proposing to reinstate Lake County AQMD Tables I through IV by revising the regulatory language in 40 CFR 52.220(c)(37)(iv)(D) accordingly.5

    5 Since 1997, the EPA has approved newer versions of Lake County AQMD Tables I and II, and thus, as a practical matter, reinstatement of Tables I through IV, as approved in 1978, would only reinstate Tables III and IV as part of the current applicable SIP for the Lake County AQMD portion of the California SIP.

    Mojave Desert AQMD

    Rescission of Riverside County APCD Regulation V (Orchard or Citrus Grove Heaters): Riverside County APCD Regulation V includes the following rules: Rule 75 (Definitions), Rule 76 (Exceptions), Rule 77 (Permits Required), Rule 78 (Application of Permits), Rule 79 (Action on Applications), Rule 80 (Standards for Granting Permits), Rule 81 (General Restrictions and Conditions of Permits), Rule 83 (Denial of Applications), Rule 84 (Appeals), Rule 85 (Classification of Orchard, Field Crop or Citrus Grove Heaters), and Rule 86 (Prohibitions). California submitted Riverside County APCD Regulation V on February 21, 1972 as part of the original California SIP, and the EPA approved it on May 31, 1972 (37 FR 10842).

    Regulation V was rescinded in the Southeast Desert portion of Riverside County at 43 FR 40011 (September 8, 1978), but was reinstated throughout Riverside County when the EPA approved a SIP revision extending the jurisdiction of the South Coast AQMD to the Southeast Desert portion of the county and replacing the SIP rules that had been in effect for the Southeast Desert portion of Riverside County with those that applied in the South Coast AQMD. See 47 FR 25013 (June 9, 1982). At that time, the applicable SIP for the South Coast AQMD included Regulation V because the EPA inadvertently failed to codify the rescission of the rules in an action affecting the South Coast AQMD portion of Riverside County published at 43 FR 25684 (June 14, 1978). In the June 14, 1978, final action, the EPA indicated: “The changes to Regulation VI, Orchard Grove Heaters, contained in the above mentioned submittals and being acted upon by this notice include total replacement of county rules by California Health and Safety Code sections covering Orchard Heaters.” 43 FR at 25685. However, the regulatory text deleting Regulation V without replacement was not included in the final rule, and thus, Regulation V became part of the legacy SIP inherited by the Mojave Desert AQMD when the Palo Verde Valley portion of Riverside County joined the Mojave Desert AQMD in 1994. In this action, we are proposing to add regulatory text deleting Regulation V consistent with our action as described in the preamble to the June 14, 1978 final rule and to delete Riverside County APCD Regulation V from the South Coast AQMD portion of the California SIP and to thereby delete Riverside County APCD Regulation V from the Mojave Desert AQMD portion of the California SIP.

    Monterey Bay Air Resources District

    Disapproval of Monterey Bay Air Resources District Rule 200 (Permits Required): On March 26, 2015 (80 FR 15899), the EPA took final action to approve or disapprove certain revisions to the Monterey Bay Air Resources District portion of the California SIP. One of the actions finalized on March 26, 2015 was the disapproval of an amended version of Rule 200 (Permits Required) that had been submitted on May 8, 2001. Although we disapproved Rule 200, we mistakenly added a paragraph incorporating this rule by reference in 40 CFR 52.220 (“Identification of plan”) as if we had approved the rule as part of the California SIP. See 40 CFR 52.220(c)(284)(i)(A)(5). To correct this error, we propose to remove the corresponding paragraph (i.e., (c)(284)(i)(A)(5)) from section 52.220 (Identification of plan).

    Rescission of Monterey Bay Air Resources District Rule 208 (Standards for Granting Permits to Operate): In that same March 26, 2015, final rule (80 FR 15899), we approved the rescission of Monterey Bay District Rule 208 (Standards for Granting Permits to Operate), which had been submitted on February 6, 1985 and approved on July 13, 1987 (52 FR 26148), but we did not add corresponding regulatory language to remove the rule from the SIP. We propose to add a paragraph to 40 CFR 52.220(c)(159)(iii) to indicate that Monterey Bay District Rule 208 has been deleted without replacement.

    North Coast Unified AQMD

    Erroneous Amendatory Instruction for Disapproval of Certain Open Burning Rules: On May 18, 1981 (46 FR 27116), the EPA disapproved certain open burning rules adopted by the Santa Barbara County APCD, but the amendatory instructions erroneously listed the disapproved rules in subparagraph (6) of 40 CFR 52.273(a), which lists disapproved rules adopted by the Humboldt County APCD. The correct listing should have been in subparagraph (19), which lists disapproved rules adopted by the Santa Barbara County APCD. The erroneous amendatory instructions were based on the previous format of 40 CFR 52.273 and failed to account for the complete re-organization of 40 CFR 52.273 that the EPA published that same year at 46 FR 3883 (January 16, 1981). We are proposing to revise paragraph 40 CFR 52.273 to accurately reflect the 1981 disapproval of the Santa Barbara County open burning rules.

    Northern Sierra AQMD

    Codification of Approval of Northern Sierra AQMD Rules 212 and 213: On September 16, 1997 (62 FR 48480), the EPA took direct final action to approve certain revisions to the Northern Sierra AQMD portion of the California SIP. In the direct final rule, we indicated that we were approving Northern Sierra AQMD Rules 212 (Process Weight Table) and 213 (Storage of Gasoline Products) along with many other district rules, see 62 FR 48481/column 1 and 62 FR at 48482/column 2; however, in the regulatory portion of the direct final rule, we failed to include Rules 212 and 213 in the list of approved rules. We are proposing to add Rules 212 and 213 to the list of approved rules in 40 CFR 52.220(c)(246)(i)(A)(1).

    Reinstatement of Nevada County APCD Rule 404 (Excluding Paragraph (D)): On June 27, 1997 (62 FR 34641), the EPA took final action to correct certain errors in previous actions on SIPs and SIP revisions by deleting without replacement the affected local rules. With respect to a rule that was adopted by the Nevada County APCD, submitted by California on October 15, 1979, and approved by the EPA on May 18, 1981 (46 FR 27115), we added a paragraph, i.e., (c)(52)(xii)(B), to 40 CFR 52.220 (Identification of plan) that states: “Previously approved on May 18, 1981 and now deleted without replacement Rule 404.” 62 FR at 34646. In our proposed error correction, 61 FR 38664 (July 25, 1996), we indicated that the rule we intended to delete was Rule 404 (“Emergency Variance Procedures”), but the correct title of Rule 404 is “Upset Conditions, Breakdown or Scheduled Maintenance,” and “Emergency Variance Procedures” is the title of paragraph (D) of Rule 404. Thus, we intended to delete only paragraph (D) of Rule 404 but erroneously indicated in the final rule that we were deleting without replacement the entire rule. Accordingly, we propose to amend paragraph (c)(52)(xii)(B) to refer only to paragraph (D) of Rule 404.

    V. Proposed Action and Request for Public Comment

    The EPA has reviewed the rules listed in Table 1 above and determined that they were previously approved into the applicable California SIP in error. Deletion of these rules will not relax the applicable SIP and is consistent with the Act. Therefore, under section 110(k)(6) of the CAA, the EPA is proposing to delete the rules listed in Table 1 above and any earlier versions of these rules from the corresponding air pollution control district portions of the California SIP. These rules include general nuisance provisions, federal NSPS or NESHAP requirements, hearing board procedures, variance provisions, and local fee provisions. We are also proposing to make certain other corrections to fix errors in previous rulemakings on California SIP revisions as described in section IV above. We will accept comments from the public on this proposal until September 26, 2018.

    VI. Incorporation by Reference

    In this action, for the most part, the EPA is proposing to delete rules that were previously incorporated by reference from the applicable California SIP. However, we are also proposing to include in a final EPA rule regulatory text that reinstates incorporation by reference of certain rules that were previously incorporated by reference but deleted in error, and regulatory text that includes incorporation by reference of rules not previously incorporated. In accordance with requirements of 1 CFR 51.5, the EPA is proposing to reinstate incorporation by reference Lake County AQMD Table I (Agencies Designated to Issue Agricultural Burning Permits), Table II (Daily Quota of Agricultural Material that May Be Burned by Watershed), Table III (Guides for Estimating Dry Weights of Several California Fuel Types), and Table IV (Particulate Matter Emissions Standard for Process Units and Process Equipment) and Nevada County APCD Rule 404 (Upset Conditions, Breakdown or Scheduled Maintenance) (excluding paragraph (D)) and to incorporate by reference Eastern Kern APCD Rules 108 (Stack Sampling) and 417 (Agricultural and Prescribed Burning), El Dorado County AQMD Rule 1000.1 (Emission Statement Waiver) and Northern Sierra AQMD Rules 212 (Process Weight Table) and 213 (Storage of Gasoline Products), as described in section IV of this preamble. The EPA has made, and will continue to make, these materials available through www.regulations.gov and at the EPA Region IX Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

    VII. Statutory and Executive Order Reviews

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

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

    • Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;

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

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

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

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

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

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

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

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

    In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the proposed rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

    List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Volatile organic compounds.

    Authority:

    2 U.S.C. 7401 et seq.

    Dated: August 8, 2018. Deborah Jordan, Acting Regional Administrator, Region IX.
    [FR Doc. 2018-18408 Filed 8-24-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 52 and 97 [EPA-R06-OAR-2016-0611; FRL-9982-50—Region 6] Promulgation of Air Quality Implementation Plans; State of Texas; Regional Haze and Interstate Visibility Transport Federal Implementation Plan: Proposal of Best Available Retrofit Technology (BART) and Interstate Transport Provisions AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    On October 17, 2017, the EPA published a final rule partially approving the 2009 Texas Regional Haze State Implementation Plan (SIP) submission and promulgated a Federal Implementation Plan (FIP) for Texas to address certain outstanding Clean Air Act (CAA) regional haze requirements. Because the EPA believes that certain aspects of the final rule could benefit from additional public input, we are proposing to affirm our October 2017 SIP approval and FIP promulgation and to provide the public with an opportunity to comment on relevant aspects, as well as other specified related issues.

    DATES:

    Comments must be received on or before October 26, 2018.

    Public Hearing:

    We are holding an information session, for the purpose of providing additional information and informal discussion for our proposal. We are also holding a public hearing to accept oral comments into the record:

    Date: Wednesday, September 26, 2018 Time: Information Session: 1:30 p.m.-3:30 p.m. Public hearing: 4:00 p.m.-8:00 p.m. (including a short break) Location: Joe C. Thompson Conference Center (on the University of Texas (UT) Campus), Room 1.110, 2405 Robert Dedman Drive, Austin, Texas 78712. For additional logistical information regarding the public hearing please see the SUPPLEMENTARY INFORMATION section of this action. ADDRESSES:

    Submit your comments, identified by Docket No. EPA-R06-OAR-2016-0611, at http://www.regulations.gov or via email to [email protected]Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (i.e. on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

    Docket: The index to the docket for this action is available electronically at http://www.regulations.gov and in hard copy at the EPA Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas. While all documents in the docket are listed in the index, some information may be publicly available only at the hard copy location (e.g., copyrighted material), and some may not be publicly available at either location (e.g., CBI).

    The Texas regional haze SIP is also available online at: https://www.tceq.texas.gov/airquality/sip/bart/haze_sip.html. It is also available for public inspection during official business hours, by appointment, at the Texas Commission on Environmental Quality, Office of Air Quality, 12124 Park 35 Circle, Austin, Texas 78753.

    FOR FURTHER INFORMATION CONTACT:

    Jennifer Huser, Air Planning Section (6MM-AA), Environmental Protection Agency, Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733, telephone 214-665-7347; email address [email protected]

    SUPPLEMENTARY INFORMATION:

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

    Joe C. Thompson Conference Center parking is adjacent to the building in Lot 40, located at the intersection of East Dean Keeton Street and Red River Street. Additional parking is available at the Manor Garage, located at the intersection of Clyde Littlefield Drive and Robert Dedman Drive. If arranged in advance, the UT Parking Office will allow buses to park along Dedman Drive near the Manor Garage for a fee.

    The public hearing will provide interested parties the opportunity to present information and opinions to us concerning our proposal. Interested parties may also submit written comments, as discussed in the proposal. Written statements and supporting information submitted during the comment period will be considered with the same weight as any oral comments and supporting information presented at the public hearing. We will not respond to comments during the public hearing. When we publish our final action, we will provide written responses to all significant oral and written comments received on our proposal. To provide opportunities for questions and discussion, we will hold an information session prior to the public hearing. During the information session, EPA staff will be available to informally answer questions on our proposed action. Any comments made to EPA staff during an information session must still be provided orally during the public hearing, or formally in writing within 30 days after completion of the hearings, in order to be considered in the record.

    At the public hearing, the hearing officer may limit the time available for each commenter to address the proposal to three minutes or less if the hearing officer determines it to be appropriate. We will not be providing equipment for commenters to show overhead slides or make computerized slide presentations. Any person may provide written or oral comments and data pertaining to our proposal at the public hearing. Verbatim English—language transcripts of the hearing and written statements will be included in the rulemaking docket.

    Table of Contents I. Background A. Overview of the Purpose of Today's Action B. Regional Haze C. Interstate Transport of Pollutants That Affect Visibility D. Previous Actions Related to Texas Regional Haze II. Summary of This Proposed Action A. Regional Haze 1. SO2 BART 2. PM BART B. Interstate Transport of Pollutants that Affect Visibility III. PM BART IV. The SO2 Trading Program and Its Implications for Interstate Visibility Transport and EGU BART A. Background on the Concept of CSAPR As an Alternative to BART B. Texas SO2 Trading Program 1. Identification of Sources Participating in the Trading Program 2. Texas SO2 Trading Program as a BART Alternative C. Specific Texas SO2 Trading Program Features D. Recent Retirements E. Interstate Visibility Transport V. Proposed Action A. Regional Haze B. Interstate Visibility Transport VI. Statutory and Executive Order Reviews I. Background A. Overview of the Purpose of Today's Action

    The following overview demonstrates the lengthy and difficult path the regional haze program has taken in Texas. EPA maintains that States are in the best position to provide flexibility and protect the environment while maintaining a strong economic engine. As outlined in more detail below, the Texas 2009 Regional Haze SIP relied on the defunct Clean Air Interstate Rule (CAIR) to satisfy the Best Available Retrofit Technology (BART) requirements. The D.C. Circuit remanded CAIR to the EPA in 2009, prior to the state's submission. The CAIR requirements were replaced by the Cross-State Air Pollution Rule (CSAPR) in 2011. Because of legal challenges, CSAPR in its current form does not provide SO2 emission reductions in Texas and, as such, cannot satisfy the BART requirements for SO2 at electrical generating units (EGUs) in Texas. Nonetheless, Texas has not provided a replacement SIP submission to address BART for SO2 at its EGUs. Because of court deadlines and without a Texas SIP, EPA has been forced to adopt a Federal Implementation Plan (FIP) to address BART.

    When EPA proposed a source-specific BART FIP in January 2017,1 Texas, along with other commenters, suggested to EPA the concept of a trading program. In close cooperation with Texas, EPA developed an SO2 trading program that we included in our October 2017 final rule 2 and adopted in time to meet our court-ordered deadline. Texas entered an agreement with EPA to provide a SIP-based trading program that would replace the FIP.3 However, in the months since EPA promulgated the trading program FIP, Texas has not met its commitment to provide a SIP, leaving it without the benefits a State program could bring and leaving EPA little choice but to continue to implement a federal plan.

    1 82 FR 912 (Jan. 4, 2017).

    2 82 FR 48324 (Oct. 17, 2017).

    3 See Texas Regional Haze MOA with TCEQ dated August 14, 2017 at docket document number EPA-R06-OAR-2016-0611-0051.

    On December 15, 2017, EPA received a petition for reconsideration of the October 2017 rule requesting that the Administrator reconsider certain aspects of the FIP related to the intrastate trading program promulgated to address the SO2 BART requirement for EGUs. As stated in our letter in response to that petition dated April 30, 2018, we believe certain specific aspects of the federal plan can benefit from further public comment. Therefore, in this action, we are soliciting comment on: (1) The issuance of a FIP establishing an intrastate trading program capping emissions of SO2 from certain EGUs in Texas and our determination that this program meets the requirements for an alternative to BART for SO2; (2) our finding that the BART alternatives in the October 2017 rulemaking to address SO2 and NOX BART at Texas' EGUs result in emission reductions adequate to satisfy the requirements of CAA section 110(a)(2)(D)(i)(II) with respect to visibility for a number of NAAQS issued between 1997 and 2010; and (3) our approval of Texas' SIP determination that no sources are subject to BART for PM2.5. We are also soliciting comment on the specific issues of whether recent shutdowns of sources included in the trading program and the merger of two owners of affected EGUs should impact the allocation methodology for certain SO2 allowances. EPA will consider these comments in the context of our proposal to affirm the SO2 trading program FIP. We believe that this action, which provides the public an opportunity to provide input on the issues raised in the December 15, 2017 petition for reconsideration of the October 2017 final rule, resolves the basis for that petition.

    While soliciting comment on the above three proposed actions, EPA also invites comment on additional issues that could inform our decision making with regard to the SO2 BART obligations for Texas. First, we seek input on whether SO2 BART would be better addressed through a source-by-source approach (source-specific BART), the October 2017 SO2 trading program, or some other appropriate BART alternative. Second, EPA requests comment on whether a SIP-based program would serve Texas better than a FIP. Third, we request public input on whether and how the SO2 trading program finalized in the October 2017 final rule addresses the long-term strategy and reasonable progress requirements for Texas.

    We note that, should we decide to act pursuant to any comments we receive on these additional policy questions, we may initiate a new rulemaking process with a new proposed rule.

    B. Regional Haze

    Regional haze is visibility impairment that is produced by a multitude of sources and activities that are located across a broad geographic area and emit PM2.5 (e.g., sulfates, nitrates, organic carbon (OC), elemental carbon (EC), and soil dust), and its precursors (e.g., SO2, NOX, and, in some cases, ammonia (NH3) and volatile organic compounds (VOCs)). Fine particle precursors react in the atmosphere to form PM2.5, which impairs visibility by scattering and absorbing light. Visibility impairment reduces the clarity, color, and visible distance that can be seen. PM2.5 can also cause serious health effects and mortality in humans and contributes to environmental effects, such as acid deposition and eutrophication.4

    4 Additional information regarding the regulatory background of the CAA and regional haze requirements can be found in our January 2017 notice of proposed rulemaking for Texas Regional Haze. (82 FR 917, January 4, 2017).

    In Section 169A of the 1977 Amendments to the CAA, Congress created a program for protecting visibility in the nation's national parks and wilderness areas. This section of the CAA establishes as a national goal the prevention of any future, and the remedying of any existing, man-made impairment of visibility in 156 national parks and wilderness areas designated as mandatory Class I Federal areas. On December 2, 1980, EPA promulgated regulations to address visibility impairment in Class I areas that is “reasonably attributable” to a single source or small group of sources, i.e., “reasonably attributable visibility impairment.” These regulations represented the first phase in addressing visibility impairment. EPA deferred action on regional haze that emanates from a variety of sources until monitoring, modeling, and scientific knowledge about the relationships between pollutants and visibility impairment were improved. Congress added section 169B to the CAA in 1990 to address regional haze issues, and EPA promulgated regulations addressing regional haze in 1999. The Regional Haze Rule revised the existing visibility regulations to add provisions addressing regional haze impairment and established a comprehensive visibility protection program for Class I areas.

    Section 169A of the CAA directs states to evaluate the use of retrofit controls at certain larger, often under-controlled, older stationary sources in order to address visibility impacts from these sources. Specifically, section 169A(b)(2)(A) of the CAA requires states to revise their SIPs to contain such measures as may be necessary to make reasonable progress toward the natural visibility goal by controlling emissions of pollutants that contribute to visibility impairment, including a requirement that certain categories of existing major stationary sources 5 built between 1962 and 1977 procure, install, and operate the “Best Available Retrofit Technology” (BART). Larger “fossil-fuel fired steam electric plants” are included among the BART source categories. Under the Regional Haze Rule, states are directed to conduct BART determinations for “BART-eligible” sources that may be anticipated to cause or contribute to any visibility impairment in a Class I area. Following the compilation of the BART-eligible sources, the sources are examined to determine whether these sources cause or contribute to visibility impairment in nearby Class I areas.6 For those sources that are not reasonably anticipated to cause or contribute to any visibility impairment in a Class I area, a BART determination is not required. Those sources are determined to be not subject-to-BART. Sources that are reasonably anticipated to cause or contribute to any visibility impairment in a Class I area are determined to be subject-to-BART. For each source subject to BART, 40 CFR 51.308(e)(1)(ii)(A) requires that states (or EPA, in the case of a FIP) identify the level of control representing BART after considering the factors set out in CAA section 169A(g). The evaluation of BART for EGUs that are located at fossil-fuel-fired power plants having a generating capacity in excess of 750 megawatts must follow the “Guidelines for BART Determinations Under the Regional Haze Rule” at appendix Y to 40 CFR part 51 (hereinafter referred to as the “BART Guidelines”). Rather than requiring source-specific BART controls, states also have the flexibility to adopt an emissions trading program or alternative program (sometimes referred to as a “BART alternative”) as long as the alternative provides greater reasonable progress towards improving visibility than BART. 40 CFR 51.308(e)(2) specifies how a state must conduct the demonstration to show that an alternative program will achieve greater reasonable progress than the installation and operation of BART. 40 CFR 51.308(e)(2)(i)(E) requires a determination, under specific criteria laid out at 40 CFR 51.308(e)(3) or otherwise based on the clear weight of evidence, that the trading program or other alternative measure achieves greater reasonable progress than would be achieved through the installation and operation of BART at the covered sources. Finally, 40 CFR 51.308(e)(4) states that states participating in a Cross-State Air Pollution Rule (CSAPR) trading program need not require BART-eligible fossil fuel-fired steam electric plants to install, operate, and maintain BART for the pollutant covered by that trading program.

    5See 42 U.S.C. 7491(g)(7) (listing the set of “major stationary sources” potentially subject-to-BART).

    6 See 40 CFR part 51, Appendix Y, III, How to Identify Sources “Subject to BART”.

    Under section 110(c) of the CAA, whenever we disapprove a mandatory SIP submission in whole or in part, we are required to promulgate a FIP within two years unless the state corrects the deficiency and we approve the new SIP submittal.

    C. Interstate Transport of Pollutants That Affect Visibility

    Section 110(a) of the CAA directs states to submit SIPs that provide for the implementation, maintenance, and enforcement of each NAAQS, which is commonly referred to as an infrastructure SIP. Among other things, CAA section 110(a)(2)(D)(i)(II) requires that SIPs contain adequate provisions to prohibit interference with measures required to protect visibility in other states. This is commonly referred to as “interstate visibility transport.” States must submit infrastructure SIPs addressing interstate visibility transport, among other requirements, which are due to the EPA within three years after the promulgation of a new or revised NAAQS (or within such shorter period as we may prescribe). A state's failure to submit a complete, approvable SIP for interstate visibility transport creates an obligation for the EPA to promulgate a FIP to address this requirement.

    D. Previous Actions Related to Texas Regional Haze

    On March 31, 2009, Texas submitted a regional haze SIP (the 2009 Regional Haze SIP) to the EPA that included reliance on Texas' participation in trading programs under the Clean Air Interstate Rule (CAIR) as an alternative to BART for SO2 and NOX emissions from EGUs.7 This reliance was consistent with the EPA's regulations at the time that Texas developed its 2009 Regional Haze SIP,8 but at the time that Texas submitted this SIP to the EPA, the D.C. Circuit had remanded CAIR (without vacatur).9 The court left CAIR and our CAIR FIPs in place in order to “temporarily preserve the environmental values covered by CAIR” until we could, by rulemaking, replace CAIR consistent with the court's opinion. The EPA promulgated CSAPR to replace CAIR in 2011 10 (and revised it in 2012).11 CSAPR established FIP requirements for a number of states, including Texas, to address the states' interstate transport obligation under CAA section 110(a)(2)(D)(i)(I). CSAPR addresses interstate transport of fine particulate matter and ozone by requiring affected EGUs in these states to participate in the CSAPR trading programs and establishes emissions budgets that apply to the EGUs' collective annual emissions of SO2 and NOX, as well as emissions of NOX during ozone season.12

    7 CAIR required certain states, including Texas, to reduce emissions of SO2 and NOX that significantly contribute to downwind nonattainment of the 1997 NAAQS for fine particulate matter and ozone. See 70 FR 25152 (May 12, 2005).

    8See 70 FR 39104 (July 6, 2005).

    9See North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), as modified, 550 F.3d 1176 (D.C. Cir. 2008).

    10 76 FR 48207 (Aug. 8, 2011).

    11 CSAPR was amended three times in 2011 and 2012 to add five states to the seasonal NOX program and to increase certain state budgets. 76 FR 80760 (December 27, 2011); 77 FR 10324 (February 21, 2012); 77 FR 34830 (June 12, 2012).

    12 Ozone season for CSAPR purposes is May 1 through September 30.

    Following issuance of CSAPR, the EPA determined that CSAPR would achieve greater reasonable progress towards improving visibility than would source-specific BART in CSAPR states (a determination often referred to as “CSAPR better than BART”).13 In the same action, we revised the Regional Haze Rule to allow states that participate in the CSAPR trading programs to rely on such participation in lieu of requiring EGUs in the state to install BART controls.

    13 77 FR 33641 (June 7, 2012). This determination was recently upheld by the D.C. Circuit. (See Util. Air Regulatory Grp. v. EPA, 885 F.3d 714 (D.C. Cir. 2018)).

    In the same action that EPA determined that states could rely on CSAPR to address the BART requirements for EGUs, EPA issued a limited disapproval of a number of states' regional haze SIPs, including the 2009 Regional Haze SIP submittal from Texas, due to the states' reliance on CAIR, which had been replaced by CSAPR.14 The EPA did not immediately promulgate a FIP to address those aspects of the 2009 Regional Haze SIP submittal subject to the limited disapproval of Texas' regional haze SIP to allow more time for the EPA to assess the remaining elements of the 2009 Texas SIP submittal.

    14Id.

    In December 2014, we proposed an action to address the remaining regional haze obligations for Texas.15 In that action, we proposed, among other things, to rely on our CSAPR FIP subjecting Texas to participation in the CSAPR trading programs to satisfy the NOX and SO2 BART requirements for Texas' EGUs; we also proposed to approve the portions of the 2009 Regional Haze SIP addressing PM BART requirements for the state's EGUs. Before that rule was finalized, however, the D.C. Circuit issued a decision on a number of challenges to CSAPR, denying most claims, but remanding the CSAPR SO2 and/or seasonal NOX emissions budgets of several states to the EPA for reconsideration, including the Phase 2 SO2 and seasonal NOX budgets for Texas.16 Due to the uncertainty arising from the remand of Texas' CSAPR budgets, we did not finalize our December 2014 proposal to rely on CSAPR to satisfy the SO2 and NOX BART requirements for Texas EGUs.17 Additionally, because our proposed action on the PM BART provisions for EGUs was dependent on how SO2 and NOX BART were satisfied, we did not take final action on the PM BART elements of the 2009 Texas' Regional Haze SIP. In January 2016, we finalized action on the remaining aspects of the December 2014 proposal. This final action disapproved Texas' Reasonable Progress Goals for the Big Bend and Guadalupe Mountains Class I areas in Texas, Texas's reasonable progress analysis and Texas's long-term strategy. EPA promulgated a FIP establishing a new long-term strategy that consisted of SO2 emission limits for 15 coal fired EGUs at eight power plants. That rulemaking was challenged, however, and in July 2016, the Fifth Circuit granted the petitioners' motion to stay the rule pending review. In December 2016, following the submittal of a request by the EPA for a voluntary remand of the parts of the rule under challenge, the Fifth Circuit Court of Appeals remanded the rule in its entirety.18

    15 79 FR 74818 (Dec. 16, 2014).

    16EME Homer City Generation, L.P. v. EPA, 795 F.3d 118, 132 (D.C. Cir. 2015).

    17 81 FR 296 (Jan. 5, 2016).

    18Texas v. EPA, 829 F.3d 405 (5th Cir. 2016).

    On October 26, 2016, the EPA finalized an update to CSAPR to address the interstate transport requirements of CAA section 110(a)(2)(D)(i)(I) with respect to the 2008 ozone NAAQS (CSAPR Update).19 The EPA also responded to the D.C. Circuit's remand of certain CSAPR seasonal NOX budgets in that action. As to Texas, the EPA withdrew Texas' seasonal NOX budget finalized in CSAPR to address the 1997 ozone NAAQS. However, in that same action, the EPA promulgated a FIP with a revised seasonal NOX budget for Texas to address the 2008 ozone NAAQS.20 Accordingly, Texas remains subject to CSAPR seasonal NOX requirements.

    19 81 FR 74504 (Oct. 26, 2016).

    20 81 FR 74504, 74524-25.

    On November 10, 2016, in response to the D.C. Circuit's remand of Texas's CSAPR SO2 budget, we proposed to withdraw the FIP provisions that required EGUs in Texas to participate in the CSAPR trading programs for annual emissions of SO2 and NOX.21 We also proposed to reaffirm that CSAPR continues to provide for greater reasonable progress than BART following our actions taken to address the D.C. Circuit's remand of Texas' SO2 budget and the CSAPR emissions budgets of several additional states. On September 29, 2017, we finalized the withdrawal of the FIP provisions for annual emissions of SO2 and NOX for EGUs in Texas 22 and affirmed our proposed finding that the EPA's 2012 analytical demonstration remains valid and that participation in the CSAPR trading programs as they now exist meets the Regional Haze Rule's criteria for an alternative to BART.

    21 81 FR 78954.

    22 82 FR 45481 (Sept. 29, 2017). Texas continues to be subject to portions of our CSAPR FIP, under which it participates in CSAPR for ozone season NOX.

    On January 4, 2017, we proposed a FIP to address the EGU BART requirements for Texas' EGUs. In that action, we proposed to replace the 2009 Regional Haze SIP's reliance on CAIR with reliance on our CSAPR FIP to address the NOX BART requirements for EGUs.23 This portion of our proposal was based on the CSAPR Update and our separate November 10, 2016 proposed finding that the EPA's actions in response to the D.C. Circuit's remand would not adversely impact our 2012 demonstration that participation in the CSAPR trading programs meets the Regional Haze Rule's criteria for alternatives to BART (sometimes referred to as a finding that “CSAPR is still better than BART”).24 We noted that we could not finalize this portion of our proposed FIP to address the NOX BART requirements for EGUs unless and until we finalized our proposed finding that CSAPR was still better than BART.

    23 82 FR 912, 914-15 (Jan. 4, 2017).

    24 81 FR 74504 (Nov. 10, 2016).

    Our January 4, 2017 proposed action addressing the BART requirements for Texas EGUs acknowledged that because Texas would no longer be participating in the CSAPR program for SO2, and thus would no longer be eligible to rely on participation in CSAPR as an alternative to source-specific EGU BART for SO2 under 40 CFR 51.308(e)(4), there were BART requirements that were left unfulfilled with respect to Texas's EGU emissions of SO2 that would need to be fulfilled by either an approved SIP or an EPA-issued FIP that satisfied the BART requirements under 40 CFR 51.308(e)(1) or constituted a viable BART alternative under 40 CFR 51.308(e)(2) for those emissions. EPA proposed to satisfy these requirements through a BART FIP, entailing the identification of BART-eligible EGU sources, screening of sources to identify subject-to-BART sources, and source-by-source determinations of SO2 BART controls as appropriate. For those EGU sources we proposed to find subject to BART, we proposed to promulgate source-specific SO2 requirements. We proposed SO2 emission limits on 29 EGUs located at 14 facilities.

    In the January 2017 proposal, we also proposed to disapprove the portion of the 2009 Regional Haze SIP that made BART determinations for PM from EGUs, on the grounds that the demonstration in the 2009 Texas Regional Haze SIP relied on underlying assumptions as to how the SO2 and NOX BART requirements for EGUs were being met that were no longer valid with the proposed source-specific SO2 requirements.25 In place of these determinations, we proposed to promulgate source-specific PM BART requirements based on existing practices and control capabilities for those EGUs that we proposed to find subject to BART. Previously, we had proposed to approve the EGU BART determinations for PM in the 2009 Texas Regional Haze SIP, and this proposal had never been withdrawn.26 At that time, CSAPR was an appropriate alternative for SO2 and NOX BART for EGUs. The 2009 Texas Regional Haze SIP included a pollutant-specific screening analysis for PM to demonstrate that Texas EGUs were not subject to BART for PM. In a 2006 guidance document,27 the EPA stated that pollutant-specific screening can be appropriate where a state is relying on a BART alternative to address both NOX and SO2 BART. However, in the January 2017 proposal, we proposed to disapprove the PM BART determination since SO2 BART was no longer addressed by a BART alternative. In our October 2017 FIP, we approved the 2009 Regional Haze SIP PM BART determination because the SO2 requirements were addressed by a BART alternative, making the original pollutant-specific screening demonstration once again an appropriate approach.

    25 In the 2009 Regional Haze Texas SIP, for EGU BART, Texas' BART EGUs' emissions of both SO2 and NOX were covered by participation in trading programs, which allowed Texas to conduct a screening analysis of the visibility impacts from PM emissions in isolation. However, modeling on a pollutant-specific basis for PM is appropriate only in the narrow circumstance of reliance on BART alternatives to satisfy both NOX and SO2 BART. Due to the complexity and nonlinear nature of atmospheric chemistry and chemical transformation among pollutants, EPA has not recommended performing modeling on a pollutant-specific basis to determine whether a source is subject to BART, except in the unique situation described above. See discussion in Memorandum from Joseph Paisie to Kay Prince, “Regional Haze Regulations and Guidelines for Best Available Retrofit Technology (BART) Determinations,” July 19, 2006.

    26 79 FR 74817, 74853-54 (Dec. 16, 2014).

    27See discussion in Memorandum from Joseph Paisie to Kay Prince, “Regional Haze Regulations and Guidelines for Best Available Retrofit Technology (BART) Determinations,” July 19, 2006.

    In our October 2017 rulemaking, we finalized our January 2017 proposed determination that Texas' participation in CSAPR's trading program for ozone-season NOX qualifies as an alternative to source-specific NOX BART. We also determined that the SO2 BART requirements for all BART-eligible coal-fired units and a number of BART-eligible gas- or gas/fuel oil-fired units are satisfied by a BART alternative for SO2—specifically, an intrastate trading program addressing emissions of SO2 from certain EGUs in Texas. Finally, we approved the 2009 Regional Haze SIP's determination that Texas' EGUs are not subject to BART for PM. The remaining BART-eligible EGUs not covered by the SO2 BART alternative were previously determined to be not subject to BART based on methods using model plants and CALPUFF 28 modeling as described in our proposed rule and BART Screening technical support document (TSD).29 With respect to visibility transport obligations, we determined that the BART alternative to address SO2 and Texas' participation in CSAPR's trading program for ozone-season NOX to address NOX BART at Texas' EGU fully addresses the obligations for six NAAQS.

    28 CALPUFF (California Puff Model) is a multi-layer, multi-species non-steady-state puff dispersion modeling system that simulates the effects of time- and space-varying meteorological conditions on pollutant transport, transformation, and removal. CALPUFF is intended for use in assessing pollutant impacts at distances greater than 50 kilometers to several hundreds of kilometers. It includes algorithms for calculating visibility effects from long range transport of pollutants and their impacts on Federal Class I areas. EPA previously approved the use of the CALPUFF model in BART related analyses (40 CFR part 51 Regional Haze Regulations and Guidelines for Best Available Retrofit Technology (BART) Determinations; Final Rule; FR Vol. 70 No. 128 Pages 39104—39172; July 6, 2005). For instructions on how to download the appropriate model code and documentation that are available from Exponent (Model Developer/Owner) at no cost for download, see EPA's website: https://www.epa.gov/scram/air-quality-dispersion-modeling-preferred-and-recommended-models#calpuff.

    29 See document at docket identification number EPA-R06-OAR-0611-0005.

    As explained above, EPA received a petition for reconsideration of issues related to the SO2 intrastate trading program promulgated in the October 2017 rule. As stated in our letter in response to that petition dated April 30, 2018, we believe certain specific aspects of the federal plan can benefit from further public comment. Therefore, in this notice, we are proposing to affirm certain aspects of our SIP approval and of the FIP, and to provide the public with an opportunity to comment on those particular aspects, as well as other specified related issues.

    II. Summary of This Proposed Action

    In this notice, we are taking comment on the following elements: (1) This proposal to affirm the October 2017 FIP establishing an intrastate trading program addressing emissions of SO2 from certain EGUs in Texas as a BART alternative and the determination that this program satisfies the requirements for BART alternatives; (2) this proposal to affirm the finding that the BART alternatives in the October 2017 rulemaking to address SO2 and NOX BART at Texas' EGUs result in emission reductions adequate to satisfy the requirements of CAA section 110(a)(2)(D)(i)(II) with respect to visibility for a number of NAAQS issued between 1997 and 2010; and (3) this proposal to affirm our October 2017 approval of Texas' SIP determination that no sources are subject to BART for PM. We are not soliciting comment on our final determination that CSAPR addresses the NOX BART requirements for EGUs in Texas.30

    30 For additional information regarding the determination that CSAPR addresses the NOX BART requirements for EGUs in Texas, please see our January 2017 proposal, and our October 2017 final action, including response to comments. These actions are included in the docket for this action.

    A. Regional Haze 1. SO2 BART

    In our January 2017 proposed action, we proposed BART limits based on our source-specific BART determinations for certain EGUs in Texas. We proposed this approach to address the SO2 BART requirements following the remand from the D.C. Circuit in EME Homer City II31 of certain CSAPR emission budgets that created uncertainty regarding our proposed reliance on CSAPR to satisfy the SO2 BART requirements for EGUs in Texas. However, based on comments we received in response to our January 2017 proposal, including views expressed by Texas, we finalized, as a BART alternative, a program establishing emission caps using CSAPR allocations for certain EGUs in Texas in our October 2017 final action. The EPA determined that, because this BART alternative would result in SO2 emissions from Texas EGUs similar to emissions anticipated under CSAPR, the alternative is an appropriate approach for addressing Texas' SO2 BART obligations and, in the context of the operation of the CSAPR ozone-season NOX trading program and the operation of the CSAPR annual NOX and SO2 trading programs, will achieve greater reasonable progress than BART towards restoring visibility, consistent with the June 2012 “CSAPR better than BART” and September 2017 “CSAPR still better than BART” determinations. In today's proposed action, we are proposing to affirm our determination that the intrastate trading program is an appropriate SO2 BART alternative for EGUs in Texas.

    31EME Homer City Generation, L.P. v. EPA, 795 F.3d 118, 132 (D.C. Cir. 2015).

    The BART alternative has been designed to achieve SO2 emission levels that are functionally equivalent to those projected for Texas' participation in the original CSAPR program. The BART alternative applies the CSAPR allowance allocations for SO2 to all BART-eligible coal-fired EGUs, several additional coal-fired EGUs, and several BART-eligible gas-fired and gas/fuel oil-fired EGUs. In addition to being a sufficient alternative to BART, we are proposing to affirm our October 2017 determination that the BART alternative secures reductions consistent with visibility transport requirements and is part of the long-term strategy to meet the reasonable progress requirements of the Regional Haze Rule.

    We propose to affirm that the combination of the source coverage for this program, the total allocations for EGUs covered by the program, and recent and foreseeable emissions trends from those EGUs both covered and not covered by the program will result in future EGU emissions in Texas that are similar to or less than the SO2 emission levels forecast in the 2012 better-than-BART demonstration for Texas EGU emissions assuming CSAPR participation. We propose to affirm that the intrastate trading program meets the requirements for a BART alternative and therefore satisfies the SO2 BART requirements for the BART-eligible coal-fired EGUs and gas- and gas/fuel oil-fired EGUs in the following table. See Section IV.B for a discussion on identification of sources covered by the program.

    Table 1—Texas EGUs Subject to the FIP SO2 Trading Program Owner/operator Units BART-
  • eligible
  • AEP Welsh Power Plant Unit 1 Yes. Welsh Power Plant Unit 2 Yes. Welsh Power Plant Unit 3 No. H W Pirkey Power Plant Unit 1 No. Wilkes Unit 1 * Yes. Wilkes Unit 2 * Yes. Wilkes Unit 3 * Yes. CPS Energy JT Deely Unit 1 Yes. JT Deely Unit 2 Yes. Sommers Unit 1 * Yes. Sommers Unit 2 * Yes. Dynegy/Vistra Coleto Creek Unit 1 Yes. LCRA Fayette/Sam Seymour Unit 1 Yes. Fayette/Sam Seymour Unit 2 Yes. Vistra/Luminant Big Brown Unit 1 Yes. Big Brown Unit 2 Yes. Martin Lake Unit 1 Yes. Martin Lake Unit 2 Yes. Martin Lake Unit 3 Yes. Monticello Unit 1 Yes. Monticello Unit 2 Yes. Monticello Unit 3 Yes. Sandow Unit 4 No. Stryker ST2 * Yes. Graham Unit 2 * Yes. NRG Limestone Unit 1 No. Limestone Unit 2 No. WA Parish Unit WAP4 * Yes. WA Parish Unit WAP5 Yes. WA Parish Unit WAP6 Yes. WA Parish Unit WAP7 No. Xcel Tolk Station Unit 171B No. Tolk Station Unit 172B No. Harrington Unit 061B Yes. Harrington Unit 062B Yes. Harrington Unit 063B No. El Paso Electric Newman Unit 2 * Yes. Newman Unit 3 * Yes. Newman Unit 4 * Yes. * Gas-fired or gas/fuel oil-fired units.

    This BART alternative includes all BART-eligible coal-fired units in Texas, additional coal-fired EGUs, and some additional BART-eligible gas and gas/fuel oil-fired units. Moreover, we propose to affirm that the differences in source coverage between CSAPR and this BART alternative are either not significant or, in fact, work to demonstrate the relative stringency of this BART alternative as compared to CSAPR. This relative stringency is demonstrated in the following points:

    A. Covered sources under the BART alternative in this FIP represent 89% 32 of all SO2 emissions from all Texas EGUs in both 2016 and 2017, and approximately 85% of CSAPR allocations for existing units in Texas.

    32 In 2016, EGUs included in the program emitted 218,291 tons of SO2, and other EGUs emitted 27,446 tons from other EGUs (11.1% of the total emitted by Texas EGUs). In 2017, sources included in the program emitted 245,870 tons of SO2, and other EGUs emitted 30,096 (10.9%).

    B. The remaining 11% (100 minus 89) of 2016 and 2017 emissions from sources not covered by the BART alternative come from gas units that rarely burn fuel oil or from coal-fired units that on average are better controlled for SO2 than the covered sources and generally are less relevant to visibility impairment. As such, any shifting of generation to non-covered sources, as might occur if a covered source were to reduce its operation in order to remain within its SO2 emissions allowance allocation, would result in fewer emissions to generate the same amount of electricity.

    C. Furthermore, the non-inclusion of a large number of gas-fired units that rarely burn fuel oil reduces the amount of available allowances for such units that would typically and collectively be expected to use only a fraction of CSAPR emissions allowances. Many of these sources typically emit at levels much lower than their allocation level. Should sources not participating in the program choose to opt in, thereby increasing the number of available allowances, this would serve to make the program more closely resemble CSAPR.

    D. The BART alternative does not allow purchasing of allowances from out-of-state sources. Emission projections under CAIR and CSAPR showed that Texas sources were anticipated to purchase allowances from out-of-state sources.33 34

    33 See CAIR 2018 emission projections of approximately 350,000 tons SO2 emitted from Texas EGUs compared to CAIR budget for Texas of 225,000 tons. See section 10 of the 2009 Texas Regional Haze SIP.

    34 For the projected annual SO2 emissions from Texas EGUs under CSAPR See Technical Support Document for Demonstration of the Transport Rule as a BART Alternative, Docket ID No. EPA-HQ-OAR-2011- 0729-0014 (December 2011) (2011 CSAPR/BART Technical Support Document), available in the docket for this action at table 2-4. Certain CSAPR budgets were increased after promulgation of the CSAPR final rule (and the increases were addressed in the 2012 CSAPR/BART sensitivity analysis memo. See memo entitled “Sensitivity Analysis Accounting for Increases in Texas and Georgia Transport Rule State Emissions Budgets,” Docket ID No. EPA-HQ-OAR-2011-0729-0323 (May 29, 2012), available in the docket for this action. The increase in the Texas SO2 budget was 50,517 tons which, when added to the Texas SO2 emissions projected in the CSAPR + BART-elsewhere scenario of 266,600 tons, yields total potential SO2 emissions from Texas EGUs of approximately 317,100 tons. Texas SO2 emissions projected in the CSAPR + BART-elsewhere scenario of 266,600 tons compared to the original CSAPR budget of 243,954. The CSAPR budget for Texas after adjustments was 294,471 tons.

    Based on these points, and applying as appropriate the principles of the rules and program design of CSAPR to a program designed to apply to and for Texas, we are proposing to affirm our earlier determinations regarding SO2 BART coverage for EGUs by means of a BART alternative under an intrastate trading program. In 2014, we had originally proposed that participation in a CSAPR SO2 trading program would satisfy the SO2 BART requirement for Texas EGUs.35 The October 2017 final action and this proposal rely in large part on substantially similar technical elements. In contrast to the 2014 proposal, however, the intrastate trading program SO2 BART alternative would not meet the terms of 40 CFR 51.308(e)(4), as amended, because that regulatory provision provides BART coverage for pollutants covered by the CSAPR trading program in the State. In September 2017, EPA finalized the removal of Texas from the CSAPR SO2 trading program.36 Instead, we are relying on the BART alternative option provided under 40 CFR 51.308(e)(2). The BART alternative we are proposing to affirm today is supported by our determination that the trading program achieves greater reasonable progress than BART. The BART alternative is designed to achieve SO2 emission levels from Texas sources similar to the SO2 emission levels that would have been achieved under CSAPR. Relying on a quantitative and qualitative assessment of the operation of the BART alternative, we propose to affirm our determination that emission levels under this program, and their aggregate impact on visibility, will be on average no greater than those from Texas EGUs that would have been realized from the SO2 trading program under CSAPR. Accordingly, for materially the same reasons underlying our June 2012 “CSAPR better than BART” and September 2017 “CSAPR still better than BART” determinations, and the March 2018 court opinion 37 upholding CSAPR better than BART, the SO2 BART FIP for Texas' BART-eligible EGUs participating in the trading program will achieve greater reasonable progress than BART with respect to SO2.

    35 79 FR 74817, 74823 (December 16, 2014) (“We propose to replace Texas' reliance on CAIR to satisfy the BART requirement for EGUs with reliance on CSAPR.”). This part of the 2014 proposal was not finalized in the action taken on January 5, 2016, that has since been remanded by the Fifth Circuit Court of Appeals. 81 FR 295.

    36 2 FR 45481 (Sept. 29, 2017). See docket EPA-HQ-OAR-2016-0598 for additional information.

    37Util. Air Regulatory Grp. v. EPA, 885 F.3d 714 (D.C. Cir. 2018).

    In our January 2017 proposed action and in our October 2017 final action, we determined that the BART-eligible EGUs not participating in the program were not causing or contributing to visibility impairment, and were therefore not subject to BART. In today's proposed rule, we are not re-opening the determination that these units are not subject to BART.

    The Regional Haze Rule at 40 CFR 51.308(e)(2)(iii) requires that the emission reductions from BART alternatives occur “during the period of the first long-term strategy for regional haze.” The SO2 BART alternative that EPA is proposing here will be implemented beginning in January 2019, and thus emission reductions needed to meet the allowance allocations must take place by the end of 2019. For the purpose of evaluating Texas' BART alternative, the end of the period of the first long-term strategy for Texas is 2021, consistent with the requirement that states submit revisions to their long-term strategy to address the second planning period by July 31, 2021.38 Therefore, we propose to affirm our determination that because the emission reductions from the Texas SO2 trading program will be realized prior to that date, the necessary emission reductions will take place within the period of Texas' first long-term strategy for regional haze.

    38 40 CFR 51.308(f).

    In proposing to affirm the regulatory terms and rules for implementing the BART alternative, we are mindful of the minimally required elements for a BART alternative emissions trading program that are specified in the provisions of 40 CFR 51.308(e)(2)(vi)(A)-(L). In a generic sense, these types of provisions are foundational to the establishment of allowance markets. CSAPR is a prominent example of such an allowance market, and we have designed this BART alternative guided by transferring and generally incorporating well-tested program rules and terms from the provisions of CSAPR; we have ensured that the BART alternative will conform to the provisions necessary and appropriate that are needed for an emissions trading program covered by a cap.

    EPA requests comment on our proposal to affirm the October 2017 FIP establishing an intrastate trading program addressing emissions of SO2 from certain EGUs in Texas as a BART alternative and our determinations that this program satisfies the requirements for BART alternatives.

    2. PM BART

    The 2009 Texas Regional Haze SIP included a pollutant-specific screening analysis for PM to demonstrate that Texas EGUs were not subject to BART for PM. This approach was consistent with a 2006 guidance document in which the EPA stated that pollutant-specific screening can be appropriate where a state is relying on a BART alternative to address both NOX and SO2 BART. The majority of Texas' BART-eligible EGUs rely on BART alternatives for both SO2 and NOX emissions and we approved Texas' pollutant-specific screening analysis as appropriate. All of the BART-eligible sources participating in the SO2 intrastate trading program have visibility impacts from PM alone below the subject-to-BART threshold of 0.5 deciviews (dv). Furthermore, the BART-eligible sources not participating in the intrastate trading program were screened out of BART for all visibility impairing pollutants. EPA requests comments on our proposal to affirm our October 2017 approval of the portion of the Texas Regional Haze SIP that determined that PM BART emission limits are not required for any Texas EGUs.

    B. Interstate Transport of Pollutants That Affect Visibility

    In our January 5, 2016 final action 39 we disapproved the portion of Texas' SIP revisions intended to address interstate visibility transport for six NAAQS, including the 1997 8-hour ozone and 1997 PM2.5.40 That rulemaking was challenged, however, and in December 2016, following a stay of the rule by the Fifth Circuit Court of Appeals in Texas v. EPA and EPA's submittal of a subsequent request by the EPA for a voluntary remand of the parts of the rule under challenge, the Fifth Circuit Court of Appeals remanded the rule in its entirety without vacatur.41 In our October 2017 final action, we again finalized our disapproval of Texas' SIP revisions addressing interstate visibility transport under CAA section 110(a)(2)(D)(i)(II) for six NAAQS. As explained in our January 2017 proposal, Texas' infrastructure SIP revisions for these six NAAQS relied on its 2009 Regional Haze SIP, including that SIP's reliance on CAIR as an alternative to EGU BART for SO2 and NOX, to meet the interstate visibility transport requirements.42 We are now proposing to affirm that Texas' participation in CSAPR to satisfy NOX BART and our SO2 intrastate trading program, fully addresses Texas' interstate visibility transport obligations for the following six NAAQS: (1) 1997 8-hour ozone; (2) 1997 PM2.5 (annual and 24 hour); (3) 2006 PM2.5 (24-hour); (4) 2008 8-hour ozone; (5) 2010 1-hour NO2; and (6) 2010 1-hour SO2. The basis of this proposed affirmation is our determination in the October 2017 final action that the regional haze measures in place for Texas are adequate to ensure that emissions from the State do not interfere with measures to protect visibility in nearby states because the emission reductions are consistent with the level of emissions reductions relied upon by other states during consultation. EPA requests comment on our proposal to affirm the finding that the BART alternatives in the October 2017 rulemaking result in emission reductions adequate to satisfy the requirements of CAA section 110(a)(2)(D)(i)(II) with respect to visibility for six NAAQS issued between 1997 and 2010.

    39 81 FR 296 (Jan. 5, 2016).

    40 Specifically, we previously disapproved the relevant portion of these Texas' SIP submittals: April 4, 2008: 1997 8-hour Ozone, 1997 PM2.5 (24-hour and annual); May 1, 2008: 1997 8-hour Ozone, 1997 PM2.5 (24-hour and annual); November 23, 2009: 2006 24-hour PM2.5; December 7, 2012: 2010 NO2; December 13, 2012: 2008 8-hour Ozone; May 6, 2013: 2010 1-hour SO2 (Primary NAAQS). 79 FR 74818, 74821; 81 FR 296, 302.

    41Texas v. EPA, 829 F.3d 405 (5th Cir. 2016).

    42EME Homer City Generation, L.P. v. EPA, 795 F.3d 118, 133-34 (DC Cir. 2015) (holding that SIPs based on CAIR were unapprovable to fulfill good neighbor obligations).

    III. PM BART

    In our January 2017 proposal, we proposed to disapprove Texas' technical evaluation and determination in the 2009 Regional Haze SIP that PM BART emission limits are not required for any of Texas' EGUs. That SIP included a pollutant-specific screening analysis for PM to demonstrate that Texas EGUs were not subject to BART for PM. This approach was consistent with a 2006 guidance document 43 in which the EPA stated that pollutant-specific screening can be appropriate where a state is relying on a BART alternative to address both NOX and SO2 BART. However, because we proposed to address SO2 BART on a source-specific basis, Texas' pollutant-specific screening was not appropriate and we proposed source-specific PM BART emission limits consistent with existing practices and controls. In our October 2017 final action, we did not issue source-specific SO2 BART determinations. Instead, for the majority of Texas' BART-eligible EGUs, we relied on BART alternatives for both SO2 and NOX emissions and approved Texas' pollutant-specific screening analysis as appropriate.44 All of the BART-eligible sources participating in the intrastate trading program have visibility impacts from PM alone below the subject-to-BART threshold of 0.5 deciviews (dv).45 Furthermore, the BART-eligible sources not participating in the intrastate trading program were screened out of BART for all visibility impairing pollutants. As such, we are proposing to affirm our October 2017 approval of the portion of the Texas Regional Haze SIP that determined that PM BART emission limits are not required for any Texas EGUs, and are requesting comment on this proposal.

    43See discussion in Memorandum from Joseph Paisie to Kay Prince, “Regional Haze Regulations and Guidelines for Best Available Retrofit Technology (BART) Determinations,” July 19, 2006.

    44 We originally proposed to approve Texas' screening approach in 2014, and the basis of our proposal today remains consistent with the technical evaluation we provided at that time. See 79 FR 74817, 74848 (Dec. 16, 2014).

    45 Stryker Creek is covered by CSAPR for NOX and by the SO2 trading program but was not included in the 2009 Regional Haze SIP. How Stryker Creek is screened out for PM is discussed below.

    As we explained in the January 2017 proposal, the 2009 Regional Haze SIP did not evaluate PM impacts from all BART-eligible EGUs. We evaluated and determined that this omission did not affect Texas' conclusion that no BART-eligible EGUs should be subject-to-BART for PM emissions. In our January 2017 proposal and as finalized in our October 2017 action, we identified several facilities as BART-eligible that Texas did not identify as BART eligible in its 2009 Regional Haze SIP. Specifically, we identified the following additional BART-eligible sources: Coleto Creek Unit 1 (Dynegy), Dansby Unit 1 (City of Bryan), Greens Bayou Unit 5 (NRG), Handley Units 3,4, and 5 (Exelon), Lake Hubbard Units 1 and 2 (Luminant), Plant X Unit 4 (Xcel), Powerlane Units ST1, ST2, and ST3 (City of Greenville), R W Miller Units 1, 2, and 3 (Brazos Elec.), Spencer Units 4 and 5 (City of Garland), and Stryker Creek Unit ST2 (Luminant). Based on CALPUFF modeling and a model-plant analysis, we found that all of these facilities except Coleto Creek and Stryker Creek had impacts from NOX, SO2, and PM below the BART screening level.46 CALPUFF modeling showed that Stryker Creek Unit ST2 had a visibility impact of 0.786 dv from NOX, SO2, and PM. However, Stryker Creek Unit ST2 is now covered by a BART alternative for NOX and SO2, so we evaluated the visibility impact of Stryker Creek Unit ST2's PM emissions alone. The CALPUFF modeling files and spreadsheets included in our January 2017 proposal indicate that light extinction from PM (PMFine and PMCoarse) is less than 1% of total light extinction at all Class I areas. Therefore, because the visibility impact attributable to PM emissions from Stryker Creek Unit ST2 would be a small fraction (roughly 1%) of the 0.786 dv aggregate impact of the unit's emissions from all pollutants, we propose to affirm our determination that the source is not subject to BART for PM under EPA's 2006 guidance, and are requesting comment on this proposal.

    46 EPA determined that Dansby, Greens Bayou, Handley, Lake Hubbard, Plant X, Powerlane, R W Miller, and Spencer are not subject to BART based on the methodologies utilizing model plants and CALPUFF modeling as described in our January 2017 proposed rule and BART Screening TSD (Available in the docket for this action, document ID EPA-R06-OAR-2016-0611-0005).

    We also evaluated the potential visibility impact of PM emissions from Coleto Creek Unit 1 using the CAMx modeling that Texas used for PM BART screening of its EGU sources in its 2009 Regional Haze SIP.47 Specifically, we evaluated the modeling results for two facilities (LCRA Fayette and Sommers Deely) that have stack parameters similar to Coleto Creek's, but that are located closer to Class I areas than Coleto Creek. Texas grouped the LCRA Fayette Facility together with other sources into Group 2 of their PM screening modeling and found that this group's maximum aggregate impacts at all Class I areas were less than 0.25 deciviews (dv). Texas also modeled the City Public Service Sommers Deely Facility's PM impacts. Maximum impacts at all Class I areas from Sommers Deely were less than 0.32 dv. To extend these model results to Coleto Creek, we used the Q/D ratio where Q is the maximum annual PM emissions 48 and D is the distance to the nearest receptor in a Class I area. If the Q/D ratio of Coleto Creek is smaller than the ratios for the two modeling results (Fayette and Sommers Deely) then Coleto Creek's impacts can be estimated as less than the impacts of these source(s) and thus be screened out. We evaluated the closest Class I areas (Big Bend, Guadalupe Mountains, Carlsbad, Wichita Mountains, and Caney Creek) and the Q/D ratios were: Coleto Creek (0.59-0.86), Fayette (4.25-6.1), and Sommers Deely (6.0-10.05).49 The Q/D ratio for Fayette is 6 to 8 times larger than for Coleto Creek, while the Q/D ratio for Sommers Deely is 9 to 11.6 times higher than for Coleto Creek. Therefore, if we were to model the PM impacts from Coleto Creek, they would be an order of magnitude smaller than the impacts from these facilities, which themselves are well below the threshold of 0.5 dv. Therefore, we propose to affirm our determination that Coleto Creek is not subject to BART for PM emissions, and are requesting comment on this proposal.

    47 Environ Report—“Final Report Screening Analysis of Potential BART-Eligible Sources in Texas”, September 27, 2006; “Addendum 1—BART Exemption Screening Analysis”, Draft December 6, 2006; and “BARTmodelingparameters V2.csv”.

    48 This is calculated by using the maximum daily PM10 daily emission rate, adding the maximum daily PM2.5 emission rate and then calculating the total emissions in tons per year if this max daily rate happened every day.

    49See `Coleto_Creek_Screen_analysis.xlsx'.

    We originally proposed to approve Texas' screening approach in 2014,50 and the basis of our proposal today remains consistent with the technical evaluation we provided at that time.

    50See 79 FR 74817, 74848 (Dec. 16, 2014). Docket number EPA-R06-OAR-2014-0754.

    IV. The SO2 Trading Program and Its Implications for Interstate Visibility Transport and EGU BART

    The Regional Haze Rule provides each state with the flexibility to adopt an emissions trading program or other alternative measure instead of requiring source-specific BART controls, so long as the alternative measure is demonstrated to achieve greater reasonable progress than BART. In our October 2017 final rulemaking, we acknowledged the State's preference and promulgated a BART alternative for SO2 for certain Texas EGUs. The rationale that the BART alternative would be better than BART was based on the combination of the source coverage for this program and the total allocations for EGUs covered by the program, which along with the recent and foreseeable emissions trends from EGUs both covered and not covered by the program indicate that the BART alternative will result in future EGU emissions in Texas that are similar to what was forecast in the 2012 “CSAPR better than BART” demonstration for Texas EGU emissions that assumed Texas would be subject to CSAPR for all pollutants participation. Today's proposed rule reiterates our finding in the October 2017 rule and affirms that it continues to support the promulgated FIP.

    A. Background on the Concept of CSAPR as an Alternative to BART

    In 2012, the EPA amended the Regional Haze Rule to provide that participation by a state's EGUs in a CSAPR trading program for a given pollutant qualifies as a BART alternative for those EGUs for that pollutant.51 In promulgating this “CSAPR-better-than-BART” rule (also referred to as “Transport Rule as a BART Alternative”), the EPA relied on an analytic demonstration based on an air quality modeling study 52 showing that CSAPR implementation meets the Regional Haze Rule's criteria for a demonstration of greater reasonable progress than BART. In the air quality modeling study conducted for the 2012 analytic demonstration, the EPA projected visibility conditions in affected Class I areas 53 based on 2014 emissions projections for two control scenarios and on the 2014 base case emissions projections.54 One control scenario represents “Nationwide BART” and the other represents “CSAPR+BART-elsewhere.” 55 In the base case, neither BART controls nor the EGU SO2 and NOX emissions reductions attributable to CSAPR were reflected. To project emissions under CSAPR, the EPA assumed that the geographic scope and state emissions budgets for CSAPR would be implemented as finalized in 2011, and the EPA's final analysis also accounted for several amendments to the CSAPR budgets that were finalized in 2012.56 The results of that analytic demonstration based on this air quality modeling passed the two-pronged test set forth at 40 CFR 51.308(e)(3). The first prong requires that the alternative program will not cause a decline in visibility at any affected Class I area. The second prong requires that the alternative program results in improvements in average visibility across all affected Class I areas as compared to adopting source-specific BART. Together, these tests ensure that the alternative program provides for greater visibility improvement than would source-specific BART.

    51 40 CFR 51.308(e)(4); see also generally 77 FR 33641 (June 7, 2012). The D.C. Circuit recently denied a challenge to petition seeking review of the 2012 amendments. Utility Air Regulatory Group v. EPA, 885 F.3d 714 (D.C. Cir. 2018).

    52See Technical Support Document for Demonstration of the Transport Rule as a BART Alternative, Docket ID No. EPA-HQ-OAR-2011-0729-0014 (December 2011) (2011 CSAPR/BART Technical Support Document), and memo entitled “Sensitivity Analysis Accounting for Increases in Texas and Georgia Transport Rule State Emissions Budgets,” Docket ID No. EPA-HQ-OAR-2011-0729-0323 (May 29, 2012), both available in the docket for this action.

    53 The EPA identified two possible sets of affected Class I areas to consider for purposes of the study and found that implementation of CSAPR met the criteria for a BART alternative whichever set was considered. See 77 FR 33641, 33650 (June 7, 2012).

    54 For additional detail on the 2014 base case, see the CSAPR Final Rule Technical Support Document, available in the docket for this action.

    55 The “Nationwide BART” scenario reflected implementation of presumptive source-specific BART for both SO2 and NOX at BART-eligible EGUs nationwide. The “CSAPR+BART-elsewhere” reflected implementation of CSAPR in covered states and presumptive source-specific BART for each pollutant in states where CSAPR did not apply for that pollutant.

    56 CSAPR was amended three times in 2011 and 2012 to add five states to the seasonal NOX program and to increase certain state budgets. 76 FR 80760 (Dec. 27, 2011); 77 FR 10324 (Feb. 21, 2012); 77 FR 34830 (June 12, 2012). The “CSAPR-better-than-BART” final rule reflected consideration of these changes to CSAPR.

    For purposes of the 2012 analytic demonstration that CSAPR as finalized and amended in 2011 and 2012 provides for greater reasonable progress than BART, the analysis included Texas EGUs as subject to CSAPR for SO2 and annual NOX (as well as ozone-season NOX). CSAPR's emissions limitations are defined in terms of emissions “budgets” for the collective emissions from affected EGUs in each covered state. Sources can purchase allowances from sources outside of the state, so total projected emissions for a state may, in some cases, exceed the state's emission budget, but aggregate emissions from all sources in a state are expected to remain lower than or equal to the state's “assurance level” given the incentives that source owners have under the program to achieve that result. The final emission budget under CSAPR for Texas was 294,471 tons per year for SO2, including 14,430 tons of allowances available in the new unit set aside.57 The State's “assurance level” under CSAPR was 347,476 tons.58 Under CSAPR, the projected SO2 emissions from the affected Texas EGUs in the “CSAPR + BART-elsewhere” scenario were 266,600 tons per year. In a 2012 sensitivity analysis memo, EPA conducted a sensitivity analysis that confirmed that CSAPR would remain better-than-BART even if Texas EGU emissions increased to approximately 317,100 tons.59

    57 Units that are subject to CSAPR but that do not receive allowance allocations as existing units are eligible for a new unit set aside (NUSA) allowance allocation. NUSA allowance allocations are a batch of emissions allowances that are reserved for new units that are regulated by the CSAPR, but were not included in the final rule allocations. The NUSA allowance allocations are removed from the original pool of regional allowances, and divided up amongst the new units, so as not to exceed the emissions cap set in the CSAPR. Each calendar year, EPA issues three pairs of preliminary and final notices of data availability (NODAs), which are determined and recorded in two “rounds” and are published in the Federal Register. In any year, if the NUSA for a given CSAPR state and program does not have enough new unit applicants after completion of the 2nd round to use up all of the set aside allowances, the remaining allowances are allocated to existing CSAPR-affected units.

    58 See 40 CFR 97.710 for state SO2 Group 2 trading budgets, new unit set-asides, Indian country new unit set-asides, and variability limits.

    59 For the projected annual SO2 emissions from Texas EGUs, see Technical Support Document for Demonstration of the Transport Rule as a BART Alternative, Docket ID No. EPA-HQ-OAR-2011- 0729-0014 (December 2011) (2011 CSAPR/BART Technical Support Document at Table 2-4), available in the docket for this action. at table 2-4. Certain CSAPR budgets were increased after promulgation of the CSAPR final rule (and the increases were addressed in the 2012 CSAPR/BART sensitivity analysis memo. See memo entitled “Sensitivity Analysis Accounting for Increases in Texas and Georgia Transport Rule State Emissions Budgets,” Docket ID No. EPA-HQ-OAR-2011-0729-0323 (May 29, 2012), available in the docket for this action. The increase in the Texas SO2 budget was 50,517 tons which, when added to the Texas SO2 emissions projected in the CSAPR + BART-elsewhere scenario of 266,600 tons, yields total potential SO2 emissions from Texas EGUs of approximately 317,100 tons.

    As discussed in Section I.D, in the EPA's final response in September 2017 to the D.C. Circuit's remand in EME Homer City II of certain CSAPR budgets, we finalized the withdrawal of the requirements for Texas' EGUs to participate in the annual SO2 and NOX trading programs and also finalized our determination that the changes to the geographic scope of the CSAPR trading programs resulting from the remand response do not affect the continued validity of participation in CSAPR as a BART alternative.60 This determination that CSAPR remains a viable BART alternative despite changes in geographic scope resulting from EPA's response to the CSAPR remand was based on a sensitivity analysis of the 2012 analytic demonstration used to support the original CSAPR as better-than-BART rulemaking. A full explanation of the sensitivity analysis is included in the remand response proposal and final rule.61

    60 In addition to the withdrawal of the FIP provisions for annual emissions of SO2 and NOX for EGUs in Texas, the full set of actions taken to respond to the remand includes the 2016 CSAPR Update withdrawing the remanded seasonal NOX budgets for eleven states and establishing new seasonal NOX budgets to address a more recent ozone NAAQS for eight of those states, and the actions approving Alabama's, Georgia's, and South Carolina's SIP revisions establishing state CSAPR trading programs for SO2 and annual NOX to replace the corresponding federal CSAPR trading programs.

    61 81 FR 78954 (Nov. 10, 2016), 82 FR 45481 (Sept. 29, 2017). A petition challenging the EPA's determination regarding the continued validity of participation in CSAPR as a BART alternative is currently being held in abeyance in the D.C. Circuit. Order, Nat'l Parks Conservation Assn. v. EPA, No. 17-1253 (D.C. Cir. Apr. 10, 2018).

    B. Texas SO2 Trading Program

    Texas is no longer in the CSAPR program for annual SO2 emissions and accordingly cannot rely on CSAPR as a BART alternative for SO2 under 51.308(e)(4).62 Therefore, informed by the TCEQ's comments on our January 2017 proposal, in our October 2017 final action we addressed the SO2 BART requirement for coal-fired, some gas-fired, and some gas/fuel oil-fired units under a BART alternative, which we developed to meet the demonstration requirements under 51.308(e)(2). Today we propose to affirm the demonstration in our October 2017 action and to retain the SO2 BART alternative for coal-fired, some gas-fired, and some gas/fuel-oil fired units. We are soliciting comment on these issues, and in particular, we are soliciting comments on the proposal to affirm our determinations that the BART alternative meets each of the applicable regulatory requirements, as detailed in this section.

    62 See 82 FR 45481; see also 40 CFR 52.39(c)(2), 52.2284(c)(1).

    1. Identification of Sources Participating in the Trading Program

    Under 51.308(e)(2), a State may opt to implement or require participation in an emissions trading program or other alternative measure rather than to require sources subject to BART to install, operate, and maintain BART. Such an emissions trading program or other alternative measure must achieve greater reasonable progress than would be achieved through the installation and operation of BART. At the same time, the Texas trading program should be designed so as not to interfere with the validity of existing SIPs in other states that have relied on reductions from sources in Texas. As discussed elsewhere, the Texas trading program is designed to provide the measures that are needed to address interstate visibility transport requirements for several NAAQS and to be part of the long-term strategy needed to meet the reasonable progress requirements of the Regional Haze Rule.63 To meet all of these goals, the trading program must not only be inclusive of all BART-eligible sources that are treated as satisfying the BART requirements through participation in a BART alternative, but must also include additional emission sources to the extent required to ensure that the trading program as a whole can be shown to both achieve greater reasonable progress than would be achieved through the installation and operation of BART, and achieve the emission reductions assumed by other states in their own regional haze SIPs, and relied upon in establishing their reasonable progress goals for their Class I areas.

    63 EPA is not determining now that this proposal serves to also resolve the EPA's outstanding obligations with respect to reasonable progress that resulted from the Fifth Circuit's remand of our reasonable progress FIP. We intend to take future action to address the Fifth Circuit's remand.

    In order to identify EGUs in the trading program, we began with the list of BART-eligible EGUs for which we intended to address the BART requirements through a BART alternative. As discussed elsewhere, we determined that several BART-eligible gas-fired and gas/oil-fired EGUs are not subject-to-BART for NOX, SO2, and PM, and are therefore not included in the trading program. The table below lists those BART-eligible EGUs identified for inclusion in the trading program.

    Table 2—BART-Eligible EGUs Participating in the Trading Program Facility Unit Big Brown (Luminant/Vistra) 1 Big Brown (Luminant/Vistra) 2 Coleto Creek (Dynegy 64/Vistra) 1 Fayette (LCRA) 1 Fayette (LCRA) 2 Graham (Luminant) 2 Harrington Station (Xcel) 061B Harrington Station (Xcel) 062B J T Deely (CPS Energy) 1 J T Deely (CPS Energy) 2 Martin Lake (Luminant/Vistra) 1 Martin Lake (Luminant/Vistra) 2 Martin Lake (Luminant/Vistra) 3 Monticello (Luminant/Vistra) 1 Monticello (Luminant/Vistra) 2 Monticello (Luminant/Vistra) 3 Newman (El Paso Electric) 2 Newman (El Paso Electric) 3 Newman (El Paso Electric) 4 O W Sommers (CPS Energy) 1 O W Sommers (CPS Energy) 2 Stryker Creek (Luminant/Vistra) ST2 WA Parish (NRG) WAP4 WA Parish (NRG) WAP5 WA Parish (NRG) WAP6 Welsh Power Plant (AEP) 1 Welsh Power Plant (AEP) 2 Wilkes Power Plant (AEP) 1 Wilkes Power Plant (AEP) 2 Wilkes Power Plant (AEP) 3

    For a BART alternative that includes an emissions trading program, the applicability provisions must be designed to prevent any significant potential shifting within the state of production and emissions from sources in the program to sources outside the program.65 Shifting would be logistically simplest among units in the same facility, because they are under common management and have access to the same transmission lines. In addition, since a coal-fired EGU to which electricity production could shift would have a relatively high SO2 emission rate (compared to a gas-fired EGU), such shifting could also shift substantial amounts of SO2 emissions. To prevent any significant shifting of generation and SO2 emissions from participating sources to non-participating sources within the same facility, coal-fired EGUs that are not BART-eligible but are co-located with BART-eligible EGUs have been included in the program, with the following exceptions. While Fayette Unit 3, WA Parish Unit 8 (WAP8), and J K Spruce Units 1 and 2 were identified as coal-fired units that are not BART-eligible but are co-located with BART-eligible EGUs, these units have scrubbers installed to control SO2 emissions such that a shift in generation from the participating units to these units would not result in a significant increase in emissions. Fayette Unit 3 has a high performing scrubber similar to the scrubbers on Fayette Units 1 and 2,66 and has a demonstrated ability to maintain SO2 emissions at or below 0.04 lbs/MMBtu.67 Any shifting of generation from the participating units at the facility to Fayette Unit 3 would result in an insignificant shift of emissions. The scrubber at Parish Unit 8 maintains an emission rate four to five times lower than the emission rate of the other coal-fired units at the facility (Parish Units 5, 6, and 7) that are uncontrolled.68 Shifting of generation from the participating units at the Parish facility to Parish Unit 8 would result in a decrease in overall emissions from the source. Similarly, J K Spruce Units 1 and 2 have high performing scrubbers and emit at emission rates much lower than the co-located BART-eligible coal-fired units (J T Deely Units 1 and 2).69 In addition, because these units not covered by the program are on average better controlled for SO2 than the covered sources and emit far less SO2 per unit of energy produced, we conclude that in general, based on the current emission rates of the EGUs, should a portion of electricity generation shift to those units not covered by the program, the net result would be a decrease in overall SO2 emissions, as these non-participating units are on average much better controlled. Relative to current emission levels, should participating units increase their emissions rates and decrease generation to comply with their allocation, emissions from non-participating units may see a small increase. Therefore, we have not included Fayette Unit 3, WA Parish Unit 8 (WAP8), and J K Spruce Units 1 and 2 in the trading program. The table below lists those coal-fired units that are co-located with BART-eligible units that have been identified for inclusion in the trading program.

    64 Dynegy purchased the Coleto Creek power plant from Engie in February 2017. Note that Coleto Creek may still be listed as being owned by Engie in some of our supporting documentation which was prepared before that sale.

    65 40 CFR 51.308(e)(2)(vi)(A).

    66 See the BART FIP TSD, available in the docket for this action (Document Id: EPA-R06-OAR-2016-0611-0004), for evaluation of the performance of scrubbers on Fayette Units 1 and 2.

    67 The annual average emission rate for 2016 for this unit was 0.01 lb/MMBtu.

    68 Parish Units 5 and 6 are coal-fired BART-eligible units. Parish Unit 7 is not BART-eligible, but is a co-located coal-fired EGU. Unlike Parish Unit 8, these three units do not have an SO2 scrubber installed.

    69 The annual average emission rate for 2016 for J K Spruce Units 1 and 2 was 0.03 lb/MMBtu and 0.01 lb/MMBtu, respectively. The annual average emission rate for 2016 for J T Deely Units 1 and 2 was 0.52 lb/MMBtu and 0.51 lb/MMBtu, respectively.

    Table 3—Coal-Fired EGUs Co-Located With BART-Eligible EGUs and Participating in the Trading Program Facility Unit Harrington Station (Xcel) 063B WA Parish (NRG) WAP7 Welsh Power Plant (AEP) 3

    In addition to these sources, we also evaluated other EGUs for inclusion in the trading program based on their potential to impact visibility at Class I areas. Addressing emissions from sources with the largest potential to impact visibility is required to make progress towards the goal of natural visibility conditions and to address emissions that may otherwise interfere with measures required to protect visibility in other states. EPA, states, and Regional Planning Organizations (RPOs) have historically used a Q/D analysis to identify those facilities that have the potential to impact visibility at a Class I area based on their emissions and distance to the Class I area. Where,

    1. Q is the annual emissions in tons per year (tpy), and

    2. D is the nearest distance to a Class I Area in kilometers (km),

    We used a Q/D value of 10 as a threshold for identification of facilities that may impact visibility at Class I areas and could be included in the trading program in order to meet the goals of achieving greater reasonable progress than BART and limiting visibility transport. We selected this value of 10 based on guidance contained in the BART Guidelines, which states:

    Based on our analyses, we believe that a State that has established 0.5 deciviews as a contribution threshold could reasonably exempt from the BART review process sources that emit less than 500 tpy of NOX or SO2 (or combined NOX and SO2), as long as these sources are located more than 50 kilometers from any Class I area; and sources that emit less than 1000 tpy of NOX or SO2 (or combined NOX and SO2) that are located more than 100 kilometers from any Class I area.70

    70 See 40 CFR part 51, App. Y, § III (How to Identify Sources “Subject to BART”).

    The approach described above corresponds to a Q/D threshold of 10. This approach has also been recommended by the Federal Land Managers' Air Quality Related Values Work Group (FLAG) 71 as an initial screening test to evaluate the potential impact of a new or modified source on air quality related values (AQRV) at a Class I area and screen out sources from further visibility analysis. For this purpose, a Q/D value is calculated using the combined annual emissions in tons per year of SO2, NOX, PM10, and sulfuric acid mist (H2SO4) divided by the distance to the Class I area in km. A Q/D value greater than 10 for a new or modified major source seeking a permit under the Prevention of Significant Deterioration Program or Nonattainment New Source Review Program is recommended to have a Class I area AQRV analysis conducted.72

    71 Federal Land Managers' Air Quality Related Values Work Group (FLAG), Phase I Report—Revised (2010).

    Natural Resource Report NPS/NRPC/NRR—2010/232, October 2010. Available at http://www.nature.nps.gov/air/Pubs/pdf/flag/FLAG_2010.pdf.

    72 We also note that TCEQ utilized a Q/D threshold of 5 in its analysis of reasonable progress sources in the 2009 Texas Regional Haze SIP. See Appendix 10-1 of the 2009 Texas Regional Haze SIP.

    We considered the results of an available Q/D analysis based on 2009 emissions to identify facilities that may impact air visibility at Class I areas.73 Table 4 summarizes the results of that Q/D analysis for EGU sources in Texas with a Q/D value greater than 10 with respect to the nearest Class I area to the source.

    73 See the TX RH FIP TSD that accompanied our December 2014 proposal to address Reasonable Progress requirements 79 FR 74818 (Dec 16, 2014) ;) and 2009statesum_Q_D.xlsx, available in the docket for that action.

    Table 4—Q/D Analysis for Texas EGUs [Q/D Greater than 10, 2009 annual emissions] Facility Maximum Q/D H.W. Pirkey (AEP) 35.8 Big Brown (Luminant) 182.9 Sommers-Deely (CPS) 56.9 Coleto Creek (Dynegy) 46.0 Fayette (LCRA) 61.0 Gibbons Creek (TMPA) 30.8 Harrington Station (Xcel) 107.8 San Miguel 32.9 Limestone (NRG) 85.1 Martin Lake (Luminant) 367.4 Monticello (Luminant) 425.4 Oklaunion (AEP) 85.0 Sandow (Luminant) 63.0 Tolk Station (Xcel) 148.5 Twin Oaks 14.2 WA Parish (NRG) 84.3 Welsh (AEP) 230.1

    Based on the above Q/D analysis, we identified additional coal-fired EGUs for participation in the SO2 trading program due to their emissions, proximity to Class I areas, and potential to impact visibility at Class I areas. While Gibbons Creek is identified by the Q/D analysis, the facility does not include any BART-eligible EGUs and has installed very stringent controls such that current emissions are approximately 1% of what they were in 2009.74 Therefore, we do not consider Gibbons Creek to have significant potential to impact visibility at any Class I area and do not include it in the trading program. The Twin Oaks facility, consisting of two units, is also identified as having a Q/D greater than 10. However, the Q/D for this facility is significantly lower than that of the other facilities, the facility does not include any BART-eligible EGUs, and the estimated Q/D for an individual unit would be less than 10. We do not consider the potential visibility impacts from these units to be significant relative to the other coal-fired EGUs in Texas with Q/Ds much greater than 10 and do not include it in the trading program. The Oklaunion facility consists of one coal-fired unit that is not BART-eligible. Annual emissions of SO2 in 2016 from this source were 1,530 tons, less than 1% of the total annual emissions for EGUs in the state and only 988 tons in 2017. The most recent emissions from this facility are small relative to other non-BART units included in the program and we have not included Oklaunion in the trading program. Finally, San Miguel is identified as having a Q/D greater than 10. The San Miguel facility consists of one coal-fired unit that is not BART-eligible. In our review of existing controls at the facility performed as part of our action to address the remaining regional haze obligations for Texas, we found that the San Miguel facility has upgraded its SO2 scrubber system to perform at the highest level (94% control efficiency) that can reasonably be expected based on the extremely high sulfur content of the coal being burned, and the technology currently available.75 Since completion of all scrubber upgrades,76 emissions from the facility on a 30-day boiler operating day 77 rolling average basis have remained below 0.6 lb/MMBtu and the 2016 annual average emission rate was 0.44 lb/MMBtu. Therefore, we found the facility is well controlled and did not include San Miguel in the trading program. Other coal-fired EGUs in Texas that are not included in the trading program either had Q/D values less than 10 based on 2009 emissions or were not yet operating in 2009. New units beginning operation after 2009 have been or would be permitted and constructed using emission control technology determined under either Best Available Control Technology (BACT) or Lowest Achievable Emission Rate (LAER) review, as applicable, and we do not consider the potential visibility impacts from these units to be significant relative to those coal-fired EGUs participating in the program. See Table 8 and accompanying discussion in the section below for additional information on coal-fired EGUs not included in the trading program. The table below lists the additional units identified by the Q/D analysis described above as potentially significantly impacting visibility that are included in the trading program. We note that all of the other coal-fired units identified for inclusion in the trading program due to their BART-eligibility or by the fact that they are co-located with BART-eligible coal units would also be identified for inclusion in the trading program if the Q/D analysis were applied to them.

    74 Gibbons Creek's 2016 annual SO2 emissions were only 138 tons compared to 11,931 tons in 2009.

    75 79 FR 74818 (Dec. 16, 2014).

    76 San Miguel Electric Cooperative FGD Upgrade Program Update, URS Corporation, June 30, 2014. Available in the docket for our December 2014 Proposed action, 79 FR 74818 (Dec 16, 2014) as “TX166-008-066 San Miguel FGD Upgrade Program.”

    77 A boiler operating day (BOD) is any 24-hour period between 12:00 midnight and the following midnight during which any fuel is combusted at any time at the steam generating unit. See 70 FR 39172 (July 6, 2005).

    Table 5—Additional Units Identified for Inclusion in the Trading Program Facility Unit H.W. Pirkey (AEP) 1 Limestone (NRG) 1 Limestone (NRG) 2 Sandow (Luminant) 4 Tolk (Xcel) 171B Tolk (Xcel) 172B

    EPA proposes to affirm our determination that the inclusion of all of these identified sources (Tables 2, 3, and 5) in an intrastate SO2 trading program will both: (1) Achieve emission levels that are similar to those projected in the 2012 “CSAPR better than BART” determination from original projected participation by all Texas EGUs in the CSAPR program for trading of SO2; and (2) achieve greater reasonable progress than BART. In addition to being a sufficient alternative to BART, the trading program secures reductions consistent with visibility transport requirements and is part of the long-term strategy to meet the reasonable progress requirements of the Regional Haze Rule.78 The combination of the source coverage for this program, the total allocations for EGUs covered by the program, and recent and foreseeable emissions from EGUs not covered by the program will result in future EGU emissions in Texas that on average will be no greater than what was forecast in the 2012 “CSAPR better than BART” demonstration for Texas EGU emissions which assumed CSAPR participation by Texas. EPA requests comment on our proposal to affirm the identification of sources participating in the trading program in the October 2017 final rule.

    78 EPA is not determining at this time that this final action fully resolves the EPA's outstanding obligations with respect to reasonable progress that resulted from the Fifth Circuit's remand of our reasonable progress FIP. We intend to take future action to address the Fifth Circuit's remand.

    2. Texas SO2 Trading Program as a BART Alternative

    40 CFR 51.308(e)(2) contains the required plan elements and analyses for an emissions trading program or alternative measure designed as a BART alternative.

    In our October 2017 final action, we finalized our list of all BART-eligible sources in Texas, which serves to satisfy 51.308(e)(2)(i)(A). We are not reopening the identification of BART-eligible sources, and thus are not requesting comment on this element.

    This proposal includes a list of all EGUs covered by the trading program, satisfying the first requirement of 51.308(e)(2)(i)(B). All BART-eligible coal-fired units, some additional coal-fired EGUs, and some BART-eligible gas-fired and oil-and-gas-fired units are covered by the alternative program.79 This coverage and our determinations that the BART-eligible gas-fired and oil-and-gas-fired EGUs not covered by the program are not subject-to-BART for NOX, SO2 and PM satisfy the second requirement of 51.308(e)(2)(i)(B).80

    79 See Table 3 above for list of participating units and identification of BART-eligible participating units.

    80 EPA's determination that these EGU units not covered by the program are not subject to BART is final and we are not reopening that determination here.

    Regarding the requirements of 40 CFR 51.308(e)(2)(i)(C), we are proposing to affirm our determination that it is not necessary to make determinations of BART for each source subject to BART and covered by the program. Under that provision, the demonstration for a BART alternative does not need to include determinations of BART for each source subject to BART and covered by the program when the “alternative measure has been designed to meet a requirement other than BART.” The Texas trading program meets this condition, as discussed elsewhere, because it has been designed to meet multiple requirements other than BART. This BART alternative extends beyond all BART-eligible coal-fired units to include a number of additional coal-fired EGUs, and some BART-eligible gas-fired and oil-and-gas-fired units, capturing the majority of emissions from EGUs in the State, and is designed to provide the measures that are needed to address interstate visibility transport requirements for several NAAQS. This is because for all sources covered by the Texas SO2 trading program, those sources' CSAPR allocations for SO2 are incorporated into the BART alternative, and the BART FIP obtains more emission reductions of SO2 and NOX than the level of emissions reductions relied upon by other states during consultation and assumed by other states in their own regional haze SIPs, including their reasonable progress goals for their Class I areas. This BART alternative, addressing emissions from both BART eligible and non-BART eligible sources, that in combination provides for greater reasonable progress than BART, is also designed to be part of the long-term strategy needed to meet the reasonable progress requirements of the Regional Haze Rule, which remain outstanding after the remand of our reasonable progress FIP by the Fifth Circuit Court of Appeals. In our January 4, 2017 proposal on BART, we noted that the Fifth Circuit Court of Appeals has remanded without vacatur our prior action on the Texas' 2009 Texas Regional Haze SIP and part of the Oklahoma Regional Haze SIP.81 We contemplate that future action on this remand, will bring closure to the reasonable progress requirement. For these reasons, we find that it is not necessary for us to make determinations of BART for each source subject to BART and covered by the program. In this context, 51.308(e)(2)(i)(C) provides that we may “determine the best system of continuous emission control technology and associated emission reductions for similar types of sources within a source category based on both source-specific and category-wide information, as appropriate.” In this action, we are relying on the determinations of the best system of continuous emission control technology and associated emission reductions for EGUs as was used in our 2012 determination that showed that CSAPR as finalized and amended in 2011 and 2012 achieves more reasonable progress than BART (“CSAPR better than BART”). These determinations were based largely on category-wide information.

    81Texas v. EPA, 829 F.3d 405 (5th Cir. 2016).

    Regarding the requirement of 40 CFR 51.308(e)(2)(i)(D), our analysis is that the Texas trading program will effectively limit the aggregate annual SO2 emissions of the covered EGUs to be no higher than the sum of their allowances. The Texas SO2 Trading Program is an intrastate cap-and-trade program for listed covered sources in the State of Texas modeled after the EPA's CSAPR SO2 Group 2 Trading Program. Authorizations to emit SO2, known as allowances, are allocated to affected units. As discussed elsewhere, the program includes a Supplemental Allowance Pool with additional allowances that may be allocated to subject units and sources to provide compliance assistance. The average total annual allowance allocation for all covered sources is 238,393 tons, with and an additional 10,000 tons allocated to the Supplemental Allowance pool. In addition, while the Supplemental Allowance pool may grow over time as unused supplemental allowances remain available and allocations from retired units are placed in the supplemental pool, the total number of allowances that can be allocated to sources in a control period from the supplemental pool is limited to a maximum 54,711 tons plus the amount of any allowances placed in the pool that year from retired units and corrections. Therefore, annual average emissions for the covered sources will be less than or equal to 248,393 tons, and although there will be some with year- to- year variability, that variability will be constrained by the number of banked allowances and number of allowances that can be allocated in a control period from the supplemental pool. The projected SO2 emission reduction that will be achieved by the program, relative to any selected historical baseline year, is therefore the difference between the aggregate historical baseline emissions of the covered units and the average total annual allocation. For example, the aggregate 2014 SO2 emissions of the covered EGUs were 309,296 tons per year, while the average total annual allocation for the covered EGUs is 248,393 tons/year.82 Therefore, compared to 2014 emissions, the Texas trading program is projected to achieve an average reduction of approximately 60,903 tons per year.83 We note that the trading program allows additional sources to opt-in to the program. Should sources choose to opt-in in the future, the average total annual allocation could increase, up to a maximum of 289,740 tons. For comparison, the aggregate 2014 SO2 emissions of the covered EGUs including all potential opt-ins were 343,425 tons per year. Therefore, compared to 2014 emissions, the Texas trading program including all potential opt-ins is projected to achieve an average reduction of approximately 53,685 tons per year.

    82 Texas sources were subject to the CSAPR SO2 trading program in 2015 and 2016 but are no longer subject to that program. We therefore select 2014 as the appropriate most recent year for this comparison.

    83 We note that for other types of alternative programs that might be adopted under 40 CFR 51.308(e)(2), the analysis of achievable emission reductions could be more complicated. For example, a program that involved economic incentives instead of allowances or that involved interstate allowance trading would present a more complex situation in which achievable emission reductions could not be calculated simply be comparing aggregate baseline emissions to aggregate allowances.

    Regarding the requirement of 40 CFR 51.308(e)(2)(i)(E), the BART alternative EPA is proposing to affirm here is supported by our determination that, the clear weight of the evidence is that in the context of the operation of the CSAPR ozone-season NOX trading program and the operation of CSAPR annual NOX and SO2 trading programs, the Texas trading program achieves greater reasonable progress than would be achieved through the installation and operation of BART at the covered sources.84 The 2012 demonstration showed that CSAPR as finalized and amended in 2011 and 2012 meets the Regional Haze Rule's criteria for a demonstration of greater reasonable progress than BART. This 2012 demonstration is the primary evidence that the Texas trading program achieves greater reasonable progress than BART. However, the states participating in CSAPR are now slightly different than the geographic scope of CSAPR assumed in the 2012 analytic demonstration. In September 2017, we determined that the changes resulting from EPA's responses to the D.C. Circuit's remand in EME Homer City II to the emissions budgets and emissions distributions in states participating in CSAPR trading programs had no adverse impact on the 2012 determination that CSAPR participation remains better-than-BART.85 Regarding SO2 emissions from Texas, as detailed below, the BART alternative is projected to accomplish emission levels from Texas EGUs that are similar to the emission levels from Texas EGUs that would have been realized from participation in the SO2 trading program under CSAPR. The changes to the geographic scope of the NOX CSAPR programs combined with the expectation that the Texas trading program will reduce the SO2 emissions of EGUs in Texas to levels similar to CSAPR-participation levels, despite slight differences in EGU participation between the two SO2 programs, lead to the proposed finding here that, in the context of the operation of the CSAPR ozone-season NOX trading program and the operation of CSAPR annual NOX and SO2 trading programs, the Texas BART alternative program is better-than-BART.

    84 EPA's determination that Texas' participation in CSAPR for ozone-season NOX satisfies NOX BART for EGUs is final and we are not reopening that determination here.

    85 82 FR 45481 (Sept. 29, 2017).

    The differences in Texas EGU participation in CSAPR and this BART alternative are either not significant or, in some cases, work to demonstrate the relative stringency of the BART alternative as compared to CSAPR. If Texas EGUs were still required to participate in CSAPR's SO2 trading program, a determination that CSAPR is an acceptable BART alternative for Texas EGUs would be plainly consistent with EPA's previous findings and regulations. The Texas trading program will result in average annual emissions from the covered EGUs and other EGUs in Texas that are no higher than if Texas EGUs were still required to participate in CSAPR's SO2 trading program, and thus the clear weight of evidence is that, overall, the Texas trading program in conjunction with CSAPR will provide more reasonable progress than BART. We have considered the question of whether, in applying this portion of the Regional Haze Rule, we should take as the baseline the application of source-specific BART at the covered sources. We are proposing to interpret the rule to not require that approach in this situation, given that 51.308(e)(2)(i)C) provides for an exception (which we are exercising) to the requirement for source-specific BART determinations for the covered sources. As discussed previously, we are not making any source-specific BART determinations in this action, nor did Texas do so in its 2009 Regional Haze SIP submission.

    Table 6 identifies the participating units and their proposed unit-level allocations under the Texas SO2 trading program. These allocations are the same as under CSAPR.

    Table 6—Allocations for Texas EGUs Subject to the FIP SO2 Trading Program Owner/operator Units Allocations (tpy) AEP Welsh Power Plant Unit 1 6,496 Welsh Power Plant Unit 2 7,050 Welsh Power Plant Unit 3 7,208 H W Pirkey Power Plant Unit 1 8,882 Wilkes Unit 1 14 Wilkes Unit 2 2 Wilkes Unit 3 3 CPS Energy JT Deely Unit 1 6,170 JT Deely Unit 2 6,082 Sommers Unit 1 55 Sommers Unit 2 7 Dynegy/Vistra Coleto Creek Unit 1 9,057 El Paso Electric Newman Unit 2 1 Newman Unit 3 1 Newman Unit 4 2 LCRA Fayette/Sam Seymour Unit 1 7,979 Fayette/Sam Seymour Unit 2 8,019 Luminant/Vistra Big Brown Unit 1 8,473 Big Brown Unit 2 8,559 Martin Lake Unit 1 12,024 Martin Lake Unit 2 11,580 Martin Lake Unit 3 12,236 Monticello Unit 1 8,598 Monticello Unit 2 8,795 Monticello Unit 3 12,216 Sandow Unit 4 8,370 Stryker ST2 145 Graham Unit 2 226 NRG Limestone Unit 1 12,081 Limestone Unit 2 12,293 WA Parish Unit WAP4 3 WA Parish Unit WAP5 9,580 WA Parish Unit WAP6 8,900 WA Parish Unit WAP7 7,653 Xcel Tolk Station Unit 171B 6,900 Tolk Station Unit 172B 7,062 Harrington Unit 061B 5,361 Harrington Unit 062B 5,255 Harrington Unit 063B 5,055 Total 238,393

    The total annual allocation for all sources in the Texas SO2 trading program is 238,393 tons. In addition, a Supplemental Allowance pool initially holds an additional 10,000 tons for a maximum total annual allocation of 248,393 tons. The Administrator may allocate a limited number of additional allowances from this pool to sources whose emissions exceed their annual allocation, pursuant to the provisions in the FIP. 86 Under CSAPR, the total allocations for all existing EGUs in Texas is 279,740 tons, for a total of 294,471 tons including the state new-unit set aside of 14,430 tons and the Indian country new-unit set aside.87 As shown in Table 7, the coverage of the Texas SO2 trading program represents 81% of the total CSAPR allocation for Texas and 85% of the CSAPR allocations for existing units. The Supplemental Allowance pool contains an additional 10,000 tons, compared to the new unit set aside (NUSA) allowance allocation under CSAPR of 14,430 tons. Examining 2016 emissions, the EGUs covered by the program represent 89% of total Texas EGU emissions.

    86See 40 CFR 97.912.

    87 An Indian Country new unit set-aside is established for each state under the CSAPR that provides allowances for future new units locating in Indian Country. The Indian Country new unit set-aside for Texas is 294 tons. See 40 CFR 97.710.

    Table 7—Comparison of Texas SO2 Trading Program Allocations to Previously Applicable CSAPR Allocations and to 2016 Emissions Annual allocations in the Texas trading program
  • (tons per year)
  • % of total
  • previously
  • applicable CSAPR
  • allocations
  • (294,471 tons per year)
  • 2016 Emissions
  • (tons per year)
  • 2017 Emissions
  • (tons per year)
  • Texas SO2 Trading program sources 238,393 81 218,291 245,870 Total EGU emissions 245,737 275,965 Supplemental Allowance pool 10,000 3.4 Existing Sources not covered by trading program No allocation 16 27,446 30,096

    The remaining 11% of the total 2016 or 2017 emissions due to sources not covered by the program come from coal-fired units that on average are better controlled for SO2 than the covered sources (26,795 tons in 2016; 29,514 tons in 2017) and gas units that rarely burn fuel oil (651 tons in 2016; 582 tons in 2017). The table below lists these coal-fired units. We note that Sandow 5A and 5B were shut down in early 2018.88 The aggregate annual emission rate in 2016 and 2017 was 0.50 lb/MMBTU for the coal-fired units participating in the trading program compared to 0.12 lb/MMBTU for the coal-fired units not covered by the program.89 Therefore, we expect that in general, based on the current emission rates of the EGUs, should a portion of electricity generation shift to units not covered by the program, the net result would be a decrease in overall SO2 emissions, as these non-participating units are on average much better controlled and emit far less SO2 per unit of energy produced.

    88 See letter dated February 14, 2018 from Kim Mireles of Luminant to the TCEQ requesting to cancel certain air permits and registrations for Sandow 5 Units 5A and 5B available in the docket for this action.

    89 See “Texas EGUs 2016 and 2017 annual emissions.xlsx” available in the docket for this action.

    Table 8—Coal-Fired EGUs Not Covered by the Texas SO2 Trading Program Previously
  • applicable CSAPR
  • allocation
  • (tons)
  • 2016
  • Emissions
  • (tons)
  • 2016 Annual
  • average
  • emission rate
  • (lb/MMBtu)
  • Fayette/Sam Seymour Unit 3 2,955 231 0.01 Gibbons Creek Unit 1 6,314 138 0.02 JK Spruce Unit 1 4,133 467 0.03 JK Spruce Unit 2 158 151 0.01 Oak Grove Unit 1 1,665 3,334 0.11 Oak Grove Unit 2 * N/A 3,727 0.12 Oklaunion Unit 1 4,386 1,530 0.11 San Miguel Unit 1 6,271 6,815 0.44 Sandow Station Unit 5A 773 1,117 0.11 Sandow Station Unit 5B 725 1,146 0.10 Sandy Creek Unit 1 * N/A 1,842 0.09 Twin Oaks Unit 1 2,326 1,712 0.21 Twin Oaks Unit 2 2,270 1,475 0.23 WA Parish Unit WAP8 4,071 3,112 0.16 Total 36,047 26,795 * Oak Grove Unit 2 and Sandy Creek Unit 1 received allocations from the new unit set aside under the CSAPR program.

    The exclusion of a large number of gas-fired units that rarely burn fuel oil further limits allowances in the program as compared to CSAPR because CSAPR allocated these units allowances that are higher than their recent and current emissions. In 2016, these units emitted 651 tons of SO2, but received allowances for over 5,000 tons. By excluding these sources from the program, those unused allowances are not available for purchase by other EGUs. We note the trading program does allow non-participating sources that previously had CSAPR allocations to opt-in to the trading program and receive allocations equivalent to their CSAPR allocation. Should some sources choose to opt-in to the program, the total number of allowances will increase by the collective amount of the allowances they receive. This will serve to increase the percentage of CSAPR allowances represented by the Texas SO2 trading program and increase the portion of emissions covered by the program, with the result that the Texas program will more closely resemble the CSAPR program as it would have applied to Texas.

    Finally, the Texas SO2 trading program does not allow EGUs to purchase allowances from sources in other states. Under CSAPR, Texas EGUs were allowed to purchase allowances from other Group 2 states, a fact which could, and was projected in CSAPR modeling to, result in an increase in annual allowances used in the State above its budget. CSAPR also included a variability limit that was set at 18% of the State budget and an assurance level equal to the State's budget plus the variability limit. The assurance level for Texas was set at 347,476 tons. The CSAPR assurance provisions are triggered if the State's emissions for a year exceed the assurance level. These assurance provisions require some sources to surrender two additional allowances per ton beyond the amount equal to their actual emissions, depending on their emissions and annual allocation level. In effect, under CSAPR, EGUs in Texas could have emitted above the allocation if willing to pay the market price of allowances, and the cost associated with each incremental ton of emissions could triple if in the aggregate they exceeded the assurance level.

    The Texas trading program, by contrast, will have 248,393 tons of allowances allocated every year, with no ability to purchase additional allowances from sources outside of the State, preventing an increase beyond that annual allocation.90 This includes an annual allocation of 10,000 allowances to the Supplemental Allowance pool. The Supplemental Allowance pool may grow over time as unused supplemental allowances remain available and allocations from retired units are placed in the supplemental pool, but the total number of allowances that can be allocated in a control period from in this supplemental pool is limited to a maximum 54,711 tons plus the amount of any allowances placed in the pool that year from retired units and corrections. The 54,711-ton value is equal to 10,000 tons annually allocated to the pool plus 18% of the total annual allocation for participating units, mirroring the variability limit from CSAPR. The total number of allowances that can be allocated in a single year is therefore 293,104, which is the sum of the 238,393 budget for existing units plus 54,711. Annual average emissions for the covered sources will be less than or equal to 248,393 tons with some year to year variability constrained by the number of banked allowances and allowances available to be allocated during a control period from the Supplemental Allowance pool. If additional units opt into the program, additional allowances will be available corresponding to the amounts that those units would have been allocated under CSAPR. The projected SO2 emissions from the affected Texas EGUs in the CSAPR + BART-elsewhere scenario were 266,600 tons per year. In a 2012 sensitivity analysis memo, EPA conducted a sensitivity analysis that confirmed that CSAPR would remain better-than-BART if Texas EGU emissions increased to approximately 317,100 tons.91 Under the Texas SO2 trading program, annual average EGU emissions are anticipated to remain well below 317,100 tons per year as annual allocations for participating units are held at 248,393 tons per year. Sources not covered by the program emitted less than 27,500 tons of SO2 in 2016 and are not projected to significantly increase from this level. Any new units would be required to be well controlled and, similar to the existing units not covered by the program, they would not significantly increase total emissions of SO2. Furthermore, as discussed above, any load shifting to these new non-participating units would be projected to result in a net decrease in emissions per unit of electricity generated and at most a small increase in total SO2 emissions compared to them not having been brought into operation. We note that total emissions of SO2 from all EGU sources in Texas in 2016 were 245,737 tons.

    90 We note the trading program does allow non-participating sources that previously had CSAPR allocations to opt-in to the trading program and receive an allocation equivalent to the CSAPR level allocation. Should some sources choose to opt-in to the program, the total number of allowances will increase by that amount.

    91 For the projected annual SO2 emissions from Texas EGUs, see 2011 CSAPR/BART Technical Support Document, at Table 2-4, available in the docket for this action. Certain CSAPR budgets were increased after promulgation of the CSAPR final rule (and the increases were addressed in the 2012 CSAPR/BART sensitivity analysis memo), See memo titled “Sensitivity Analysis Accounting for Increases in Texas and Georgia Transport Rule State Emissions Budgets,” Docket ID No. EPA-HQ-OAR-2011-0729-0323 (May 29, 2012), available in the docket for this action. The increase in the Texas SO2 budget was 50,517 tons which, when added to the Texas SO2 emissions projected in the CSAPR + BART-elsewhere scenario of 266,600 tons, yields total potential SO2 emissions from Texas EGUs of approximately 317,100 tons.

    We also note that state-wide EGU SO2 emissions in Texas have decreased considerably since the 2002 baseline period, reflecting market changes and reductions due to requirements such as CAIR/CSAPR. In 2002, Texas EGU emissions were 560,860 tons of SO2 compared to emissions of 245,737 tons in 2016, a reduction of over 56%. The Texas SO2 trading program locks in the large majority of these reductions by limiting allocation of allowances to 248,393 tons per year for participating sources. While the Texas program does not include all EGU sources in the State, as discussed above, the EGUs outside of the program contribute relatively little to the total state emissions and these units on average are better controlled for SO2 than the units subject to the Texas program.

    In sum, we propose to affirm and request comment on the determination that the Texas Trading Program will result in SO2 emissions from Texas EGUs similar to emissions anticipated under CSAPR and thus that the weight of evidence supports the conclusion that the SO2 Trading Program meets the requirements of a BART alternative. The differences in source coverage are either not significant, or, in some cases, work to demonstrate the relative stringency of the Program compared to CSAPR.

    C. Specific Texas SO2 Trading Program Features

    The Texas SO2 Trading Program is an intrastate cap-and-trade program for listed covered sources in the State of Texas. The EPA is proposing to affirm our promulgation of the Texas SO2 Trading Program under 40 CFR 52.2312 and subpart FFFFF of part 97. The State of Texas may choose to remain under the Texas SO2 Trading Program in our FIP or replace it with an appropriate SIP if it chooses to develop and submit one to EPA and EPA is able to approve it. If the State of Texas is interested in pursuing delegation of the Texas SO2 Trading Program, the request would need to provide a demonstration of the State's statutory authority to implement any delegated elements.

    The Texas SO2 Trading Program is modeled after the EPA's CSAPR SO2 Group 2 Trading Program, and we are proposing to affirm that the Program satisfies the requirements of 51.308(e)(2)(vi). Similar to the CSAPR SO2 Group 2 Trading Program, the Texas SO2 Trading Program sets an SO2 emission budget for affected units and sources in the State of Texas. Authorizations to emit SO2, known as allowances, are allocated to affected units. The Texas SO2 Trading Program provides flexibility to affected units and sources by allowing units and sources to determine their own compliance path; this includes adding or operating control technologies, upgrading or improving controls, switching fuels, and using allowances. Sources can buy and sell allowances and bank (save) allowances for future use as so long as each source holds enough allowances to account for its emissions of SO2 by the allowance transfer deadline shortly after the end of the compliance period.

    Pursuant to the requirements of 51.308(e)(2)(vi)(A), the applicability of the Texas SO2 Trading Program is defined in 40 CFR 97.904. Section 97.904(a) identifies the subject units, which include all BART-eligible coal-fired EGUs, additional coal-fired EGUs, and several BART-eligible gas-fired and gas/fuel oil-fired EGUs, all of which were previously covered by the CSAPR SO2 Group 2 Trading Program. Additionally, pursuant to 40 CFR 97.904(b), the Trading Program provides an opportunity for any other unit in the State of Texas that was subject to the CSAPR SO2 Group 2 Trading Program to opt-in to the Texas SO2 Trading Program. We discuss in Section IV.B how the applicability results in coverage of the Texas SO2 trading program representing 81% of the total CSAPR allocation for Texas and 85% of the CSAPR allocations for existing units, and how potential shifts in generation would result in a reduction of emissions or, at worst, an insignificant increase in emissions. The Texas SO2 Trading Program establishes the statewide SO2 budget for the subject units at 40 CFR 97.910(a). This budget is equal to the sum of the allowances for each subject unit identified under 97.904(a) and 97.911(a). As units opt-in to the Texas SO2 Trading under 97.904(b), the allowances for each of these units will equal their CSAPR SO2 Group 2 allowances under 97.911(b). We specifically solicit comment on retention or elimination of the provision that provides opportunity for certain units to opt-in to the Texas SO2 trading Program.

    Additionally, the EPA has established a Supplemental Allowance Pool with a budget of 10,000 tons of SO2 to provide compliance assistance to subject units and sources. Section 40 CFR 97.912 establishes how allowances are allocated from the Supplemental Allowance Pool to sources (collections of participating units at a facility) that have reported total emissions for that control period exceeding the total amounts of allowances allocated to the participating units at the source for that control period (before any allocation from the Supplemental Allowance Pool). For any control period, the maximum supplemental allocation from the Supplemental Allowance Pool that a source may receive is the amount by which the total emissions reported for its participating units exceed the total allocations to its participating units (before any allocation from the Supplemental Allowance Pool). If the total amount of allowances available for allocation from the Supplemental Allowance Pool for a control period is less than the sum of these maximum allocations, sources will receive less than the maximum supplemental allocation from the Supplemental Allowance Pool, where the amount of supplemental allocations for each source is determined in proportion to the source's respective maximum allocations, with one exception. While all other sources required to participate in the trading program have flexibility to transfer allowances among multiple participating units under the same owner/operator when planning operations, Coleto Creek consists of only one coal-fired unit and, as of the issuance of the October 2017 final action, was the only coal-fired unit in Texas owned and operated by Dynegy. It was conceivable that insufficient incentives would exist to compel Dynegy's competitors in the electric market to make their additional allowances available for purchase by Dynegy. To provide this source additional flexibility, Coleto Creek will be allocated its maximum supplemental allocation from the Supplemental Allowance Pool as long as there are sufficient allowances in the Supplemental Allowance Pool available for this allocation, and its actual allocation will not be reduced in proportion with any reductions made to the supplemental allocations to other sources. We note that Dynegy and Vistra—which owns other units that are subject to the trading program, some of which have ceased operation and thus will not need to use their allowances—have recently merged, and we specifically solicit comment on whether we should retain or eliminate this additional flexibility for Coleto Creek in light of this recent change in ownership.92

    92https://www.vistraenergy.com/vistra-dynegy-merger/.

    Section 97.921 establishes how the Administrator will record the allowances for the Texas SO2 Trading Program and ensures that the Administrator will not record more allowances than are available under the program consistent with 40 CFR 51.308(e)(2)(vi)(B). The monitoring, recordkeeping, and reporting provisions for the Texas SO2 Trading Program at 40 CFR 97.930-97.935 are consistent with those requirements in the CSAPR SO2 Group 2 Trading Program. The provisions in 40 CFR 97.930-97.935 require the subject units to comply with the monitoring, recordkeeping, and reporting requirements for SO2 emissions in 40 CFR part 75; thereby satisfying the requirements of 51.308(e)(2)(vi)(C)-(E). The EPA will implement the Texas SO2 Trading Program using the Allowance Management System, which will provide a consistent approach to implementation and tracking of allowances and emissions for the EPA, subject sources, and the public consistent with the requirements of 40 CFR 51.308(e)(2)(vi)(F). The requirements at 40 CFR 97.913-97.918 for designated and alternate designated representatives are consistent with the requirements of 40 CFR 51.308(e)(2)(vi)(G) and are also consistent with the EPA's other trading programs under 40 CFR part 97. Allowance transfer provisions for the Texas SO2 Trading Program at 40 CFR 97.922 and 97.923 provide procedures that allow timely transfer and recording of allowances; these provisions will minimize administrative barriers to the operation of the allowance market and ensure that such procedures apply uniformly to all sources and other potential participants in the allowance market, consistent with 40 CFR 51.308(e)(2)(vi)(H). Compliance provisions for the Texas SO2 Trading Program at 40 CFR 97.924 prohibit a source from emitting a total tonnage of SO2 that exceeds the tonnage value of its SO2 allowance holdings as required by 40 CFR 51.308(e)(2)(vi)(I). The Texas SO2 Trading Program includes automatic allowance surrender provisions at 40 CFR 97.924(d) that apply consistently from source to source and the tonnage value of the allowances deducted shall equal at least three times the tonnage of the excess emissions, consistent with the penalty provisions at 40 CFR 51.308(e)(2)(vi)(J). The Texas SO2 Trading Program provides for banking of allowances under 40 CFR 97.926; Texas SO2 Trading Program allowances are valid for compliance in the control period of issuance or may be banked for future use, consistent with 40 CFR 51.308(e)(2)(vi)(K). 40 CFR 51.308(e)(2)(vi)(L) requires periodic program evaluation to assess whether the program is accomplishing its goals and whether modifications to the program are needed to enhance performance of the program. The CAA and EPA's implementing regulations require comprehensive periodic revisions of implementation plans for regional haze under 40 CFR 51.308(f) and periodic review of the state's regional haze approach under 40 CFR 51.308(g) to evaluate progress towards the reasonable progress goals for Class I areas located within the State and Class I areas located outside the State affected by emissions from within the State. Because the Texas SO2 Trading Program is a BART-alternative and part of the long-term strategy for Texas' Regional Haze obligations, this program will be reviewed in each comprehensive periodic revision and progress report. We anticipate these revisions and progress reports will provide the information needed to assess program performance, as required by 40 CFR 51.308(e)(2)(vi)(L). In sum, the EPA is proposing to affirm our determination that the promulgation of the Texas SO2 Trading Program meets the requirements of 40 CFR 51.308(e)(2) as a BART alternative for Texas' Regional Haze obligations.

    As previously discussed, the EPA modeled the Texas SO2 Trading Program after the EPA's CSAPR SO2 Group 2 Trading Program. Relying on a trading program structure that is already in effect enables the EPA, the subject sources, and the public to benefit from the use of the Allowance Management System's forms, and of familiar and tested monitoring, recordkeeping, and reporting requirements. However, there are a few features of the Texas SO2 Trading Program that are separate and unique from the EPA's CSAPR. First, the program does not address new units that are built after the inception of the program; these units would be permitted and constructed using emission control technology determined under either BACT or LAER review, as applicable, and would emit at emission rates much lower than the average emission rate of those units participating in the program. Second, the Texas SO2 Trading Program provides that Texas sources that were previously covered under the CSAPR SO2 Group 2 Trading Program, but that are not subject to the requirements of subpart FFFFF of part 97, can opt-in to the Texas SO2 Trading Program at the allocation level established under CSAPR. Finally, the Texas SO2 Trading Program includes a Supplemental Allowance Pool to provide some compliance assistance to units whose emissions exceed their allocations. The amount of allocations to the Supplemental Allowance Pool each year is less than the portion of the Texas budget under the CSAPR SO2 Group 2 Trading Program that would have been set aside each year for new units (and which would have been allocated to existing units to the extent not needed by new units).

    D. Recent Retirements

    Vistra permanently retired Big Brown,93 Monticello,94 and Sandow 95 this year. This is new information that arose after we issued our October 2017 FIP. There are now a significant amount of allowances that would be allocated to retired units. We also note that Welsh Unit 2 shut down in 2016 96 and the JT Deely units have been announced for retirement at the end of 2018. After all these recent and planned shutdowns, 74,313 tons of allowances would be allocated to retired units. In 2017, these units emitted 105,844 tons of SO2. We specifically solicit comment on how these shutdowns should impact the provision at 40 CFR 97.911(a)(2) regarding allocations to retired units for a period of five years, including comment on the alternative proposal described below.

    93 See letter dated March 27, 2018 from Kim Mireles of Luminant to the TCEQ requesting to cancel certain air permits and registrations for Big Brown available in the docket for this action.

    94 See letter dated February 8, 2018 from Kim Mireles of Luminant to the TCEQ requesting to cancel certain air permits and registrations for Monticello available in the docket for this action.

    95 See letter dated February 14, 2018 from Kim Mireles of Luminant to the TCEQ requesting to cancel certain air permits and registrations for Sandow 5 Units 5A and 5B available in the docket for this action.

    96 Welsh Unit 2 was retired on April 16, 2016 pursuant to a Consent Decree (No. 4:10-cv-04017-RGK) and subsequently removed from the Title V permit (permit no. O26). We have included the Consent Decree, permitting notes, and new Title V permit showing that the Unit is removed in the docket for this action.

    In light of these shutdowns, we solicit comment on a different approach to calculating the total number of allowances that can be allocated in a control period from the supplemental allowance pool. The 54,711-ton value discussed above is equal to 10,000 tons annually allocated to the pool plus 18% of the total annual allocation for participating units, mirroring the variability limit from CSAPR (40 CFR 97.912(b)). In this alternative approach, the total limit would be 41,335 tons, calculated as 10,000 tons annually allocated to the pool plus 18% of the total annual allocation for participating units minus the annual allocation for the participating units that have been permanently retired as of January 1, 2019. The total number of allowances that can be allocated in a single year would therefore be not 293,104, but rather 279,728, which is the sum of the 238,393 budget for existing units plus 41,335.97 Annual average emissions for the covered sources will be less than or equal to 248,393 tons, and although there will be with some year-to-year variability, that variability will be constrained by the number of banked allowances and allowances available to be allocated during a control period from the Supplemental Allowance pool.

    97 See “Texas EGUs 2016 and 2017 annual emissions.xlsx,” available in the docket for this action.

    E. Interstate Visibility Transport

    In our October 2017 final action, we determined that the BART alternatives to address SO2 and NOX BART at Texas' EGUs provided measures that are adequate to ensure that emissions from the State do not interfere with measures to protect visibility in nearby states, and thus the October 2017 final action satisfies the interstate visibility transport requirements. An EPA guidance document (2013 Guidance) on infrastructure SIP elements states that CAA section 110(a)(2)(D)(i)(II)'s interstate visibility transport requirements can be satisfied by approved SIP provisions that the EPA has found to adequately address a state's contribution to visibility impairment in other states.98 The EPA interprets interstate visibility transport to be pollutant-specific, such that the infrastructure SIP submission need only address the potential for interference with protection of visibility caused by the pollutant (including precursors) to which the new or revised NAAQS applies.99 The 2013 Guidance lays out two ways in which a state's infrastructure SIP submittal may satisfy interstate visibility transport. One way is through a state's confirmation in its infrastructure SIP submittal that it has an EPA approved regional haze SIP in place. In the absence of a fully approved regional haze SIP, a demonstration that emissions within a state's jurisdiction do not interfere with other states' plans to protect visibility meets this requirement. Such a demonstration should point to measures that limit visibility-impairing pollutants and ensure that the resulting reductions conform with any mutually agreed emission reductions under the relevant regional haze regional planning organization (RPO) process.100

    98See “Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and (2)” included in the docket for this action.

    99 See id. at 33.

    100See id., at 34; 76 FR 22036 (April 20, 2011) (containing EPA's approval of the visibility requirement of 110(a)(2)(D)(i)(II) based on a demonstration by Colorado that did not rely on the Colorado Regional Haze SIP).

    To develop its 2009 Regional Haze SIP, TCEQ worked through its RPO, the Central Regional Air Planning Association (CENRAP), to develop strategies to address regional haze, which at that time were based on emissions reductions from CAIR. To help states in establishing reasonable progress goals for improving visibility in Class I areas, the CENRAP modeled future visibility conditions based on the mutually agreed emissions reductions from each state. The CENRAP states then relied on this modeling in setting their respective reasonable progress goals.

    We are proposing to affirm our determination that the October 2017 final action is adequate to ensure that emissions from Texas do not interfere with measures to protect visibility in nearby states because the BART FIP emission reductions are consistent with the level of emission reductions relied upon by other states during consultation. The 2009 Texas Regional Haze SIP relied on CAIR to meet SO2 and NOX BART requirements for EGUs. Under CAIR, Texas EGU sources were projected to emit approximately 350,000 tpy of SO2. As discussed elsewhere, Texas EGU SO2 emissions for sources covered by the trading program will be constrained by the number of available allowances. Average annual emissions for the covered sources will be less than or equal to 248,393 tons with some year to year variability constrained by the number of banked allowances and number of allowances that can be allocated in a control period from the supplemental pool. Sources not covered by the program emitted less than 27,500 tons of SO2 in 2016 and are not projected to significantly increase from this level. Any new units would be required to be well controlled and similar to the existing units not covered by the program, they would not significantly increase total emissions of SO2. Additionally, the FIP relies on CSAPR as an alternative to EGU BART for NOX, which exceeds the emission reductions relied upon by other states during consultation. As such, we are proposing to affirm that the BART alternatives in the October 2017 final action are sufficient to address the interstate visibility transport requirement under CAA section 110(a)(2)(D)(i)(II) for the six NAAQS, and request comment on this determination.

    V. Proposed Action A. Regional Haze

    We are proposing to affirm our approval of the portion of the Texas Regional Haze SIP that addresses the BART requirement for EGUs for PM. To address the SO2 BART requirements for EGUs, we are proposing to affirm our FIP to replace Texas' reliance on CAIR with reliance on an intrastate SO2 trading program for certain EGUs identified in Table 9. This proposed action would also be part of the long-term strategy to address the reasonable progress requirements for Texas EGUs, which remain outstanding after the remand of our reasonable progress FIP by the Fifth Circuit Court of Appeals.

    In this proposed action we are also specifically soliciting comment on whether we should retain or eliminate the additional flexibility for Coleto Creek in Section 40 CFR 97.912 that establishes how allowances are allocated from the Supplemental Allowance Pool to this source in light of this recent change in ownership after the merger of Dynegy and Vistra. In light of recent and planned shutdowns, we specifically solicit comment on how these shutdowns should impact the provision at 40 CFR 97.911(a)(2) regarding allocations to retired units for a period of five years. We also solicit comment on a different approach to calculating the total number of allowances that can be allocated in a control period from the supplemental allowance pool pursuant to 40 CFR 97.912(b). In addition, we are specifically soliciting comment on retention or elimination of the provision under 40 CFR 97.904(b) that provides opportunity for certain units to opt-in to the Texas SO2 trading Program.

    Table 9—Texas EGUs Subject to the FIP SO2 Trading Program Owner/
  • operator
  • Units
    AEP Welsh Power Plant Units 1, 2, and 3. H W Pirkey Power Plant Unit 1. Wilkes Units 1*, 2*, and 3*. CPS Energy JT Deely Units 1 and 2, Sommers Units 1* and 2*. Dynegy Coleto Creek Unit 1. LCRA Fayette/Sam Seymour Units 1 and 2. Luminant/Vistra Big Brown Units 1 and 2. Martin Lake Units 1, 2, and 3. Monticello Units 1, 2, and 3. Sandow Unit 4. Stryker ST2*. Graham Unit 2*. NRG Limestone Units 1 and 2. WA Parish Units WAP4*, WAP5, WAP6, WAP7. Xcel Tolk Station Units 171B and 172B. Harrington Units 061B, 062B, and 063B. El Paso Electric Newman Units 2*, 3*, and 4*. * Gas-fired or gas/fuel oil-fired units.
    B. Interstate Visibility Transport

    In our October 2017 final action, we determined that the BART alternatives to address SO2 and NOX BART at Texas' EGUs were adequate to satisfy the interstate visibility transport requirements for these NAAQS: (1) 1997 8-hour ozone; (2) 1997 PM2.5 (annual and 24-hour); (3) 2006 PM2.5 (24-hour); (4) 2008 8-hour ozone; (5) 2010 1-hour NO2; and (6) 2010 1-hour SO2. The emission reductions from Texas sources associated with these BART alternatives are consistent with the level of emission reductions relied upon by other states when setting their reasonable progress goals. Consistent with our decision in the October 2017 rulemaking, we are proposing to affirm that the measures in the FIP are therefore adequate to ensure that emissions from Texas do not interfere with measures to protect visibility in nearby states with respect to the NAAQS enumerated above in accordance with CAA section 110(a)(2)(D)(i)(II).

    VI. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Overview, Executive Order 13563: Improving Regulation and Regulatory Review

    This proposed action is not a “significant regulatory action” under the terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011).

    B. Executive Order 13771: Reducing Regulations and Controlling Regulatory Costs

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

    C. Paperwork Reduction Act

    This proposed action does not impose any new information collection burden under the PRA. The information collection activities in the October 2017 final rule promulgating the Texas SO2 Trading Program at 40 CFR part 97, subpart FFFFF are being submitted to the Office of Management and Budget (OMB) under the PRA as part of the current Information Collection Request (ICR) renewal for the CSAPR trading programs. OMB has previously approved the information collection activities for the CSAPR trading programs and has assigned OMB control number 2060-0667. The ICR document that the EPA prepared for the renewal has been assigned EPA ICR number 2391.05. You can find a copy of the ICR at https://www.regulations.gov under Docket ID Number EPA-HQ-OAR-2018-0209. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

    D. Regulatory Flexibility Act

    I certify that this proposed action will not have a significant impact on a substantial number of small entities. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden or otherwise has a positive economic effect on the small entities subject to the rule. This proposed rule does not impose any requirements or create impacts on small entities. This proposed FIP action under Section 110 of the CAA will not create any new requirement with which small entities must comply. Accordingly, it affords no opportunity for the EPA to fashion for small entities less burdensome compliance or reporting requirements or timetables or exemptions from all or part of the rule. The fact that the CAA prescribes that various consequences (e.g., emission limitations) may or will flow from this action does not mean that the EPA either can or must conduct a regulatory flexibility analysis for this action. We have therefore concluded that this proposed action will have no net regulatory burden for all directly regulated small entities.

    E. Unfunded Mandates Reform Act (UMRA)

    This proposed action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments.

    F. Executive Order 13132: Federalism

    This proposed action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

    G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

    This proposed rule does not have tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments. Thus, Executive Order 13175 does not apply to this rule.

    H. Executive Order 13045: Protection of Children from Environmental Health Risks and Safety Risks

    Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks 101 applies to any rule that: (1) Is determined to be economically significant as defined under Executive Order 12866; and (2) concerns an environmental health or safety risk that we have reason to believe may have a disproportionate effect on children. EPA interprets E.O. 13045 as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under Section 5-501 of the E.O. has the potential to influence the regulation. This proposed action is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and because the EPA does not believe the environmental health or safety risks addressed by this proposed action present a disproportionate risk to children. This proposed action is not subject to E.O. 13045 because it implements specific standards established by Congress in statutes. However, to the extent this proposed rule will limit emissions of SO2, the proposed rule will have a beneficial effect on children's health by reducing air pollution.

    101 62 FR 19885 (Apr. 23, 1997).

    I. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use

    This proposed action is not subject to Executive Order 13211 (66 FR 28355 (May 22, 2001)), because it is not a significant regulatory action under Executive Order 12866.

    J. National Technology Transfer and Advancement Act (NTTAA)

    This proposed action involves technical standards. The EPA has decided to use the applicable monitoring requirements of 40 CFR part 75. Part 75 already incorporates a number of voluntary consensus standards. Consistent with the Agency's Performance Based Measurement System (PBMS), part 75 sets forth performance criteria that allow the use of alternative methods to the ones set forth in part 75. The PBMS approach is intended to be more flexible and cost-effective for the regulated community; it is also intended to encourage innovation in analytical technology and improved data quality. At this time, EPA is not recommending any revisions to part 75; however, EPA periodically revises the test procedures set forth in part 75. When EPA revises the test procedures set forth in part 75 in the future, EPA will address the use of any new voluntary consensus standards that are equivalent. Currently, even if a test procedure is not set forth in part 75, EPA is not precluding the use of any method, whether it constitutes a voluntary consensus standard or not, as long as it meets the performance criteria specified; however, any alternative methods must be approved through the petition process under 40 CFR 75.66 before they are used.

    K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

    The EPA believes that this proposed action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). We have determined that this proposed rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it increases the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population. The proposed rule limits emissions of SO2 from certain facilities in Texas.

    List of Subjects 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur dioxides, Visibility, Interstate transport of pollution, Regional haze, Best available retrofit technology.

    40 CFR Part 97

    Environmental protection, Administrative practice and procedure, Air pollution control, Intergovernmental relations, Nitrogen dioxide, Reporting and recordkeeping requirements, Sulfur dioxides.

    Dated: August 17, 2018. Anne Idsal, Regional Administrator.
    [FR Doc. 2018-18497 Filed 8-24-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 721 [EPA-HQ-OPPT-2017-0560; FRL-9982-78] RIN 2070-AB27 Significant New Use Rules on Certain Chemical Substances AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    EPA is proposing significant new use rules (SNURs) under the Toxic Substances Control Act (TSCA) for 10 chemical substances which were the subject of premanufacture notices (PMNs). The chemical substances are subject to Orders issued by EPA pursuant to section 5(e) of TSCA. This action would require persons who intend to manufacture (defined by statute to include import) or process any of these 10 chemical substances for an activity that is designated as a significant new use by this rule to notify EPA at least 90 days before commencing that activity. The required notification initiates EPA's evaluation of the intended use within the applicable review period. Persons may not commence manufacture or processing for the significant new use until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination. In addition to this notice of proposed rulemaking, EPA is issuing the action as a direct final rule elsewhere in this issue of the Federal Register.

    DATES:

    Comments must be received on or before September 26, 2018.

    ADDRESSES:

    Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2017-0560, by one of the following methods:

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

    Mail: Document Control Office (7407M), Office of Pollution Prevention and Toxics (OPPT), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.

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

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

    FOR FURTHER INFORMATION CONTACT:

    For technical information contact: Kenneth Moss, Chemical Control Division (7405M), Office of Pollution Prevention and Toxics, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 564-9232; email address: [email protected]

    For general information contact: The TSCA-Hotline, ABVI-Goodwill, 422 South Clinton Ave., Rochester, NY 14620; telephone number: (202) 554-1404; email address: [email protected]

    SUPPLEMENTARY INFORMATION:

    In addition to this notice of proposed rulemaking, EPA is issuing the action as a direct final rule elsewhere in this issue of the Federal Register. For further information about the proposed significant new use rules, please see the information provided in the direct final action, with the same title, that is located in the “Rules and Regulations” section of this issue of the Federal Register.

    List of Subjects in 40 CFR Part 721

    Environmental protection, Chemicals, Hazardous substances, Reporting and recordkeeping requirements.

    Dated: August 20, 2018. Jeffery T. Morris, Director, Office of Pollution Prevention and Toxics.
    [FR Doc. 2018-18528 Filed 8-24-18; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 721 [EPA-HQ-OPPT-2017-0464; FRL-9982-25] RIN 2070-AB27 Significant New Use Rules on Certain Chemical Substances AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    EPA is proposing significant new use rules (SNURs) under the Toxic Substances Control Act (TSCA) for 19 chemical substances which were the subject of premanufacture notices (PMNs). The chemical substances are subject to Orders issued by EPA pursuant to section 5(e) of TSCA. This action would require persons who intend to manufacture (defined by statute to include import) or process any of these 19 chemical substances for an activity that is designated as a significant new use by these rules to notify EPA at least 90 days before commencing that activity. The required notification initiates EPA's evaluation of the intended use within the applicable review period. Persons may not commence manufacture or processing for the significant new use until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination. In addition to this Notice of Proposed Rulemaking, EPA is issuing the action as a direct final rule elsewhere in this issue of the Federal Register.

    DATES:

    Comments must be received on or before September 26, 2018.

    ADDRESSES:

    Submit your comments, identified by docket identification (ID) number EPA-HQ-OPPT-2017-0464, by one of the following methods:

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

    Mail: Document Control Office (7407M), Office of Pollution Prevention and Toxics (OPPT), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.

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

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

    For technical information contact: Kenneth Moss, Chemical Control Division (7405M), Office of Pollution Prevention and Toxics, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number: (202) 564-9232; email address: [email protected]

    For general information contact: The TSCA-Hotline, ABVI-Goodwill, 422 South Clinton Ave., Rochester, NY 14620; telephone number: (202) 554-1404; email address: [email protected]

    SUPPLEMENTARY INFORMATION:

    In addition to this Notice of Proposed Rulemaking, EPA is issuing the action as a direct final rule elsewhere in this issue of the Federal Register. For further information about the proposed significant new use rules, please see the information provided in the direct final action, with the same title, that is located in the “Rules and Regulations” section of this issue of the Federal Register.

    List of Subjects in 40 CFR Part 721

    Environmental protection, Chemicals, Hazardous substances, Reporting and recordkeeping requirements.

    Dated: August 17, 2018. Jeffery T. Morris, Director, Office of Pollution Prevention and Toxics.
    [FR Doc. 2018-18606 Filed 8-24-18; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Office of Inspector General 42 CFR Parts 1001 and 1003 RIN 0936-AA10 Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding the Anti-Kickback Statute and Beneficiary Inducements CMP AGENCY:

    Office of Inspector General (OIG), HHS.

    ACTION:

    Request for information.

    SUMMARY:

    This request for information seeks input from the public on how to address any regulatory provisions that may act as barriers to coordinated care or value-based care.

    DATES:

    Comment Date: To ensure consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on October 26, 2018.

    ADDRESSES:

    In commenting, refer to file code OIG-0803-N. Because of staff and resource limitations, we cannot accept comments by facsimile (fax) transmission. However, you may submit comments in one of three ways (no duplicates, please):

    1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the “Submit a comment” instructions.

    2. By regular, express, or overnight mail. You may send written comments to the following address: Susan Edwards, Office of Inspector General, Department of Health and Human Services, Attention: OIG-0803-N, Room 5513, Cohen Building, 330 Independence Avenue SW, Washington, DC 20201.

    Please allow sufficient time for mailed comments to be received before the close of the comment period.

    3. By hand or courier. If you prefer, you may deliver your written comments by hand or courier before the close of the comment period to: Susan Edwards, Office of Inspector General, Department of Health and Human Services, Attention: OIG-0803-N, Room 5513, Cohen Building, 330 Independence Avenue SW, Washington, DC 20201.

    Because access to the interior of the Cohen Building is not readily available to persons without Federal Government identification, commenters are encouraged to schedule their delivery with one of our staff members at (202) 619-0335.

    For information on viewing public comments, please see the SUPPLEMENTARY INFORMATION section.

    FOR FURTHER INFORMATION CONTACT:

    Susan Edwards, (202) 708-9845.

    SUPPLEMENTARY INFORMATION:

    Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to view public comments. Comments received in a timely manner will also be available for public inspection as they are received at the Office of Inspector General, Department of Health and Human Services, Cohen Building, 330 Independence Avenue SW, Washington, DC 20201, Monday through Friday, from 10 a.m. to 5 p.m. To schedule an appointment to view public comments, phone (202) 619-0335.

    I. Introduction

    The Department of Health and Human Services (HHS) is working to transform the health care system into one that better pays for value. Care coordination is a key aspect of systems that deliver value. Removing unnecessary government obstacles to care coordination is a key priority for HHS. To help accelerate the transformation to a value-based system that includes care coordination, HHS has launched a Regulatory Sprint to Coordinated Care, led by the Deputy Secretary. This “Regulatory Sprint” is focused on identifying regulatory provisions that may act as barriers to coordinated care, assessing whether those regulatory provisions are unnecessary obstacles to coordinated care, and issuing guidance or revising regulations to address such obstacles and, as appropriate, to encourage and incentivize coordinated care while protecting against harms caused by fraud and abuse.

    The Office of Inspector General (OIG) seeks to identify ways in which it might modify or add new safe harbors to the anti-kickback statute and exceptions to the beneficiary inducements civil monetary penalty (CMP) definition of “remuneration” in order to foster arrangements that would promote care coordination and advance the delivery of value-based care, while also protecting against harms caused by fraud and abuse. Through internal discussion and with the benefit of facts and information received from external stakeholders, OIG has identified the broad reach of the anti-kickback statute and beneficiary inducements CMP as a potential impediment to beneficial arrangements that would advance coordinated care. To inform our efforts, we welcome public comment on the safe harbors to the anti-kickback statute and the exceptions to the beneficiary inducements CMP definition of “remuneration” as they relate to the goals of the Regulatory Sprint outlined above. In particular, we welcome comments in response to the questions presented in this Request for Information (RFI).

    II. Background

    Section 1128B(b) of the Social Security Act (the Act), the Federal anti-kickback statute, provides criminal penalties for individuals or entities that knowingly and willfully offer, pay, solicit, or receive remuneration to induce or reward the referral of business reimbursable under Federal health care programs, as defined in section 1128B(f) of the Act. The law endeavors to protect patients and the Federal health care programs from fraud and abuse by curtailing the corrupting influence of remuneration on health care decisions; however, because the statute is broadly written, when it was enacted there was concern that some relatively innocuous and potentially beneficial arrangements were technically covered by the statute and therefore were subject to criminal prosecution.

    In response to this concern, Congress passed section 14 of the Medicare and Medicaid Patient and Program Protection Act of 1987, which required HHS to set forth “safe harbors” to the anti-kickback statute. Specifically, section 1128B(b)(3)(E) of the Act protects from the anti-kickback statute “any payment practice specified by the Secretary in regulations promulgated pursuant to section 14(a) of the Medicare and Medicaid Patient and Program Protection Act of 1987.” In giving HHS the authority to protect certain arrangements and payment practices under the anti-kickback statute, Congress intended the safe harbors to be evolving rules that would be updated periodically to reflect changing business practices and technologies in the health care industry.1

    1 H.R. Rep. No. 100-85, Pt. 2, at 27 (1987).

    Health care providers and others may voluntarily comply with safe harbors in an effort to ensure that their business practices will not be subject to criminal prosecution under the anti-kickback statute, the imposition of civil monetary penalties (CMPs) under section 1128A(a)(7) of the Act, program exclusion under section 1128(b)(7) of the Act, and liability under the False Claims Act (31 U.S.C. 3729-33). Since finalizing the first safe harbors in 1991, OIG has continued to engage the industry on the application of the Federal anti-kickback statute and development of safe harbors.

    Section 1128A(a)(5) of the Act, the beneficiary inducements CMP, provides for the imposition of CMPs against any person who offers or transfers remuneration to a Medicare or State health care program beneficiary that the benefactor knows or should know is likely to influence the beneficiary's selection of a particular provider, practitioner, or supplier of any item or service for which payment may be made, in whole or in part, by Medicare or a State health care program. In the same administrative proceedings in which it may seek to impose CMPs against a person, OIG may seek to exclude such person from the Federal health care programs. For purposes of section 1128A(a)(5) of the Act, the statute defines “remuneration” to include, without limitation, waivers of co-payments and deductible amounts (or any part thereof) and transfers of items or services for free or for other than fair market value.2 The statute and associated regulations contain a limited number of exceptions.3

    2See section 1128A(i)(6) of the Act.

    3See id.; 42 CFR 1003.110.

    OIG is mindful of the impact of delivery system and payment reform on Federal health care programs and the changing relationships between providers, suppliers, and other entities in delivering higher quality, better coordinated care; enhancing value; and improving the overall health of patients. We have received several suggestions for new safe harbors and proposed modifications to existing safe harbors that may promote care coordination and reduce regulatory impediments to value-based arrangements, including in response to our annual “Solicitation of New Safe Harbors and Special Fraud Alerts.” 4

    4See, e.g., Solicitation of New Safe Harbors and Special Fraud Alerts, 82 FR 61,229 (Dec. 27, 2017), available at https://www.thefederalregister.org/fdsys/pkg/FR-2017-12-27/pdf/2017-27117.pdf; OIG, Semiannual Report to Congress, April 1, 2017-September 30, 2017, available at https://oig.hhs.gov/reports-and-publications/archives/semiannual/2017/sar-fall-2017.pdf.

    We continue to consider how to balance additional flexibility for industry stakeholders to provide efficient, well-coordinated, patient-centered care with protections against the harms caused by fraud and abuse. We are requesting additional information in this RFI to help inform our efforts. We are particularly interested in thoughts on topics that include, but are not limited to: (i) The structure of arrangements between parties that participate in alternative payment models or other novel financial arrangements designed to promote care coordination and value; (ii) the need for new or revised safe harbors and exceptions to the definition of “remuneration” under the beneficiary inducements CMP to promote beneficial care coordination, patient engagement, and value-based arrangements; and (iii) terminology related to alternative payment models, value-based arrangements, and care coordination. We are interested in any special considerations for rural providers and others serving underserved populations, including American Indian and Alaska Native communities.

    Where relevant, we intend to review comments submitted in response to the Medicare Program; Request for Information Regarding the Physician Self-Referral Law, RIN 0938-AT64, issued by the Centers for Medicare & Medicaid Services (CMS).5 However, given the volume of questions included in that RFI and OIG's separate, and different, authorities, we urge individuals and entities to resubmit any relevant comments to this RFI to ensure they are considered by OIG. We look forward to receiving input in response to this RFI.

    5 Medicare Program; Request for Information Regarding the Physician Self-Referral Law, 83 FR 29,524 (June 25, 2018), available at https://www.thefederalregister.org/fdsys/pkg/FR-2018-06-25/pdf/2018-13529.pdf.

    III. Request for Information

    We welcome public input on any or all of the topics identified below. Respondents are not required to address every issue or respond to every question discussed in this RFI to have their responses considered.

    1. Promoting Care Coordination and Value-Based Care

    A. Please tell us about potential arrangements that the industry is interested in pursuing, such as care coordination, value-based arrangements, alternative payment models, arrangements involving innovative technology, and other novel financial arrangements that may implicate the anti-kickback statute or beneficiary inducements CMP. For example, we are interested in better understanding the structure and terms of the arrangement (e.g., categories/types of parties; how risk is allocated among parties; financial relationships involving potential referral sources and seekers created by the arrangement; and types of items and services provided by the arrangement). We are also interested in understanding how the arrangement promotes care coordination or value-based care and how the arrangement prevents potential harms, such as increased costs, inappropriate utilization, poor quality of care, and distorted decision making.

    B. Please identify what, if any, additional or modified safe harbors to the anti-kickback statute or exceptions to the definition of “remuneration” under the beneficiary inducements CMP may be necessary to protect such arrangements and any key provisions that should be included in the additional or modified safe harbor or exception. Existing safe harbors and exceptions of particular relevance to coordinated care include, for example, those related to personal services and management contracts, electronic health record arrangements, warranties, transportation, and promoting access to care. Suggested new safe harbors or exceptions might address care coordination services arrangements or arrangements promoting the use of innovative technology. In particular, please describe what conditions would be appropriate to include in a safe harbor or exception to protect against fraud and abuse in the context of such arrangements, including what, if any, disclosures should be required by such safe harbors or exceptions.

    C. Please explain how “value” could be defined and used in a safe harbor or exception such that OIG could evaluate “value” within an arrangement to determine compliance with the safe harbor or exception.

    D. In the context of health care delivery reform, payment reform, and the anti-kickback statute, please share thoughts on definitions for critical terminology such as:

    i. Alternative payment model ii. Care coordination services iii. Care coordinator iv. Clinical integration v. Coordinated care vi. Financial integration vii. Gainsharing viii. Health system ix. Integrated care model x. Integrated delivery system xi. Incentive payments xii. Outcomes-based care xiii. Risk xiv. Risk-sharing xv. Value-based care xvi. Value-based arrangement

    E. Are there opportunities where OIG could clarify its position through guidance as opposed to regulation? For example, would a law enforcement policy statement offer sufficient protection in some instances? If so, please elaborate.

    2. Beneficiary Engagement A. Beneficiary Incentives

    i. Please provide feedback regarding the types of incentives providers, suppliers, and others are interested in providing to beneficiaries, how providing such incentives would contribute to or improve quality of care, care coordination, and patient engagement, including adherence to care plans, and whether the types of providers, suppliers, or other entities that furnish the incentives matter from an effectiveness and program integrity perspective. Please be as specific as possible. Additional areas of interest include:

    a. What, if any, restrictions should OIG place on the sources, types, or frequency of beneficiary incentives that could be provided to reduce the risk of fraud and abuse?

    b. Examples of beneficiary incentive arrangements that are appropriate and effective.

    c. Should beneficiary incentives connected to medication adherence and medication management be treated differently than other types of beneficiary incentives? If so, how and why?

    d. What, if any, disclosures should OIG require the offeror to make to beneficiaries regarding an incentive (e.g., the source of the incentive)?

    ii. Please identify (and provide citations to) any recent studies assessing the positive or negative effects of beneficiary incentives on patient care or patient engagement.

    iii. In the context of beneficiary incentives, please identify any risks or benefits from the following types of potential remuneration, as well as any safeguards to mitigate risks, and describe how these terms should be defined for purposes of any rulemaking related to coordinated care or value-based arrangements:

    a. Cash equivalent b. Gift card c. In-kind items and services d. Nonmonetary remuneration

    iv. To promote care coordination and value-based care, should OIG amend its “Office of Inspector General Policy Statement Regarding Gifts of Nominal Value To Medicare and Medicaid Beneficiaries” 6 to increase “nominal value” from no more than $15 per item or $75 in the aggregate per patient on an annual basis? If so, why? Please provide data or other support for any suggested changes in the dollar amounts. Also, please provide input on whether OIG should have a similar policy under the anti-kickback statute and, if so, how such policy would contribute to care coordination or value-based care.

    6 OIG, Office of Inspector General Policy Statement Regarding Gifts of Nominal Value To Medicare and Medicaid Beneficiaries (Dec. 7, 2016), available at https://oig.hhs.gov/fraud/docs/alertsandbulletins/OIG-Policy-Statement-Gifts-of-Nominal-Value.pdf.

    B. Cost-Sharing Obligations

    i. We are interested in input about how relieving or eliminating beneficiary cost-sharing obligations might improve care delivery, enhance value-based arrangements, and promote quality of care. Please describe any patient care scenarios in which cost-sharing obligations are particularly problematic.

    ii. Please describe the financial impact on providers, suppliers, and other entities, as well as the fraud and abuse risks, if cost-sharing amounts could be waived (i.e., the amount owed is not paid) by participants in a care coordination or value-based arrangement. What, if any, concerns arise if cost-sharing obligations could be subsidized by providers, suppliers, or other entities in a care delivery arrangement?

    iii. Please describe any risks to beneficiaries and Federal health care programs from the reduction or elimination of cost-sharing obligations.

    iv. Please describe any suggested protections or safeguards that OIG should incorporate if we were to create a safe harbor for certain beneficiary cost-sharing waiver or subsidy arrangements.

    3. Other Related Topics of Interest A. Current Fraud and Abuse Waivers

    i. Please provide feedback on the current waivers developed for the purposes of testing models by the Center for Medicare and Medicaid Innovation (Innovation Center) and carrying out the Medicare Shared Savings Program (MSSP).7 Feedback from parties who are using or who are eligible to use those waivers would be helpful as we consider the issues raised in this RFI. For example, we are interested in the following:

    7 CMS, Fraud and Abuse Waivers for Select CMS Models and Programs, available at https://www.cms.gov/Medicare/Fraud-and-Abuse/PhysicianSelfReferral/Fraud-and-Abuse-Waivers.html.

    a. How, if at all, have stakeholders found compliance with the waiver conditions challenging? Please be as specific as possible.

    b. Are any waiver requirements particularly burdensome, such that they impede the goals of the models, initiatives, or programs? If so, please specify which waiver requirements and why they impede the goals of the model, initiative, or program.

    c. What waiver structures or conditions, if any, work well? Should OIG consider any waiver structures or conditions for any future safe harbors or exceptions related to care coordination and value-based care (including beneficiary incentives to promote patient engagement)? Please be as specific as possible and provide reasons.

    d. One of the key safeguards to mitigate the risk of fraud or abuse from arrangements protected by the pre-participation and participation waivers developed pursuant to the MSSP, the Next Generation ACO Model's participation waiver, and the Pioneer ACO Model's participation waiver 8 is the involvement of the accountable care organization's (ACO's) governing body in the authorization of each arrangement. We are interested in feedback on how the ACO governing body concept is working, and whether and if so how, it could be applied to safe harbors or exceptions for alternative payment models and coordinated care arrangements.

    8 The Pioneer ACO model began in 2012, and the final performance year concluded on December 31, 2016.

    e. We invite specific feedback regarding the pros and cons of fraud and abuse protections (e.g., waivers or safe harbors) that are uniform across different types of CMS-sponsored models, initiatives, and programs.

    B. Cybersecurity-Related Items and Services

    i. We are aware of interest in donating or subsidizing cybersecurity-related items and services to providers and others with whom they share information. We are interested in information about the types of cybersecurity-related items or services that entities wish to donate or subsidize, and how existing fraud and abuse laws may pose barriers to such arrangements. For example, we are interested in (i) the types of persons that would be parties to, or benefit from, such arrangements; (ii) whether any persons should be excluded from such arrangements; (iii) the particular types of items that would be involved in such arrangements (e.g., hardware, software, and other items); and (iv) the types of services that would be involved in such arrangements (e.g., testing services, training services, monitoring services, or repair or maintenance services). Other areas of interest include:

    a. How might such items or services reduce cybersecurity risks to the following: The donor, the recipient, patients, and other nonparties to the arrangement?

    b. Are there technical or legal barriers (besides the physician self-referral law and the anti-kickback statute) that could prevent or limit the arrangements?

    c. Are there any potential risks or unintended consequences to such arrangements (e.g., potential for fraud or abuse, information blocking, or anti-competitive practices) and, if so, how might these risks be mitigated?

    d. Are there any particular risks if HHS takes no action?

    C. ACO Beneficiary Incentive Program (Section 50341(b) of the Bipartisan Budget Act of 2018)  9

    9 Bipartisan Budget Act of 2018, Public Law 115-123, 115th Cong. (2018) (enacted).

    Section 50341(b) of the Bipartisan Budget Act of 2018, which added section 1128B(b)(3)(K) of the Act, states that “illegal remuneration” under the anti-kickback statute does not include “. . . an incentive payment made to a Medicare fee-for-service beneficiary by an ACO under an ACO Beneficiary Incentive Program established under subsection (m) of section 1899, if the payment is made in accordance with the requirements of such subsection and meets such other conditions as the Secretary may establish.”

    i. For the purposes of implementing this new statutory exception through a safe harbor, what, if any, “other conditions” should this safe harbor include as protections or safeguards? Please provide supporting reasons.

    D. Telehealth (Section 50302(c) of the Bipartisan Budget Act of 2018)  10

    10Id.

    Section 50302(c) of the Bipartisan Budget Act of 2018 creates a new exception to the definition of “remuneration” in the beneficiary inducements CMP. This exception applies to “telehealth technologies” provided on or after January 1, 2019, by a provider of services or a renal dialysis facility to an individual with end-stage renal disease (ESRD) who is receiving home dialysis for which payment is being made under Medicare Part B. Under the statute, “telehealth technologies” is a term to be defined by the Secretary. The exception requires that (i) the telehealth technologies not be offered as part of any advertisement or solicitation; (ii) the telehealth technologies must be provided for the purpose of furnishing telehealth services related to the patient's ESRD; and (iii) the provision of the telehealth technologies must “meet[ ] any other requirements set forth in regulations promulgated by the Secretary.”

    i. For the purposes of this exception, please provide input on how “telehealth technologies” should be defined. Please provide examples of telehealth technologies that may be used to furnish telehealth services related to a beneficiary's ESRD (e.g., technologies that address services on the Medicare telehealth list). Also, please indicate whether telehealth technologies should include services. If so, please explain, in detail, what services should be considered “telehealth technologies.”

    ii. For the purposes of this exception, should OIG include protections or safeguards as “any other requirements set forth in regulations promulgated by the Secretary?” If so, please explain what protections or safeguards and why.

    4. Intersection of Physician Self-Referral Law and Anti-Kickback Statute

    Please share any feedback regarding specific circumstances in which (i) exceptions to the physician self-referral law and safe harbors to the anti-kickback statute should align for purposes of the goals of this RFI; and (ii) exceptions to the physician self-referral law in furtherance of care coordination or value-based care should not have a corresponding safe harbor to the anti-kickback statute.

    Respondents are encouraged to provide complete but concise and organized responses, including any relevant data and specific examples. Respondents are not required to address every issue or respond to every question discussed in this RFI to have their responses considered. All responses will be considered, provided they contain information OIG can use to identify the commenter.

    Please note: This is a request for information only. This RFI is issued solely for information and planning purposes; it does not constitute a Request for Proposal (RFP), application, proposal abstract, or quotation. This RFI does not commit the U.S. Government to contract for any supplies or services or make a grant award. Further, OIG is not seeking proposals through this RFI and will not accept unsolicited proposals. Respondents are advised that the U.S. Government will not pay for any information or administrative costs incurred in response to this RFI; all costs associated with responding to this RFI will be solely at the interested party's expense. Not responding to this RFI does not preclude participation in any future procurement, if conducted. It is the responsibility of the potential responders to monitor this RFI announcement for additional information pertaining to this request. Please note that OIG will not respond to questions about the policy issues raised in this RFI. Contractor support personnel may be used to review RFI responses.

    Responses to this RFI are not offers and cannot be accepted by the U.S. Government to form a binding contract or issue a grant. Information obtained as a result of this RFI may be used by the U.S. Government for program planning on a nonattribution basis. Respondents should not include any information that might be considered proprietary or confidential. This RFI should not be construed as a commitment or authorization to incur costs for which reimbursement would be required or sought. All submissions become U.S. Government property and will not be returned. OIG may publicly post the comments received or a summary thereof.

    IV. Collection of Information Requirements

    This document does not impose information collection requirements, that is, reporting, recordkeeping, or third-party disclosure requirements. However, section III of this document does contain a general solicitation of comments in the form of a request for information. In accordance with the implementing regulations of the Paperwork Reduction Act (PRA), specifically 5 CFR 1320.3(h)(4), this general solicitation is exempt from the PRA. Facts or opinions submitted in response to general solicitations of comments from the public, published in the Federal Register or other publications, regardless of the form or format thereof, provided that no person is required to supply specific information pertaining to the commenter, other than that necessary for self-identification, as a condition of the agency's full consideration, are not generally considered information subject to the PRA. Consequently, there is no need for review by the Office of Management and Budget under the authority of the PRA (44 U.S.C. 3501 et seq.).

    V. Response to Comments

    Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, if we proceed with a subsequent document, we may respond to the comments in the preamble to that document.

    Dated: August 20, 2018. Daniel R. Levinson, Inspector General.
    [FR Doc. 2018-18519 Filed 8-24-18; 8:45 am] BILLING CODE 4152-01-P
    DEPARTMENT OF THE INTERIOR Office of the Secretary 43 CFR Part 11 [Docket No. DOI-2018-0006; XXXD5198NI.DS61600000.DNINR0000.000000.DX61604] RIN 1090-AB17 Natural Resource Damages for Hazardous Substances AGENCY:

    Office of Restoration and Damage Assessment, Interior.

    ACTION:

    Advance notice of proposed rulemaking; request for public comment.

    SUMMARY:

    The Office of Restoration and Damage Assessment (ORDA) is seeking comments and suggestions from State, Tribal, and Federal natural resource co-trustees, other affected parties, and the interested public on whether revisions to the regulations for conducting natural resource damage assessments and restoration (NRDAR) for hazardous substance releases are needed, and if so, what specific revisions should be considered.

    DATES:

    We will accept comments through October 26, 2018.

    ADDRESSES:

    You may submit comments to ORDA on this ANPRM by any of the following methods. Please reference the Regulation Identifier Number (RIN) DOI-2018-0006 in your comments.

    Electronically: Go to http://www.regulations.gov. In the “Search” box enter “DOI-2018-0006.” Follow the instructions to submit public comments. We will post all comments.

    • Hand deliver or mail comments to the Office of Restoration and Damage Assessment, U.S. Department of the Interior, 1849 C Street Northwest, Mail Stop/Room 5538, Washington, DC 20240.

    FOR FURTHER INFORMATION CONTACT:

    Steve Glomb, Director, Office of Restoration and Damage Assessment at (202) 208-4863 or email to [email protected]

    SUPPLEMENTARY INFORMATION:

    The regulations provide procedures that State, Tribal, and Federal natural resource co-trustees may use to evaluate the need for and means of restoring, replacing, or acquiring the equivalent of public natural resources that are injured or destroyed because of releases of hazardous substances into the environment. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)—which authorizes natural resource damage claims by States, federally recognized Indian Tribes, and the Federal government—specifies that the regulations are optional, but if the State, Tribal, and Federal governments (described as natural resource “co-trustees” by CERCLA) utilize them, they are entitled to a “rebuttable presumption” on their claim in any subsequent legal proceeding.

    This notice seeks comment and suggestions in response to the CERCLA biennial review requirement and Executive Order 13777 (February 24, 2017), which directed the Department of the Interior (DOI) and other Federal agencies to establish Regulatory Reform Task Forces to evaluate existing regulations and make recommendations regarding repeal, replacement, or modification, consistent with applicable law.

    Background

    CERCLA authorizes the Federal government, States, and federally recognized Indian Tribes to act as “trustees” on behalf of the public, for the purpose of bringing claims for injury to natural resources injured or destroyed by hazardous substance releases. Such claims are not fines or penalties, and the measure of damages is calculated by the cost to restore or replace the injured or destroyed natural resources. Trustees may also recover compensation for services the resources would have provided to the public pending restoration, along with the reasonable cost of assessing injury and determining appropriate restoration. The statute requires trustees to spend restoration recoveries “only to restore, replace, or acquire the equivalent” of injured natural resources pursuant to a publicly reviewed restoration plan.

    Section 301(c) of CERCLA requires the promulgation of regulations to guide natural resource damage assessment and restoration. The statute explicitly provides that the regulations are not mandatory, but if State, Tribal, or Federal trustees conduct an assessment in accordance with the regulations, they would receive a “rebuttable presumption” for their claim in any subsequent administrative or judicial proceeding. The Department of the Interior (DOI) was designated by the President to develop the regulations currently in effect at 43 CFR part 11.

    DOI previously developed two types of NRDAR regulations (as specified by CERCLA). Standard procedures for simplified assessments requiring minimal field observations (the Type A Rule); and site-specific procedures for detailed assessment in individual cases (the Type B Rule). The CERCLA NRDAR Regulations were last revised in 2008. These revisions to the Type B Rule emphasized natural resource restoration over litigation and monetary damages, made technical corrections to procedural timing inconsistencies, and responded to two court decisions addressing previous versions of the regulations: State of Ohio v. U.S. Department of the Interior, 880 F.2d 432 (D.C. Cir. 1989) (Ohio v. Interior); and Kennecott Utah Copper Corp. v. U.S. Department of the Interior, 88 F.3d 1191 (D.C. Cir. 1996) (Kennecott v. Interior).

    The 2008 revisions were based on the report of a committee convened by DOI under the Federal Advisory Committee Act (FACA) to make recommendations on improving NRDAR practice. The committee was comprised of representatives from States, Tribes, Federal agencies, industrial corporations, industry consultants and attorneys, local and national non-governmental organizations, and academics. Unlike previous iterations of the NRDAR regulations, the final regulatory revisions based on the FACA Committee report were not challenged by States, Tribes, industry or environmental groups.

    Description of Information Requested

    We are interested in comments or suggestions that improve the efficiency and cost effectiveness of the NRDAR process. An internal biennial review of the CERCLA NRDAR regulations identified some remaining issues from the NRDAR FACA Committee Report that could be addressed, and NRDAR practice issues that have developed or progressed since the last revision of the regulations. DOI is particularly interested in comments and suggestions related to these issues, outlined below. We also welcome comments and suggestions on any other aspect of the regulations that trustees, stakeholders, and the general public would like us to consider.

    Simplification and “Plain Language”

    With the exceptions of the provision of the Type B Regulations that were revised in 2008, the CERCLA NRDAR regulations are arguably complicated, overly prescriptive, repetitive, and dense—particularly when compared to the Oil Pollution Act (OPA) NRDAR Rule promulgated by the National Oceanic and Atmospheric Administration at 15 CFR part 990. A number of stakeholders have suggested that DOI should consider a comprehensive “plain English” revision to the CERCLA NRDAR Regulations that closely aligns with the structure of the existing OPA NRDAR Regulations.

    Type A Regulations

    The Type A Regulations were designed to result in efficient, cost effective, standardized assessments. It has been challenging, however, to develop workable Type A Regulations that are streamlined and utilize minimal actual field observations but are still relevant and reliable enough to be entitled to a rebuttable presumption of correctness. Accordingly, DOI is seeking comments or suggestions regarding revision to and utilization of the CERCLA NRDAR Type A Regulations.

    Early Emphasis on Restoration Over Damages

    The NRDAR FACA Committee Report recommended that DOI could encourage a restoration focus and negotiated agreements by revising the regulations to encourage early scoping of restoration opportunities at NRDAR sites. DOI is interested in any additional comments or suggestions on where specifically in the assessment process restoration scoping may be cost effective and appropriate and how that could best be addressed in the regulations.

    Procedures to Further Encourage Negotiated Settlements and Early Restoration

    Since the last revision of CERCLA NRDAR Regulations, a number of matters have utilized partial negotiated settlements early in the assessment process to cost effectively resolve discrete NRDAR claims and re-inforce an overall restoration focus for ultimate comprehensive resolution. However, the current regulations offer little guidance on how to align early restoration settlements with existing statutory and regulatory requirements for assessment and restoration planning.

    Advance Restoration and Restoration Banking

    Restoration “banking” and advance restoration—where restoration is undertaken in anticipation of marketing portions of such restoration to responsible parties to address natural resource injury caused by releases of hazardous substances—has been considered at a number of sites since the last revision of the CERCLA NRDAR regulations. Some States (such as Louisiana) have enacted specific statutory provisions and promulgated regulations on NRDAR banking. The existing CERCLA NRDAR regulations do not provide any guidance on the use of advance restoration and restoration banking techniques.

    National Environmental Policy Act (NEPA) Compliance

    The NRDAR FACA Committee Report encouraged DOI to adopt Department-wide categorical exclusions from NEPA as appropriate and to ensure that compliance with NEPA requirements occurs concurrently with NRDAR restoration planning. DOI is interested in comments or suggestions whether that would best be addressed in the NRDAR regulations, NEPA regulations, or in Departmental guidance.

    Public Comment Procedures

    DOI is not obligated to consider comments that we receive after the close of the comment period for this ANPRM, or comments that are delivered to an address other than those listed in this notice. After the comment period for this ANPRM closes, DOI will review all comment submissions. Upon consideration, DOI may publish a notice of proposed rulemaking.

    We are particularly interested in receiving comments and suggestions about the topics identified in the Description of Information Requested section. Written comments that are specific, explain the rationale for the comment or suggestion, address the issues outlined in this notice, and where possible, refer to specific statutes, existing regulations, case law, or NRDAR practices are most useful.

    Before including your address, phone number, email address or other personal identifying information in you comment, you should be aware that your entire comment—including your personal identifying information—might be made publicly available at any time. While you may ask us in your comment to withhold your personal identifying information from public review we cannot guarantee that we will do so.

    Authority:

    42 U.S.C. 9601, secs. 104,107,111(I), 122.

    Steve Glomb, Director, Office of Restoration and Damage Assessment.
    [FR Doc. 2018-18498 Filed 8-24-18; 8:45 am] BILLING CODE 4334-63-P
    FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [MB Docket No. 18-214, GN Docket No. 12-268; FCC 18-113] LPTV, TV Translator, and FM Broadcast Station Reimbursement, Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions AGENCY:

    Federal Communications Commission.

    ACTION:

    Proposed rule.

    SUMMARY:

    In this document, the Commission proposes rules to implement Congress's recent directive that we reimburse certain Low Power Television (LPTV), television translator (TV translator), and FM broadcast stations for costs incurred as a result of the Commission's broadcast television spectrum incentive auction. When Congress authorized the Commission to conduct the incentive auction, it required the Commission to reimburse certain costs incurred by full power and Class A television licensees and multichannel video program distributors (MVPDs). On March 23, 2018, Congress adopted the Reimbursement Expansion Act (REA), which, among other things, expands the list of entities eligible to be reimbursed for auction-related expenses to include LPTV, TV translator, and FM broadcast stations, and to provide additional funds to the Reimbursement Fund to be used for this purpose. The REA requires the Commission to complete a rulemaking to adopt a reimbursement process for LPTV, TV translator, and FM stations within a year from the adoption date of the Act. This NPRM commences the proceeding to implement this directive and enable the Commission to meet this statutory deadline.

    DATES:

    Comments may be filed on or before September 26, 2018; and reply comments may be filed on or before October 26, 2018.

    ADDRESSES:

    Interested parties may submit comments and reply comments, identified by MB Docket No. 18-214 and GN Docket No. 12-268, by any of the following methods:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Federal Communications Commission's website: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting comments.

    Mail: Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

    People with Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by email: [email protected] or phone: (202) 418-0530 or TTY: (202) 418-0432. For detailed instructions for submitting comments and additional information on the rulemaking process, see the supplementary information section of this document.

    FOR FURTHER INFORMATION CONTACT:

    Kim Matthews of the FCC's Media Bureau, Policy Division, [email protected], (202) 418-2154.

    SUPPLEMENTARY INFORMATION:

    This is a summary of the Commission's Notice of Proposed Rulemaking (NPRM), FCC 18-113, adopted August 2, 2018 and released August 3, 2018. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street SW, Room CY-A257, Washington, DC 20554. The complete text may be purchased from the Commission's copy contractor, 445 12th Street SW, Room CY-B402, Washington, DC 20554. This document will also be available via ECFS at http://fjallfoss.fcc.gov/ecfs/. Documents will be available electronically in ASCII, Microsoft Word, and/or Adobe Acrobat. Alternative formats are available for people with disabilities (Braille, large print, electronic files, audio format) by sending an email to [email protected] or calling the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

    The NPRM may result in new or revised information collection requirements. If the Commission adopts any new or revised information collection requirements, the Commission will publish a notice in the Federal Register inviting the public to comment on such requirements, as required by the Paperwork Reduction Act of 1995. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, the Commission will seek specific comment on how it might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”

    Synopsis I. Introduction

    1. In the NPRM, we propose rules to implement Congress's recent directive that we reimburse certain LPTV, TV translator, and FM broadcast stations for costs incurred as a result of the Commission's broadcast television spectrum incentive auction. When Congress authorized the Commission to conduct the incentive auction as part of the 2012 Spectrum Act, it required the Commission to reimburse certain costs incurred by full power and Class A television licensees that were reassigned to new channels as a result of the auction, as well as certain costs incurred by multichannel video program distributors (MVPDs) to continue to carry such stations. (47 U.S.C. 1452) On March 23, 2018, Congress adopted the Reimbursement Expansion Act (REA), which amends Section 6403 of the Spectrum Act to expand the list of entities eligible to be reimbursed for auction-related expenses to include LPTV, TV translator, and FM broadcast stations, and to provide additional funds to the Reimbursement Fund to be used for this purpose. (47 U.S.C. 1452(j) through (n)) The REA also increases the funds available to reimburse full power and Class A stations and MVPDs, and provides funds to the Commission for consumer education.

    2. In this NPRM, we propose a mechanism for reimbursing the newly eligible entities that is substantially similar to the process we currently use to reimburse full power and Class A licensees and MVPDs as established in the Incentive Auction R&O. See Expanding the Economic and Innovation Opportunities of Spectrum Through Incentive Auctions, Report and Order, 79 FR 48442 (Aug. 15, 2014) (Incentive Auction R&O). Among the key proposals are the following:

    • We tentatively conclude that LPTV and TV translator stations (collectively referred to herein as LPTV/translator stations) are eligible for reimbursement if (1) they filed an application during the Commission's Special Displacement Window and obtained a construction permit, and (2) were licensed and transmitting for at least 9 of the 12 months prior to April 13, 2017, as required by the REA.

    • We also tentatively conclude that we will reimburse LPTV/translator stations for their reasonable costs to construct the facilities authorized by the grant of the station's Special Displacement Window application, but will require stations to reuse existing equipment and take other measures to mitigate costs where possible.

    • With respect to FM broadcast stations, we tentatively conclude that both full power FM stations and FM translators that were licensed and transmitting on April 13, 2017, using the facilities impacted by the repacked television station are eligible for reimbursement under the REA. We propose that this will include FM stations that incur costs because they must permanently relocate, temporarily or permanently modify their facilities, or purchase or modify auxiliary facilities to provide service to at least 80 percent of their primary station's coverage area or population during a period of time when construction work is occurring on a collocated repacked television station's facilities.

    • We propose to reimburse up to 100 percent of the costs eligible for reimbursement for FM stations that must relocate permanently, or temporarily or permanently modify facilities. We seek comment on a graduated, prioritized system to reimburse FM stations for the cost to purchase or modify auxiliary equipment to avoid going silent as a result of the repacking process.

    • We propose to require LPTV/translator and FM stations seeking reimbursement to file with the Commission one or more forms certifying that they meet the eligibility criteria established in this proceeding for reimbursement, providing information regarding their current broadcasting equipment, and providing an estimate of their costs eligible for reimbursement. We invite comment on ways to streamline the submission of this information for these entities.

    • We propose that after the submission of information, the Media Bureau will provide eligible entities with an allocation of funds, to be available for draw down as the entities incur expenses. We propose that the Media Bureau will make an initial allocation toward eligible expenses, followed by subsequent allocation(s) as needed, to the extent funds remain for LPTV/translator stations and FM stations in the Reimbursement Fund, and we seek comment on how to determine the amount of these allocations.

    • We propose to use revised versions of the financial forms currently being used by full power, Class A, and MVPD entities for purposes of reimbursing eligible LPTV/translator and FM stations, and we propose to use the same procedures to provide reimbursement payments to these newly eligible entities.

    • We discuss the measures we propose to take to protect the Reimbursement Fund against waste, fraud, and abuse.

    3. The Commission adopted a companion Order together with the NPRM. That Order is the subject of a separate Federal Register summary.

    II. Background A. Reimbursement Expansion Act

    4. On March 23, 2018, Congress adopted the REA, directing the Commission to “reimburse costs reasonably incurred” by a TV translator or LPTV station in order to “relocate” to another channel or “otherwise modify” its facility as a result of the reorganization of broadcast television spectrum. In addition, the REA directs the Commission to “reimburse costs reasonably incurred” by an FM station “for facilities necessary for such station to reasonably minimize disruption of service” as a result of the reorganization of broadcast television spectrum. The REA also provides funding for the Commission to make payments for the purpose of consumer education relating to the reorganization of broadcast television spectrum.

    5. The REA appropriates a total of $1 billion in additional funds for the Reimbursement Fund, $600 million in fiscal year 2018 and $400 million in fiscal year 2019. Of the $600 million appropriated in fiscal year 2018, the Act authorizes the Commission to use “not more than” $350 million to make reimbursements to full power and Class A stations and MVPDs pursuant to the Spectrum Act, “not more than” $150 million to reimburse TV translator and LPTV stations, “not more than” $50 million to reimburse FM broadcast stations, and $50 million to make “payments solely for the purposes of consumer education relating to the reorganization of broadcast television spectrum” pursuant to the Spectrum Act. We seek comment below on two different interpretations of the statutory provisions that relate to the availability of the $400 million appropriated in fiscal year 2019 and, specifically, on whether these funds are available to reimburse newly eligible LPTV, TV translator, and FM broadcast stations, in addition to full power, Class A, and MVPD entities.

    6. The REA establishes a number of conditions on the availability and use of the $1 billion it appropriates to the Reimbursement Fund. First, it provides that these funds are available only if the Commission makes a certification “to the Secretary of the Treasury that the funds available prior to the date of enactment” of the REA “in the TV Broadcaster Relocation Fund are likely to be insufficient to reimburse reasonably incurred costs” of full power and Class A stations and MVPDs pursuant to the Spectrum Act. Second, it provides that the funds may be used by the Commission to make payments after April 13, 2020, only if, “before making any such payments after such date, the Commission submits to Congress a certification that such payments are necessary to reimburse” costs reasonably incurred by entities eligible for reimbursement pursuant to the Spectrum Act and the REA. Third, the REA requires that the Commission use the funds it appropriates to make all reimbursements to full power and Class A stations, MVPDs, LPTV/translators, and FM stations by July 3, 2023, at the latest. The Commission may, however, establish an earlier date by which its reimbursement program will end if it certifies to the Secretary of the Treasury that all reimbursements to full power, Class A, and MVPDs, as specified by the Spectrum Act, and all reimbursements to LPTV/translators and FM stations, as specified by the REA, have been made.

    7. Section 511(k)(3) of the REA states that duplicative payments to “a low power television station that has been accorded primary status as a Class A television licensee under [47 CFR 73.6001(a)]” from the Reimbursement Fund are prohibited. Specifically, such licensee may not receive reimbursement under Section 511(k)(1) of the REA, which provides for reimbursement of eligible displaced LPTV/translator stations, if such station has received reimbursement under Section 6403(b)(4)(A)(i) of the Spectrum Act (including the additional funding made available for reimbursing full power, Class A, and MVPDs in Section 511(j)(2)(A)(i) of the REA). Similarly, Section 511(k)(3)(B) specifies that if such station receives reimbursement under Section 511(k)(1) of the REA, it may not receive reimbursement under Section 6403(b)(4)(A)(i) of the Spectrum Act. Section 511(k)(3)(A) also provides that if a low power television station that has been accorded primary status as a Class A television licensee receives reimbursement “from any other source, such station may not receive reimbursement under paragraph 1” of Section 511(k), which permits reimbursement of costs reasonably incurred by eligible LPTV/translator stations that filed in the Special Displacement Window. Section 511(l)(1)(C) states that “[i]f an FM broadcast station has received a payment for interim facilities from the licensee of a television broadcast station that was reimbursed for such payment” under the Spectrum Act, “or from any other source,” such FM broadcast station may not receive reimbursement under the REA.

    8. Finally, the REA requires the Commission to complete a rulemaking to implement a reimbursement process for LPTV, TV translator, and FM stations “[n]ot later than 1 year” after the adoption of the Act, or by March 23, 2019. It also directs that the rulemaking include “the development of lists of reasonable eligible costs to be reimbursed by the Commission” and “procedures for the submission and review of cost estimates and other materials related to those costs consistent with the regulations developed by the Commission” in establishing the reimbursement process for full power, Class A, and MVPD entities.

    B. Incentive Auction and Transition Period

    9. Congress authorized the Commission to conduct the incentive auction to help meet the Nation's growing spectrum needs. In the “reverse auction” phase of the incentive auction, television broadcasters had the opportunity to voluntarily relinquish some or all of their broadcast television spectrum usage rights in exchange for a share of the proceeds from a “forward auction” of new, flexible-use licenses suitable for mobile broadband use. In the Incentive Auction R&O, the Commission adopted its proposal to limit reverse auction participation to licensees of commercial and noncommercial educational (NCE) full power and Class A stations.

    10. Stations that remained on the air after the auction were reorganized during the “repacking” process to occupy a smaller portion of the television spectrum, and some were assigned new channels to clear spectrum for use by wireless providers. The Commission specified that full power and Class A facilities that already were operating pursuant to a license (or a pending application for a license to cover a construction permit) on February 22, 2012, would be protected in the repacking process, as Congress required. The Commission also exercised its discretion to protect certain, additional full power and Class A stations. The Commission declined to protect other categories of facilities, including LPTV/translator stations, on the basis that such facilities are secondary in nature and protecting them would have unduly restrained the agency's flexibility in the repacking process and undermined its ability to meet the goals of the incentive auction.

    11. On April 13, 2017, after the conclusion of auction bidding, the Incentive Auction Task Force and the Media and Wireless Telecommunications Bureaus released the Closing and Channel Reassignment PN, which announced the completion of the auction, the auction results, and the broadcast television channel reassignments. The release of the Closing and Channel Reassignment PN also commenced the 39-month post-auction transition period (transition period) during which all reassigned stations must transition to their post-auction channel assignments. Reassigned stations had three months, or until July 12, 2017, to file construction permit applications for any minor changes to their facilities needed to operate on their new channels. Following the three-month application filing deadline, stations have up to 36 months, or until July 13, 2020, to transition to their new channels.

    12. To ensure an orderly, managed transition process, the Commission established a phased construction schedule for the transition period and grouped all full power and Class A television stations transitioning to new channels into one of 10 transition phases. The Closing and Channel Reassignment PN announced the specific transition phase, phase completion date, and testing period applicable to each transitioning station.

    C. LPTV and TV Translator Stations and FM Broadcasters

    13. LPTV and TV Translators. LPTV/translator stations are secondary to full power television stations, which may be authorized and operated “without regard to existing or proposed low power TV or TV translator stations.” LPTV/translator stations were not eligible to participate in the incentive auction and were not eligible for reimbursement pursuant to the Spectrum Act. In addition, while the Spectrum Act required the Commission to make “all reasonable efforts” to preserve the coverage area and population served of eligible full power and Class A television stations in the incentive auction repacking process, as noted above, LPTV/translator stations were not protected. Accordingly, the Incentive Auction R&O noted the potential for a significant number of LPTV/translator stations to be displaced as a result of the auction or repacking process which would require them either to find a new channel from the smaller number of channels that remain in the reorganized broadcast television bands or to discontinue operations altogether.

    14. The Commission has taken a number of steps to mitigate the impact of the auction and repacking process on LPTV/translator stations. The Media Bureau opened a special filing window on April 10, 2018 to offer operating LPTV/translator stations that are displaced an opportunity to select a new channel. That displacement window closed on June 1, 2018. In total, the Commission received 2,159 applications during the window which are currently under consideration. Applicants will have the opportunity to resolve any mutual exclusivity through settlement or engineering amendments filed prior to the close of a Settlement Window to be announced by the Media Bureau. Should applications remain mutually exclusive after the Settlement Window, a schedule will be set for them to be resolved subject to the Commission's competitive bidding rules.

    15. Some LPTV/translator stations have already been displaced. Pursuant to our rules, LPTV/translator stations that were on channels 38 through 51 must terminate operations if they receive notice of likely interference to a new 600 MHz Band licensee that intends to commence operations or conduct first field application (FFA) testing on their licensed 600 MHz spectrum. The Commission has granted a number of 600 MHz licenses, which authorized the licensees to construct facilities on their new spectrum. T-Mobile USA (T-Mobile), one of the recipients of those licenses, provided notices to certain LPTV and TV translator stations that it would commence operations or conduct FFA testing on some of its licensed spectrum before the opening of the Special Displacement Window. The Commission therefore provided tools to these “early displaced” LPTV/translator stations to ensure that they would be able to continue to broadcast. One of these tools was for a displaced station to submit a displacement application prior to the opening of the Special Displacement Window with a request for waiver of the current displacement freeze, and file for Special Temporary Authority to temporarily operate the facility proposed in the displacement application. The Tools PN further explained that applications filed with a request for waiver of the displacement freeze would be treated as if filed on the last day of the Special Displacement Window and processed in accordance with the rules for that window. Approximately 340 displacement applications were filed prior to the Special Displacement Window pursuant to the Tools PN. Independent of the Tools PN, T-Mobile created a Supplemental Reimbursement Plan whereby it committed to pay the reasonable costs associated for such stations to move from a temporary channel to a permanent channel if the station's displacement application for the temporary channel was not granted and the station therefore needs to move twice. In addition, T-Mobile and PBS announced in June 2017 that T-Mobile had committed to cover the costs for PBS translator stations to relocate their frequencies following the incentive auction.

    16. FM Broadcasters. FM broadcasters were not eligible to participate in the auction, were not subject to the repacking process, and were not eligible for reimbursement pursuant to the Spectrum Act. While FM spectrum was not subject to reorganization in the repacking process, FM stations may be affected by the reorganization of broadcast television spectrum if, for example, an FM station shares a tower with a repacked TV station. Changes to the facilities of the TV station could affect the FM station if, for example, the FM station antenna must be moved, either temporarily or permanently, to accommodate the TV station's change or if an FM station needs to power down, or cease operating temporarily, to permit a repacked TV broadcaster to modify its facilities. In total, we estimate this could include fewer than 500 full-service stations.

    D. Full Power, Class A, and MVPD Reimbursement Process

    17. As we initiate the proceeding to reimburse additional entities affected by the reorganization of broadcast television spectrum, we find the current eligibility criteria, process, and procedures associated with the Reimbursement Fund instructive. We summarize pertinent details below.

    18. The Spectrum Act requires the Commission to reimburse full power and Class A broadcast television licensees for costs “reasonably incurred” in relocating to their new channels assigned in the repacking process, and to reimburse MVPDs for costs “reasonably incurred” in order to continue to carry the signals of stations relocating to new channels as a result of the repacking process or a winning reverse auction bid. Congress specified that these reimbursements be made from the Reimbursement Fund, and that the Commission make all reimbursements within three years after completion of the forward auction (Reimbursement Period). In the Incentive Auction R&O, the Commission concluded that, with respect to broadcast licensees, the Spectrum Act's reimbursement mandate applies only to full power and Class A television licensees that are involuntarily reassigned to new channels in the repacking process.

    19. In the Incentive Auction R&O, the Commission established the reimbursement process that is currently in place. Following the release of the Closing and Channel Reassignment PN, entities seeking reimbursement provided information regarding their existing broadcasting equipment and their plan to accomplish the channel transition, including an estimate of their eligible costs, by filing FCC Form 2100, Schedule 399 (the Reimbursement Form), in the Media Bureau's Licensing and Management System (LMS). Estimated costs could be provided by the entity or by using predetermined cost estimates based on the Catalog of Potential Expenses and Eligible Costs (Catalog of Reimbursement Expenses, or Catalog) developed by the Media Bureau. The Catalog sets forth categories of expenses that are most likely to be commonly incurred by broadcasters and MVPDs as a result of the repacking process, together with ranges of prices for the potential expenses. The Media Bureau, with assistance from a contractor with extensive experience in television broadcast engineering and Federal funds management (Fund Administrator), reviews the cost estimates.

    20. The Commission's goal is to ensure that reimbursement funds are allocated fairly and consistently across all eligible entities and, at the same time, to have sufficient flexibility to make reasoned allocation decisions that maximize the funds available for reimbursement. To this end, reimbursement funds are being allocated in tranches, with the allocation amounts calculated based in part on the total amount of repacking expenses reported on the estimated cost forms as well as the amount of money available in the Reimbursement Fund. On October 16, 2017, an initial allocation of approximately $1 billion was made, which represented approximately 52 percent of the then-current verified cost estimates for commercial stations and MVPDs, and 62 percent for NCE broadcasters. A further allocation of approximately $742 million was made on April 16, 2018, providing all repacked full power and Class A stations and MVPDs access to approximately 92.5 percent of their then-current verified cost estimates. The Commission will continue to monitor closely the draw-down of the Reimbursement Fund to determine if additional allocations are warranted.

    21. The allocation is available for draw down and reimbursement from the U.S. Treasury as the entities incur expenses eligible for reimbursement and submit invoices that are approved for payment. Entities draw down against their individual allocations using the Reimbursement Form to report incurred expenses and upload invoices or receipts into LMS. To facilitate the disbursement of reimbursement payments, entities were also required to submit payment instructions to the Commission by (i) submitting a signed and notarized FCC Form 1876, along with a bank account verification letter or redacted bank statement that confirms ownership of the bank account, for each Facility ID/File Number receiving a reimbursement payment; and (ii) entering bank account information for the reimbursement payment recipient in the CORES Incentive Auction Financial Module.

    22. Prior to the end of the three-year Reimbursement Period, entities must provide information regarding their actual and remaining estimated costs and will be issued a final allocation, if appropriate, to cover the remainder of their eligible costs. If any allocated funds remain in excess of the entity's actual costs determined to be eligible for reimbursement, those funds will revert back to the Reimbursement Fund. In addition, if an overpayment is discovered, even after the end of the Reimbursement Period, entities will be required to return the excess to the Commission.

    III. Notice of Proposed Rulemaking A. Amounts Available for Reimbursement

    23. As an initial matter, we seek comment on how to interpret the statute with respect to amounts available to reimburse eligible entities pursuant to the REA using funds appropriated for fiscal year 2019. Section 511(j)(1) of the REA appropriates funds “to the TV Broadcaster Relocation Fund established by [47 U.S.C. 1452(d)]”—specifically, $600 million for fiscal year 2018 and $400 million for fiscal year 2019. Section 511(j)(2) of the REA discusses the “availability of funds” and provides that, if the Commission makes the required certification, “amounts made available to the TV Broadcaster Relocation Fund by [Section 511(j)(1)] shall be available to the Commission to make” certain specified payments. In particular, Section 511(j)(2)(A) states that funds appropriated in Section 511(j)(1) shall be available to the Commission to make payments required by the Spectrum Act and the REA, including “not more than” $350 million to reimburse full power and Class A stations and MVPDs from fiscal year 2018 funds, “not more than” $150 million to reimburse LPTV and TV translator stations from fiscal year 2018 funds, and “not more than” $50 million to reimburse FM broadcast stations from fiscal year 2018 funds. It also states that funds appropriated in Section 511(j)(1) shall be available to the Commission to make payments “solely for the purposes of consumer education relating to the reorganization of broadcast television spectrum,” including $50 million from the funds available for fiscal year 2018. While Section 511(j)(2)(A) clearly delineates the availability of funds for fiscal year 2018, it does not do so with respect to fiscal year 2019 funding.

    24. We therefore seek comment on whether the $400 million appropriated to the Reimbursement Fund for fiscal year 2019 is only available to reimburse eligible full power and Class A stations and MVPDs for costs reasonably incurred in the repacking process or whether the REA also permits this money to be used to reimburse LPTV, TV translators, and FM broadcast stations, as well as to fund the Commission's consumer education efforts.

    25. If the Commission were to interpret the statute to find that it is authorized to reimburse eligible LPTV, TV translator, and FM broadcast stations and to fund consumer education efforts from the fiscal year 2019 funds, in addition to reimbursing full power, Class A, and MVPD entities, we seek comment on whether and how the Commission should prioritize this funding. While we have received estimates of the costs that full power and Class A stations anticipate as a result of their channel reassignments, we have no estimates to date of the costs that will be incurred by LPTV, TV translator, and FM stations. Moreover, as we have indicated, we anticipate that the estimates for full power and Class A stations will increase as their construction process continues. It is therefore possible that there will be significant demand on the Reimbursement Fund from all categories of eligible entities such that the total amount available may not be sufficient to cover all their eligible expenses. If so, should the Commission prioritize the payments to full power and Class A stations over those of FM stations and LPTV/translator stations? We also seek comment on whether the Commission should prioritize the payment of full power and Class A stations over any aggregate costs exceeding the limits described in Section 511(j)(2) of $50 million for FM stations and $150 million for LPTV/translator stations. In other words, should the Commission consider reimbursement of costs above those aggregate amounts for FM and LPTV/translator stations only after full power and Class A expenses are fully satisfied? We seek comment on these issues.

    B. LPTV and TV Translator Stations—Eligibility and Expenses

    26. As discussed above, the REA authorized the Commission to reimburse “costs reasonably incurred by a television translator or low power television station on or after January 1, 2017, in order for such station to relocate its television service from one channel to another channel or otherwise modify its facility as a result of the reorganization of broadcast television spectrum” under Section 6403(b) of the Spectrum Act. In this section, we seek comment on issues related to eligibility and expenses under the REA provisions for reimbursement of displaced LPTV and TV translator stations.

    1. Stations Eligible for Reimbursement a. LPTV/Translator Stations

    27. The REA provides that costs reasonably incurred by certain “television translator station[s] or low power television station[s]” to relocate channels or modify facilities as a result of the reorganization of broadcast television spectrum are eligible for reimbursement. The REA specifies that these two types of stations are to be defined pursuant to the definition included in 47 CFR 74.701. We interpret this provision to mean that LPTV and TV translator stations, as defined by § 74.701 of our rules, may be eligible for reimbursement under the Reimbursement Fund if they meet the additional eligibility criteria discussed below, and we seek comment on this interpretation.

    (i) Special Displacement Window Eligibility Criteria

    28. The REA provides that “[o]nly stations that are eligible to file and do file an application in the Commission's Special Displacement Window are eligible to seek reimbursement.” The Media Bureau has provided that, to be eligible to file in the Special Displacement Window, a station had to be an LPTV/translator station that was “operating” on April 13, 2017—the date of the release of the Closing and Channel Reassignment PN. Furthermore, for this purpose, a station is “operating” if it had licensed its authorized construction permit facilities or had an application for a license to cover on file with the Commission on that date. The station must also be “displaced . . . as a result of the broadcast television spectrum incentive auction.” Therefore, we tentatively conclude that, to be eligible for reimbursement, a station must be an LPTV/translator station that was eligible to file and did file an application during the Special Displacement Window. As noted above, the Commission received 2,159 applications during the window which, subject to the other eligibility requirements, represents the largest possible universe of LPTV/translator stations that could be eligible for reimbursement.

    29. While the threshold eligibility criteria set forth in the REA require only that a station was “eligible to file and [did] file an application” in the Special Displacement Window, we tentatively conclude that, to be eligible for reimbursement, a station's displacement application filed during the Special Displacement Window (or prior to the window with grant of a waiver, or subsequently amended prior to the close of the Settlement Window) must be granted. Although this requirement is not mandated by the REA, we believe that this additional criterion is essential to ensure the integrity of the reimbursement program and is consistent with Section 511(k)(1), which requires reimbursement of only costs reasonably incurred to “relocate . . . television service from one channel to another channel . . . or otherwise modify [a] facility.” We believe that eligibility must be limited to stations with valid displacement construction permits obtained through the procedural mechanisms associated with the Special Displacement Window that will permit them to construct the displacement facilities for which they receive reimbursement. Otherwise, providing reimbursement to eligible stations whose applications are not granted will result in reimbursement for expenses related to facilities that will not be constructed to “relocate . . . television service from one channel to another channel . . . or otherwise modify [a] facility.” We seek comment on this tentative conclusion.

    30. An LPTV/translator station that filed in the Special Displacement Window whose application is dismissed may subsequently file a displacement application when the Media Bureau lifts the freeze on the filing of such applications. We tentatively conclude that such stations will be eligible for reimbursement under the REA if their later-filed displacement application is subsequently granted. Although they would receive their construction permit through a displacement application that was not filed during the Special Displacement Window, these stations would meet the threshold eligibility criteria under the REA because such stations were “eligible to file and [did] file an application” in the Special Displacement Window. In addition, such stations are affected by the reorganization of broadcast television spectrum in the same way as other displaced LPTV/translator stations. We seek comment on whether and how such stations could be included in the reimbursement process considering that they will not be able to meet the same filing deadlines applicable to other eligible LPTV/translator stations that have applications granted in the Special Displacement Window and, depending on the demand on the Reimbursement Fund, this difference could result in a lack of reimbursement resources. Would allowing such stations to be eligible for reimbursement be appropriate given the finite resources of the Reimbursement Fund? Should such stations be eligible for reimbursement only to the extent funds remain available for LPTV/translator stations in the Reimbursement Fund?

    (ii) “Licensed and Transmitting” Eligibility Criteria

    31. The REA provides that only stations that were “licensed and transmitting for at least 9 of the 12 months prior to April 13, 2017,” are eligible to receive reimbursement under the REA. The statute also specifies that “the operation of analog and digital companion facilities may be combined” for purposes of the “licensed and transmitting” requirement. We propose that, consistent with the eligibility requirement for participation in the Special Displacement Window, stations that were licensed or that filed a license to cover application prior to April 13, 2017, be considered “licensed” for purposes of REA reimbursement eligibility.

    32. Because neither Commission rules nor the REA specifies a definition of “transmitting,” we propose a definition that relies on the Commission's minimum operating schedule rule for commercial full power television broadcast stations. That rule provides that commercial full power television stations must “operate” not less than 2 hours in each day of the week and not less than a total of 28 hours per calendar week. Therefore, we propose that, in order to be considered “transmitting,” stations seeking reimbursement under the REA must have been operating not less than 2 hours in each day of the week and not less than a total of 28 hours per calendar week for 9 of the 12 months prior to April 13, 2017. We believe that, given the finite nature of the Reimbursement Fund, it is necessary to give reasonable meaning to the eligibility criteria set forth in the REA. By defining “transmitting” in the same way as we do for full power stations, we intend to prioritize reimbursement for LPTV/translator stations that provided more robust service to the public over those that were on the air for only a brief period each day. Because a translator station is required to retransmit the signal of a television station, we would expect that most, if not all, translators would meet this requirement. We believe that this requirement reflects the legislative mandate that only “transmitting” stations be eligible to receive reimbursement. We seek comment on this proposal.

    33. We propose that stations be required to certify compliance with the minimum operating requirement we adopt as part of the reimbursement process. LPTV/translator stations may be required to provide evidence to support this certification, such as documentation of the programming aired by the station during the period of time in question, electric power bills, or other evidence showing that the station was transmitting during this time period. The Commission previously determined that, with respect to the incentive auction reimbursement program, “audits, data validations, and site visits are essential tools in preventing waste, fraud, and abuse, and that use of these measures will maximize the amount of money available for reimbursement.” With respect to reimbursing low-power broadcast stations, we contemplate that a third party firm on behalf of, or in conjunction with, the Media Bureau may conduct audits, data validations, site visits or other verifications to substantiate the supporting evidence and representations of entities that certify that they meet the eligibility criteria adopted in this proceeding to the extent necessary. We propose to direct such entities to make available any relevant documentation upon request from the Commission or its contractor. We emphasize that a false certification may result in disqualification and other sanctions provided for in the Communications Act and the Commission's rules. We seek comment on these proposals.

    b. Other Eligible Stations

    34. Early Displaced Stations. We propose that LPTV and TV translator stations that were displaced early, were eligible to file in the Special Displacement Window, and filed a displacement application prior to the Special Displacement Window will be eligible for reimbursement under the REA. As described above, some LPTV/translator stations were displaced prior to the Special Displacement Window as a result of T-Mobile's decision to commence wireless operations in the 600 MHz band. As noted above, approximately 340 such stations filed a request for waiver of the displacement freeze and a request for an STA, and the Media Bureau has treated these filings as if filed on the last day of the Special Displacement Window. Such applications will be processed in accordance with the rules for that window. Because these stations meet the definition of LPTV/translator stations eligible for reimbursement under the REA, and their displacement applications were considered as filed during the Special Displacement Window, we propose that these stations will be eligible for reimbursement if they meet all of the other eligibility requirements. We seek comment on this proposal.

    35. Replacement Translators. In the Incentive Auction R&O, the Commission concluded that digital low power TV translator stations authorized pursuant to § 74.787(a)(5) of the Commission's rules (analog-to-digital replacement translators, or DRTs) that were displaced by the incentive auction and repacking process are eligible to file displacement applications during the Special Displacement Window. Because DRTs are potentially displaced as a result of the reorganization of broadcast television spectrum, were eligible to file in the Special Displacement Window, and are considered “TV translators” and licensed under the same Part 74 rules as other TV translator stations, we propose that displaced DRTs also are eligible for reimbursement pursuant to the REA, as long as they meet the other eligibility requirements. We seek comment on this proposal.

    36. In the LPTV DTV Third R&O, the Commission established a new digital-to-digital replacement translator (DTDRT) service to allow eligible full power television stations to recover lost digital service area that could result from the repacking process. The Commission concluded that full power stations may begin to file for DTDRTs beginning with the opening of the Special Displacement Window on April 10, 2018, and ending one year after completion of the incentive auction transition period. Although they were eligible to file in the Special Displacement Window, and DTDRTs are similar to DRTs in that they are considered “TV translators” and licensed under the same Part 74 rules as other TV translator stations, we tentatively conclude that new DTDRTs are not eligible for reimbursement under the REA because they would not have been “licensed and transmitting” for 9 of the past 12 months prior to April 13, 2017, as required by the statute. In addition, even if they were otherwise eligible under the statutory criteria, DTDRTs are newly established facilities and thus are not “relocat[ing] . . . from one channel to another channel” or “modify[ing]” their facilities as required by the statute. We seek comment on this tentative conclusion.

    37. Class A Television Licensees. As noted above, Section 511(k)(3) of the REA prohibits duplicative payments from the Reimbursement Fund to “a low power television station that has been accorded primary status as a Class A television licensee under [47 CFR 73.6001(a)].” Specifically, Section 511(k)(3)(A) provides that such licensee may not receive reimbursement under Section 511(k)(1) of the REA if such station has received reimbursement under Section 6403(b)(4)(A)(i) of the Spectrum Act (including the additional funding made available for reimbursing full power, Class A, and MVPDs in Section 511(j)(2)(A)(i) of the REA). We interpret this language to underscore that Class A stations reimbursed from funds for Class A stations under the Spectrum Act or the REA are not eligible for reimbursement from funds dedicated to LPTV/translator reimbursement under the REA. Such Class A stations were not eligible to file an application during the Special Displacement Window and thus do not qualify for reimbursement for LPTV/translator stations under the REA. Similarly, Section 511(k)(3)(B) specifies that a low power television station that has been accorded primary status as a Class A television licensee that receives reimbursement under Section 511(k)(1) of the REA may not receive reimbursement under Section 6403(b)(4)(A)(i) of the Spectrum Act. We interpret this language to underscore that such stations that filed in the Special Displacement Window are not eligible for reimbursement under Section 6403(b)(4)(A)(i) because they are not full power or Class A stations involuntarily reassigned to a new channel in the repacking process. We seek comment on our interpretations.

    2. Expenses Eligible for Reimbursement a. Costs Reasonably Incurred

    38. The REA provides that the Commission shall “reimburse costs reasonably incurred by a television translator station or low power television station on or after January 1, 2017, in order for such station to relocate its television service from one channel to another channel or otherwise modify its facility as a result of the reorganization of broadcast television spectrum” under the Spectrum Act. As discussed above, on April 13, 2017, we released the Closing and Channel Reassignment PN, which announced the completion of the auction, the auction results, the broadcast television channel reassignments made through repacking, and the 600 MHz Band plan reflecting the reallocations of broadcast television spectrum for flexible use and the frequencies that will serve as part of the 600 MHz Band guard bands. We interpret the REA to provide for reimbursement of reasonably incurred relocation costs for LPTV/translator stations that were displaced “as a result of the reorganization of broadcast television spectrum” under the Spectrum Act, which includes displacement resulting from full power and Class A channel reassignments made in the Closing and Channel Reassignment PN and from the reallocation of broadcast television spectrum for flexible use by a 600 MHz Band wireless licensee or for use as 600 MHz Band guard bands.

    39. While the Commission's reorganization of television spectrum under Section 1452(b) of the Spectrum Act was completed with the issuance of the Closing and Channel Reassignment PN, the Commission also afforded reassigned stations the opportunity to file applications for alternate channels or expanded facilities during two filing windows that ended on September 15 and November 2, 2017. We anticipate that some LPTV/translator stations that filed applications during the Special Displacement Window may have been displaced by grant of an application filed during one of the alternate channel/expanded facilities filing windows, rather than the channel reassignments specified in the Closing and Channel Reassignment PN. While applications filed during the two filing windows by reassigned full power and Class A stations to modify their repacked facilities were not required under Section 1452(b) of the Spectrum Act, they may have resulted in displacement of LPTV/translator stations making those stations eligible to file applications in the Special Displacement Window. Accordingly, we seek comment on whether the REA's requirement that we reimburse costs reasonably incurred “as a result of the reorganization of broadcast television spectrum” extends to include costs incurred by LPTV/translator stations that were displaced solely due to modifications made by full power and Class A facilities as a result of receiving authorizations through these two filing windows.

    40. We tentatively conclude that the equipment and other costs necessary for an eligible LPTV/translator station to construct the facilities authorized by grant of the station's Special Displacement Window application shall be considered costs “reasonably incurred,” and seek comment on this tentative conclusion. This approach is similar to the reimbursement program used for full power and Class A stations with the following distinction. In implementing the Spectrum Act's reimbursement provisions for full power and Class A stations reassigned to new channels, the Commission concluded that the Act required that it reimburse costs “that are reasonable to provide facilities comparable to those that a broadcaster . . . had prior to the auction that are reasonably replaced or modified following the auction, as a result of the repacking process, in order to allow the broadcaster to operate on a new channel . . . .” This included reimbursement “for modification or replacement of facilities on the post-auction channel consistent with the technical parameters identified in the Channel Reassignment PN.” The Spectrum Act required that the Commission make “all reasonable efforts” in the repacking process to preserve coverage area and population served of full power and Class A stations. Thus, the post-auction channel reassignments specified in the Closing and Channel Reassignment PN were made at stations' existing locations and largely replicated stations' pre-auction facilities.

    41. We do not believe that a similar “comparable” facilities reimbursement standard can, as a technical matter, be applied to displaced LPTV/translator stations. Displaced LPTV/translator stations, unlike full power and Class A stations, may need to move their transmitter and antenna locations in addition to changing channels. In order to continue to provide service to viewers from the new site, stations may need to increase their effective radiated power and height, which may require the purchase of transmitters, transmission lines, and other equipment that is not “comparable” to their existing equipment. Therefore, we tentatively conclude that the equipment and other costs necessary for an eligible LPTV/translator station to construct the facilities authorized by grant of the station's Special Displacement Window application shall be considered “reasonably incurred,” consistent with other reimbursement procedures and processes we propose herein (such as requiring broadcasters to reuse equipment and take other steps to mitigate costs where possible). We propose to permit LPTV/translators to be reimbursed for both “hard” expenses, such as new equipment and tower rigging, and “soft” expenses, such as legal and engineering services, but, as discussed below, propose to direct the Media Bureau to prioritize, if necessary, the payment of certain hard costs necessary to operate the stations over soft costs to assure that such costs are recoverable to the extent possible under a limited fund. We seek comment on these tentative conclusions and on any alternative reimbursement approaches for eligible LPTV/translator stations. For example, should we permit as costs “reasonably incurred” those costs necessary to provide replacement facilities of comparable coverage? When reimbursing low-power broadcasters for equipment, to what extent could the Commission reimburse the costs for full service mask filters that could promote spectrum efficiency, even if the station technically could operate at its new location with a stringent or simple mask? Should such equipment be considered a “reasonably incurred” expense that is related to the repack because it would promote greater use of the television band or should it be considered an upgrade that is not eligible for reimbursement?

    42. The REA limits reimbursement for LPTV/translators to “costs . . . incurred . . . on or after January 1, 2017.” We propose to interpret this provision to require that an LPTV/translator station have either expended funds or ordered equipment or services for a cost otherwise eligible for reimbursement on or after that date in order to be eligible for reimbursement pursuant to the REA. We invite comment on this proposal.

    b. Equipment Upgrades and Reuse of Existing Equipment

    43. In implementing the Spectrum Act's reimbursement provisions, the Commission concluded that it would not reimburse stations for new, optional features in equipment that are not already present in the equipment being replaced, and we propose to apply this same approach to eligible LPTV/translator stations. In addition, the Commission required full power and Class A stations seeking reimbursement to reuse their own equipment to the extent possible, rather than acquiring new equipment to be paid for from the Reimbursement Fund, and to “provide a justification when submitting their estimated cost form as to why it is reasonable under the circumstances to purchase new equipment rather than modify their . . . current equipment. . . .” We propose to adopt a similar requirement that displaced LPTV/translator stations reuse their own equipment to the extent possible, and that displaced LPTV/translator stations seeking reimbursement provide a justification why it is reasonable to purchase new equipment rather than reuse existing equipment. We seek comment on these proposals.

    c. Interim Facilities

    44. We propose to exclude “interim facilities” from the type of expenses eligible for reimbursement under the REA. In the Incentive Auction R&O, the Commission concluded that stations that are assigned a new channel in the incentive auction repacking process may need to use interim facilities to avoid prolonged periods off the air during the transition, and, thus, the Commission decided to reimburse full power and Class A stations for such facilities under the Spectrum Act reimbursement provisions. Because of their lower operating power and the fact that the engineering work that is involved in changing channels is more limited than for full power television stations, we believe it is unlikely that LPTV/translator stations will construct interim facilities as part of the displacement process. Furthermore, LPTV/translators are actually displaced at a time determined either by the receipt of a notice from a wireless carrier that the wireless carrier intends to commence operations in the new 600 MHz wireless band or the phase completion date for a full power or Class A station pursuant to the transition schedule. Because LPTV/translators will have less time to construct interim facilities as a practical matter due to the timing of their actual displacement, interim facilities are unlikely to be utilized by such stations. We believe this proposal will also maximize the limited reimbursement funds available for all eligible LPTV/translator stations and seek comment on this analysis.

    d. Lost Revenues

    45. The REA, like the 2012 Spectrum Act, prohibits reimbursement of LPTV/translator stations for “lost revenues.” In the Incentive Auction R&O, the Commission defined “lost revenues” to include “revenues that a station . . . loses as a direct or ancillary result of the reverse auction or the repacking process.” We propose to adopt a similar definition of “lost revenues” for purposes of reimbursing LPTV/translator stations: “revenues that a station loses as a direct or ancillary result of the reorganization of broadcast television spectrum, including the repacking process and the reallocation of UHF spectrum in conjunction with the incentive auction.” Under this definition and consistent with the Commission's approach in connection with reimbursing full power and Class A stations, we would not reimburse a station's loss of advertising revenues while it is off the air during its displacement, or for refunds a station is required to make for payments for airtime as a result of being off the air in order to implement a channel change. We seek comment on our proposal and on whether there are other additional categories of costs that LPTV/translator stations may incur that would constitute “lost revenues” not eligible for reimbursement under the REA.

    e. Costs To Resolve Mutually Exclusive Applications

    46. The REA provides that “[t]he Commission may not make reimbursement . . . for costs incurred to resolve mutually exclusive applications, including costs incurred in any auction of available channels.” Applications filed during the Special Displacement Window that remain mutually exclusive will be resolved through competitive bidding. We interpret the prohibition against reimbursing for “costs incurred in any auction” to mean that the Commission may not reimburse LPTV/translator station auction bidders under the REA for the costs related to filing an auction application associated with a competitive bidding process, participating in such an auction, and winning bid payments. We seek comment on this interpretation. We also tentatively conclude that costs associated with the Settlement Window to resolve mutual exclusivity will not be reimbursed under the REA. Thus, we propose not to reimburse stations for costs in resolving mutual exclusivity, including engineering studies and preparing application amendments, or the payment of other stations' expenses as part of a settlement. However, we propose to reimburse for costs reasonably incurred in constructing the facilities resulting from settlement and coordination between mutually exclusive applicants. We seek comment on these proposals.

    f. Stations With Other Sources of Funding

    47. We seek comment on whether stations that receive or have received reimbursement of certain expenses from sources of funding other than the Reimbursement Fund should receive reimbursement for those expenses from the Reimbursement Fund. As an initial matter, we note that Section 511(k)(3)(A) specifies that Class A stations that receive reimbursement from “any other source” may not receive reimbursement under the REA. While the REA does not set forth the same requirement for LPTV stations generally, we seek comment on whether a similar prohibition should extend to LPTV stations because a cost that is reimbursed by another source of funding is not a “cost . . . incurred” by the station under Section 511(k)(1). For example, we seek comment on whether displaced LPTV/translator stations that have received reimbursement from T-Mobile for a particular expense should receive reimbursement for that expense pursuant to Section 511(k)(1). As mentioned above, T-Mobile, which holds a number of 600 MHz licenses, began deploying its spectrum in 2017, thereby displacing a number of LPTV/translator stations before the Special Displacement Window opened on April 10, 2018. With respect to these displaced stations that began operating a displacement facility pursuant to an STA, T-Mobile has established a Supplemental Reimbursement Program, to be administered by T-Mobile. According to T-Mobile, it will reimburse eligible licensees “for the costs that they reasonably incur to comply with the permanent channel assignments that they may receive under the Special Displacement Window to the extent those channel assignments differ from the channel assignment these licensees may build following displacement from the 600 MHz band due to T-Mobile's rapid broadband deployment.” Similarly, T-Mobile has reportedly awarded a grant to PBS to “provide funding to enable public television translators . . . to move to new displacement channels regardless of the reason for displacement.” We seek comment on how to address the interplay between the expanded Reimbursement Fund and such pre-REA funding for LPTV relocation.

    48. We also seek comment on whether a displaced LPTV/translator station that has received a state governmental grant to construct its displacement facility should be eligible for reimbursement under the REA. Similarly, we seek comment on whether the licensee of a displaced station that has solicited and received donations to construct its displacement facility should be eligible for reimbursement from the REA.

    49. Finally, we seek comment on whether displaced LPTV/translator stations should be required to indicate on their reimbursement submissions whether they have received or expect to receive reimbursement from another source as part of the reimbursement process. If so, should they provide documentation of the amount that they have received or expect to receive and the associated eligible expenses covered by that alternate reimbursement? We seek comment on whether stations that are eligible to receive reimbursement from other sources for certain expenses (e.g., insurance) should be required to pursue those alternative sources before requesting reimbursement for those expenses pursuant to the REA, and on the type of documentation such stations should be required to provide.

    C. FM Broadcast Stations—Eligibility and Expenses

    50. As mentioned above, in the REA, Congress allocated funds for the purpose of reimbursing costs “reasonably incurred by an FM broadcast station for facilities necessary for such station to reasonably minimize disruption of service as a result of the reorganization of broadcast television spectrum.” In this section, we seek comment on issues related to eligibility and expenses under the REA provisions for reimbursement of FM stations.

    1. Stations Eligible for Reimbursement a. FM Broadcast Stations and FM Translator Stations

    51. Congress defined “FM broadcast stations” in the REA by referencing §§ 73.310 and 74.1201 of the Commission's rules. Section 73.310 defines an FM broadcast station as “[a] station employing frequency modulation in the FM broadcast band and licensed primarily for the transmission of radiotelephone emissions intended to be received by the general public.” Additionally, § 74.1201 defines an FM translator as “[a] station in the broadcasting service operated for the purpose of retransmitting the signals of an AM or FM radio broadcast station or another FM broadcast translator station without significantly altering any characteristics of the incoming signal other than its frequency and amplitude, in order to provide radio broadcast service to the general public.” Given these references, we tentatively conclude that “FM broadcast station” as used in the REA includes full-service FM stations and FM translator stations. We seek comment on this tentative conclusion. Further, although low-power FM (LPFM) stations were not specifically referenced in the REA, we note that such stations meet the criteria for “FM broadcast station” set forth in § 73.310 of the rules and they are licensed under Part 73 of the rules like full-service FM stations. We therefore seek comment on whether LPFM stations should also be considered “FM broadcast stations” for reimbursement purposes.

    b. Licensed and Transmitting at Time of Repack

    52. We tentatively conclude that to be eligible for reimbursement under the REA, an FM station must have been licensed and transmitting on April 13, 2017, and using facilities impacted by a repacked television station. We also tentatively conclude that only those costs associated with the impact at that location will be considered eligible. The REA seeks to reimburse costs “reasonably incurred” by FM stations to “reasonably minimize disruption of service” as a result of the reorganization of broadcast television spectrum, but provides no other additional specificity as to the eligibility of FM stations for reimbursement. We believe it is both necessary and appropriate to impose some reasonable standards on the eligibility of FM stations to be reimbursed from the Reimbursement Fund. We tentatively conclude that we should place the same limitation on FM stations that is applied to LPTV/translator stations. That is, we first propose a cut-off date of April 13, 2017, by which the FM station had to be licensed and transmitting. We choose this date because it is the date on which reverse auction winners and the television stations subject to the repack were identified in the Closing and Channel Reassignment PN. Thus, we tentatively conclude that any FM station that began operating on a facility or at a location impacted by a repacked television station after that date voluntarily assumed the risk of any potential disruption of service to the FM station. We tentatively conclude that any costs incurred by FM stations that undertook such a risk are not “reasonably incurred” under the statutory standard and thus are not eligible for reimbursement pursuant to the REA. We propose that FM stations will be required to certify that they were licensed and transmitting at the facility implicated by the reorganization of broadcast television spectrum on April 13, 2017, and seek comment on this proposal. The REA requires reimbursement “to reasonably minimize disruption of service as a result of the reorganization of broadcast television spectrum under [47 U.S.C. 1452(b)].” As an initial matter, we tentatively conclude that an FM station can experience a service disruption “as a result of the reorganization of broadcast television spectrum under [47 U.S.C. 1452(b)]” either because a full power or Class A television station has been reassigned to a new channel in the Closing and Channel Reassignment PN or because a full power or Class A television station relinquished spectrum usage rights in the reverse auction. In either case, the full power or Class A television station may need to modify its facilities (e.g., dismantling equipment in the case of a license relinquishment station) that may impact the FM station. We read the statutory language to require a causal link between the facilities being reimbursed and the activities associated with the repacked full power or Class A television station, and likewise interpret this provision to mean that only the FM broadcast facilities directly impacted by the repacked television station are eligible for reimbursement. We believe our interpretation of this REA language is consistent with Congress's provision of limited funds for FM facility reimbursement. We invite comment on this interpretation of the REA. We also seek comment on whether the REA's requirement that we reimburse costs incurred by FM stations to “reasonably minimize disruption of service as a result of the reorganization of broadcast television spectrum under [47 U.S.C. 1452(b)]” extends to include costs that were incurred by FM stations solely due to modifications made by full power and Class A facilities as a result of receiving authorizations through the two alternate channel/expanded facilities filing windows.

    c. Categories of Eligible FM Stations

    53. In addition, we believe it is both necessary and appropriate to impose eligibility requirements for FM stations that define the way an FM station could “reasonably incur” costs as the result of a “disruption of service” caused by “the reorganization of broadcast television spectrum” as required by the REA. We believe a large majority of FM stations will not incur any costs or encounter any disruption of service as a result of the reorganization of broadcast television spectrum. However, in limited circumstances, as defined herein, some FM stations may be affected because they are collocated with, or adjacent, or in close proximity to, a repacked television station such that construction work on the repacked television station's facility necessarily results in a disruption of service to the FM station and requires the FM station to incur costs. Accordingly, we tentatively conclude that only stations that are collocated with, or adjacent, or in close proximity to, a repacked television station are eligible for reimbursement and that the FM station will be required to certify to that fact and identify the television station. We seek comment on these conclusions. We believe that only stations in the following categories will encounter any disruption of service as a result of the reorganization of broadcast television spectrum such that they would be eligible for reimbursement under the REA:

    • Category (1)—Stations Forced to Relocate Permanently. We propose that this eligibility category include FM stations required either to vacate their towers, and which therefore incur costs for alternative facilities at a different site, or to relocate their antennas to a different level of their current towers. Either change would modify the station's transmissions and would thus require prior Commission approval. We anticipate that there will be a very small number of FM stations if any in this eligibility category.

    • Category (2)—Stations Forced to Temporarily Dismantle Equipment or Make Other Changes Not Requiring Commission Approval. We propose that this eligibility category include FM stations required temporarily to dismount or disassemble equipment, most likely antennas, in order to accommodate work on a television antenna or a tower. We propose that this category also include FM stations required to physically move their transmitter to accommodate new television transmission equipment. While such an equipment move may not be temporary, it is not the kind of facility modification that would change the station's transmissions, and thus would not require Commission approval. We propose this category also include other types of necessary equipment modifications that do not require Commission approval. We anticipate there will be a very small number of FM stations in this eligibility category.

    • Category (3)—Stations Forced to Temporarily Reduce Power or Cease Transmission on Their Primary Facility to Accommodate Antenna or Tower Modifications. We propose that this eligibility category would include those FM stations that are required to reduce power or go off the air to protect workers making modifications to television facilities on a tower from RF exposure. The length of time during which a station would have to reduce power or cease transmissions could range from hours to weeks or even months. Such stations could incur costs to build or modify auxiliary facilities to permit FM broadcast service to continue during this period. Category (3) would include stations with no existing auxiliary facilities and stations that are unable to access auxiliary transmission facilities. Category (3) would also include stations that have existing auxiliary facilities, but whose facilities do not provide substantial (80+ percent) coverage of the primary station's coverage area or population. FM stations in other eligibility categories could also qualify as Category (3) stations if they otherwise meet the reimbursement requirements. We anticipate that this category of stations will be the most numerous of eligible FM stations but is still likely to include only a limited number of FM stations.

    54. We believe that reimbursing FM stations for the types of service disruptions described in these categories is consistent with our statutory mandate to reimburse FM stations for “costs . . . for facilities necessary for such station to reasonably minimize disruption of service as a result of the reorganization of broadcast television spectrum,” and we seek comment on our interpretation. We invite comment on the scope of our categories above and ask commenters specifically to explain whether there are additional categories of service disruption that should be reimbursed. We tentatively conclude that FM stations would be required to certify which eligibility category they satisfy, and we seek comment on that conclusion.

    55. Section 511(l)(1)(C) specifies that an FM broadcast station that has received payment for “interim facilities” from either a station that was reimbursed under the Spectrum Act or “from any other source” may not receive “any reimbursements” under the REA. Thus, as required by the statutory language, we propose that if an FM broadcast station has received such payment for “interim facilities,” it is ineligible for any reimbursement under the REA. We tentatively conclude that FM stations would be required to certify whether they have received payment for such interim facilities.

    2. Expenses Eligible for Reimbursement

    56. The REA states that the Commission shall provide reimbursement for “costs reasonably incurred by an FM broadcast station for facilities necessary for such station to reasonably minimize disruption of service as a result of the reorganization of broadcast television spectrum.” We note that the statute does not require reimbursement of costs to ensure there is no disruption of service at all. We tentatively conclude that some level of disruption of service to eligible FM stations is reasonable, and we do not propose to reimburse costs incurred to avoid reasonable disruptions. We also believe that the public interest requires that we seek to maximize the limited funds available for all facilities to address the most significant service disruptions to ensure that the most needed facilities are fully funded. We seek comment below on how to define what costs are “reasonably incurred” and on how to interpret the phrase “to reasonably minimize disruption of service” as contemplated by the REA, and we propose an approach for prioritization of reimbursement to stations with a greater level of service disruption to preserve limited funds.

    a. Costs Reasonably Incurred

    57. As described below, we propose that eligible costs for Category (1) and Category (2) stations are similar to eligible costs for full power and Class A stations in the repack and therefore should be reimbursed in a similar manner. We propose, however, that the cost for Category (3) stations should be subject to a graduated priority system and reimbursable only when the disruption of service is significant enough to make it reasonable for a station to incur costs to minimize the disruption, and then on a scale that balances the level of the service disruption with the need to maximize the finite funds and ensure the most significantly impacted facilities are fully funded. We seek comment on these proposals as detailed below.

    (i) Replacing or Restoring Facilities—Category (1) and (2) Stations

    58. The existing reimbursement program for full power and Class A stations seeks to reimburse costs reasonably incurred for stations to move their facilities to a new channel that was assigned as a result of the incentive auction repacking process using reasonable efforts to preserve each station's coverage area and population served. We believe it is in the public interest to develop a similar standard for the reimbursement of costs associated with Category (1) stations because the nature of the displacement of the FM station and the types of costs incurred are similar. We seek comment on these conclusions. We believe the goal for Category (1) stations should be to rebuild their facility to reasonably replicate the station's coverage area and population served, similar to the standard applicable to full power and Class A stations. Further, we believe that Category (1) stations should be eligible for reimbursement for costs similar to full power and Class A stations to move and reconstruct the current facilities at a new site or tower location, including costs of equipment, professional services such as engineering, and tower and construction work. We believe that such stations are likely to experience the most significant disruption of service of all FM stations because they will be required to entirely or partially dismantle and reconstruct their facilities. As a result, if sufficient funds allocated to reimburse FM stations exist in the Reimbursement Fund, we believe that Category (1) stations should be reimbursed for up to 100 percent of eligible costs similar to the reimbursements provided to impacted full power and Class A stations. As noted above, we believe only a very small number of stations are likely to be included in this category and therefore we do not believe the reimbursement of these stations is likely to be a primary resource demand on the Reimbursement Fund. We seek comment on these conclusions.

    59. Examples of reimbursable equipment costs that we believe could be reasonably incurred include transmitters, antennas, coaxial cable or wave guides, and associated equipment needed to reasonably replicate the service being lost. We propose that existing equipment should be reused as appropriate. To the extent that existing equipment cannot be reused, we propose that new equipment may be reimbursable if needed to reasonably replicate service and coverage area. We propose that the costs of engineering to determine what technical facilities are needed to replace existing service at a new site should be considered reimbursable expenses, as well as transportation costs of physically moving equipment to a new site or new location on a tower and any engineering costs associated with the move. We seek comment on these proposals.

    60. We believe it is also in the public interest to develop a similar standard for eligible expenses for reimbursement of Category (2) stations because the types of costs incurred are also similar. We seek comment on these conclusions. We believe the goal for Category (2) stations should be to restore the station's existing facility. For example, Category (2) stations could reasonably incur costs that are related to their need to temporarily dismantle equipment or modify their physical facilities. Examples of reimbursable costs could include costs of equipment, professional services such as engineering, and tower and construction work, similar to the costs incurred by full power and Class A stations. Additionally, similar to Category (1), the service disruptions associated with these costs are likely to be significant in magnitude, but the number of stations incurring such costs is likely to be very small and not the most significant drain on the Reimbursement Fund. Therefore, we propose that, if sufficient funds allocated to reimburse FM stations exist in the Reimbursement Fund, Category (2) stations should be reimbursed for up to 100 percent of eligible costs similar to full power and Class A stations. We seek comment on this proposal.

    (ii) Interim Facilities—Category (3) Stations

    61. In the full power and Class A reimbursement program, the costs of interim facilities are reimbursed in the same manner as other costs incurred for a station to change channels. With respect to the types of costs that would qualify for reimbursement as interim facilities, we seek to apply the same approach to FM stations. We propose that Category (3) stations be reimbursed for the cost of constructing new auxiliary facilities or upgrading existing auxiliary facilities. This would permit FM stations to continue broadcasting while their primary facilities are off the air due to the need to protect tower personnel working on modifications related to the reorganization of broadcast television spectrum. Reimbursable costs could include costs of equipment, professional services such as engineering, and tower and construction work.

    62. As described in more detail below, we tentatively conclude that reimbursement of interim facility costs should be linked to the level of service disruption avoided by resorting to interim facilities, and therefore propose to reimburse on a graduated priority system reflecting a percentage of total costs for these interim facilities. We further tentatively conclude that it is not unreasonable for there to be some temporary disruption of service to permit construction work or maintenance on a collocated, adjacent, or nearby station. FM stations regularly power down or remain silent for temporary periods to accommodate tower or antenna work and transmitter maintenance, and we conclude from this fact that such actions are ordinary and reasonable occurrences. We therefore believe that it is appropriate to reimburse costs for interim facilities only if they are needed to avoid service interruptions that would otherwise exceed ordinary construction or maintenance requirements. Furthermore, operating from interim facilities does not require service that is identical to the station's primary service. We believe this different approach is justified by the different standard enunciated in the REA, requiring us to consider what expenses “reasonably minimize” disruption of service rather than the Spectrum Act's mandate to reimburse expenses resulting from a channel change. Furthermore, we anticipate that the majority of reimbursement requests from FM stations will be in Category (3), and that they will account for the majority of the demand by FM stations for resources from the Reimbursement Fund. Thus, we tentatively conclude that a graduated scale is in the public interest because it properly reflects the level of service disruption, which could vary from hours to weeks or even months, and therefore balances our need to preserve finite funds for the most significant instances of service disruption. Under this proposal, reimbursement percentages in excess of those proposed below might be available if, after making all the payments for interim facilities and other eligible expenses, there is sufficient money to pay a higher reimbursement percentage to FM stations in the Reimbursement Fund. We seek comment on these proposals herein.

    63. We believe that the amount of broadcaster reimbursement for interim facilities should be linked to the amount of time the FM station is off the air due to the reorganization of broadcast television spectrum. These time periods will likely range from hours to, in extreme and hopefully rare cases, months. Additionally, we believe that the times of day during which stations are off the air should also play a part in our calculus. Some stations may be subject to limited service disruptions, for instance, if tower work or work on co-tenant antennas is limited to nighttime hours which would minimize broadcast time lost during peak listening hours. Such stations will not be as adversely affected as those required to reduce power or go off-air for extended periods of time. As to the latter group of affected stations, we find that the reimbursement for interim facilities should be greater the longer they are required to be off the air. The longer the lost airtime, the more service disruption and, thus, the greater justification for reimbursement for the construction of permanent auxiliary facilities.

    64. Further, we note that transmissions from interim facilities would not exactly replicate the areas or populations covered from the licensed transmitter site. Thus, we propose that 80 percent of an FM station's coverage area or covered population should be replicated by the interim facility in order to constitute reasonably minimal disruption of service. In another context, when a rule requires provision of a certain strength signal to an entire community, the Commission has held that when a station provides that signal strength to 80 percent or more of either the area or the population of the community, such a signal may be considered to be in substantial compliance with the rule. We believe this 80 percent standard is an acceptable yardstick for measuring interim FM service, especially given that near-exact replication of a station's coverage area from an alternative site, in many if not most cases, may not be achieved without significant expense. Accordingly, we propose that FM signal coverage of either 80 percent of the area or 80 percent of the population covered by an FM station at its licensed site be considered to be substantial interim coverage and, thus, tentatively conclude it would meet the REA standard of reasonably minimizing disruption of service. We invite comment on this proposal, including comment on the costs of requiring a greater or lesser level of interim service.

    65. We seek comment on the need to develop a prioritization scheme for reimbursement of FM broadcast stations under either statutory interpretation of the amounts available to reimburse such stations. We seek comment on the following graduated priority system of reimbursement for interim facilities constructed to minimize service disruptions to FM broadcast stations forced to go off-air due to the reorganization of broadcast television spectrum. We note that additional percentages for reimbursement might be available if, after making all the payments for interim facilities and other eligible expenses, there is sufficient money to pay a higher reimbursement percentage to FM stations in the Reimbursement Fund. If adopted, we propose to direct the Media Bureau to determine whether and what higher percentage of funds should be paid to Category (3) stations.

    • Stations Off-Air for Less Than 24 Hours, or Off-Air Only During Hours from 10:00 p.m.-6:00 a.m. Local Time or Less Than Five Non-Peak Broadcast Hours Per Day: No reimbursement. We propose that such periods off-air be considered a de minimis disruption of service.

    • Stations Off-Air for 24 Hours to 10 Days: May be reimbursed up to 50 percent of eligible costs reasonably incurred to construct new auxiliary facilities, to upgrade existing auxiliary facilities to cover 80 percent of the covered area and/or population of the existing facility, or to build interim facilities for eligible secondary services.

    • Stations Off-Air for 11 Days to 30 Days: May be reimbursed up to 75 percent of eligible costs reasonably incurred to construct new auxiliary facilities, to upgrade existing auxiliary facilities to cover 80 percent of the covered area and/or population of the existing facility, or to build interim facilities for eligible secondary services.

    • Stations Off-Air for More than 30 Days: May be reimbursed up to 100 percent of eligible costs reasonably incurred to construct new auxiliary facilities, to upgrade existing auxiliary facilities to cover 80 percent of the covered area and/or population of the existing facility, or to build interim facilities for eligible secondary services.

    66. We seek comment on these issues and on whether reimbursing FM stations on a graduated scale is in the public interest. In particular, we seek comment on whether failing to pro-rate the amount of reimbursement for interim facilities might reduce reimbursement for all affected FM stations, given the total amount of money available to FM stations for reimbursements. We also request comment on the time off-air benchmarks set forth in paragraph 65, and whether they should be adjusted up or down. In particular, we seek comment on whether time off-air during nighttime and early morning hours should be considered de minimis and, if not, what level of reimbursement for auxiliary facilities should be allowed for such stations to provide interim nighttime service. If commenters disagree with the proposed reimbursement scheme, what alternative proposals do they recommend to ensure we allocate the limited funds fairly and equitably across all FM stations?

    67. We acknowledge that the graduated scale could be subject to manipulation where the construction project is prolonged in order to reach a number of days that correlates to a higher reimbursement percentage. We believe that this concern is mitigated by the fact that the FM station will ordinarily not be in control of the repacked television station's construction project, and that a repacked television station is unlikely to prolong for the benefit of the FM station the time period that it employs vendors and service providers to perform construction. Nevertheless, in order to minimize the potential for gaming the system, we seek comment on whether to pay reimbursement for interim stations only after the period of time has expired and the number of days can be and is certified by the station. We also seek comment on whether to require certification by the FM station concerning the number of days the station could not broadcast from its primary facility due to construction work of a repacked television station. As noted herein, we intend to conduct audits, data validations, and site visits, as appropriate, to prevent waste, fraud, and abuse. As part of that process, we could require a repacked television station to provide, upon request, a statement or other information regarding the dates that work was being done that impacted the FM station. We seek comment on these issues and on additional ways we can minimize this potential problem.

    68. To the extent that a Category (3) station is required to lease tower space for a new auxiliary facility, we propose to allow reimbursement only for those lease payments covering the period of time during which the primary station is off the air due to the reorganization of broadcast television spectrum. In other words, we will not reimburse for tower lease payments except during the period when the repacked television station's construction work is actively preventing the FM station from broadcasting from its primary facility and not for any period of time thereafter. We request comment on this proposal.

    b. Channel Change Equipment

    69. We expect that no FM broadcast station will be forced to change its frequency as a result of the reorganization of broadcast television spectrum and, thus, we tentatively conclude that expenses for retuning or replacing antennas or transmitters to accommodate channel changes will not be eligible for reimbursement. We seek comment on this expectation.

    c. Equipment Upgrades and Reuse of Existing Equipment

    70. As noted above, full power and Class A stations can be reimbursed only for comparable facilities, while we propose that LPTV/translators may in certain cases require modified facilities due to the fact that LPTV/translators may need to change locations and not just channels. Similarly, we tentatively conclude that the full power and Class A comparable facilities reimbursement standard cannot be applied in the same manner to FM stations in Categories (1) and (2) because the goal is to reasonably replicate the service type and area from a different location (Category (1)) or restore service using alternate equipment (Category (2)). In some cases, this can be accomplished using existing equipment or its equivalent, but in other cases this will require modified or differently configured equipment. For instance, a move of an FM station's antenna to a lower spot on the same tower could, in order to replicate the station's existing signal contours, require replacement equipment with an increase in ERP, either by using a transmitter with higher power output or an antenna with higher gain. In the (we expect rare) cases in which a station is forced to move to another tower, reasonably replicating current service might involve both of those options and/or design and construction of an antenna with a directional pattern, in order to avoid prohibited interference to other FM stations.

    71. To the extent that a Category (1) station would propose to construct a new tower, we propose to reimburse tower construction expenses only upon a showing that no space is available on other local towers that would enable it to reasonably replicate current service. Even if it were able to make such a showing, we seek comment on whether and how we should discount any reimbursement for tower construction costs, given that such “vertical real estate” carries with it the potential for revenue generation for the FM station, perhaps in substantial amounts. We seek comment on this proposal.

    72. Similar to our tentative conclusion above concerning LPTV/translators, we also propose that we will follow the Commission's determination in the existing reimbursement program and not reimburse stations for new, optional features in equipment that are not already present in the equipment being replaced. For example, we would not reimburse an analog-only FM station to add hybrid digital capability. A station that contemplates a rule-compliant modification to a higher station class or to an expanded service area as part of a required move may do so, but we propose to limit reimbursement only to costs needed to return the station to its original service area. We seek comment on these proposals. While the REA contains a provision precluding duplicative payments relating only to “interim facilities,” we tentatively conclude that FM broadcast stations that receive or have received reimbursement of expenses from sources of funding other than the Reimbursement Fund, such as co-located television stations and/or tower owners providing reimbursement under contractual provisions, will not receive reimbursement for those expenses from the Reimbursement Fund. We tentatively conclude that a cost that is reimbursed by another source of funding is not a “cost . . . incurred” by the FM broadcast station under Section 511(l)(1)(A). We seek comment on this tentative conclusion.

    73. In addition, the Commission required full power and Class A stations seeking reimbursement to reuse their own equipment to the extent possible, rather than acquiring new equipment to be paid for from the Reimbursement Fund, and to “provide a justification when submitting their estimated cost form as to why it is reasonable under the circumstances to purchase new equipment rather than modify their . . . current equipment . . .” We propose to adopt a similar requirement that FM stations reuse their own equipment, to the extent possible. As noted above, we expect that FM stations will not be required to change frequencies, so there should be no issues regarding channel-related equipment modifications. Thus, we believe it is reasonable to require FM stations seeking reimbursement to provide a justification why it is reasonable to purchase new equipment rather than reuse existing equipment. We seek comment on this proposal.

    d. Lost Revenues

    74. The REA, like the 2012 Spectrum Act, prohibits reimbursement of FM broadcast stations for “lost revenues.” In the Incentive Auction R&O, the Commission defined “lost revenues” to include “revenues that a station . . . loses as a direct or ancillary result of the reverse auction or the repacking process.” We propose to adopt a similar definition of “lost revenues” for purposes of reimbursing FM broadcast stations: “revenues that a station loses as a direct or ancillary result of the reorganization of broadcast television spectrum, including the reverse auction and the repacking process.” Under this definition, we would not reimburse a station's loss of advertising revenues while it is off the air implementing either replacement or interim facilities, or for refunds a station is required to make for payments for airtime as a result of being off the air in order to implement such a facility chang