Federal Register Vol. 83, No.179,

Background

Under the regulations in “Subpart—Fruits and Vegetables” (7 CFR 319.56-1 through 319.56-83, referred to below as the regulations or the fruits and vegetables regulations), the Animal and Plant Health Inspection Service (APHIS) of the United States Department of Agriculture (USDA) prohibits or restricts the importation of fruits and vegetables into the United States from certain parts of the world to prevent plant pests from being introduced into and spread within the United States.

The regulations in 7 CFR part 318, “State of Hawaii and Territories Quarantine Notices” (referred to below as the Hawaii and territories regulations), prohibit or restrict the interstate movement of fruits, vegetables, and other products from Hawaii, Puerto Rico, the U.S. Virgin Islands, and Guam to the continental United States to prevent the spread of plant pests and noxious weeds that occur in Hawaii and the territories.

Under our current process for authorizing importation of fruits or vegetables under the fruits and vegetables regulations or interstate movement under the Hawaii and territories regulations, when APHIS receives a request from a country's national plant protection organization (NPPO) or a State department of agriculture to allow importation or interstate movement of a fruit or vegetable whose importation or interstate movement is currently not authorized, that NPPO or State department of agriculture must first gather and submit information to APHIS concerning that fruit or vegetable. In the case of imports, a description of the required information is contained in 7 CFR 319.5(d). This information, in addition to our own research, allows APHIS to conduct a pest risk analysis.

The pest risk analysis usually contains two main components: (1) A pest risk assessment (PRA), pest list, or other pest risk document to determine what pests of quarantine significance are associated with the proposed fruit or vegetable and which of those are likely to follow the import or interstate movement pathway, and (2) a risk management document (RMD), to identify phytosanitary measures that could be applied to the fruit or vegetable and evaluate the potential effectiveness of those measures. When the PRA, pest list, or other pest risk document is complete, if quarantine pests are associated with the fruit or vegetable in the country, State, or other region of origin,1 APHIS then evaluates whether the risk posed by each quarantine pest can be mitigated by one or more of the designated phytosanitary measures of the fruits and vegetables regulations or the designated phytosanitary measures of the Hawaii and territories regulations. If the designated phytosanitary measures alone are not sufficient to mitigate the risk posed by the importation or interstate movement of the commodity, any further action on approving the fruit or vegetable for importation or interstate movement is undertaken using the rulemaking process, which entails publishing a proposed and final rule. The pest risk analysis is made available to the public for review and comment at the time of the publication of the proposed rule.

However, if APHIS determines in an RMD that the risk posed by each identified quarantine pest associated with the fruit or vegetable in the country, State, or other region of origin can be mitigated by one or more of the designated phytosanitary measures listed in § 319.56-4(b) of the fruits and vegetables regulations or § 318.13-4(b) of the Hawaii and territories regulations (these measures are referred to elsewhere in this document as designated phytosanitary measures or designated phytosanitary measures of the fruits and vegetables regulations), the findings are communicated using the notice-based process.

Under the notice-based process, APHIS publishes in the Federal Register, a notice announcing the availability of the pest risk analysis for a minimum of 60 days public comment. Each pest risk analysis made available for public comment through a notice specifies which of the designated phytosanitary measures APHIS would require to be applied. APHIS evaluates comments received in response to the notice of availability of the pest risk analysis. In the event that APHIS receives no comments, or in the event that commenters do not provide APHIS with analysis or data that indicate that the conclusions of the pest risk analysis are incorrect and that changes to the pest risk analysis are necessary, APHIS then publishes another notice in the Federal Register announcing that the Administrator has determined that, based on the information available, the application of one or more of the designated phytosanitary measures (as specified in a given pest risk analysis) is sufficient to mitigate the risk that quarantine pests could be introduced or disseminated within the United States via the importation or interstate movement of the fruit or vegetable. APHIS then authorizes the importation or interstate movement of the particular fruit or vegetable, subject to the conditions described in the pest risk analysis, on the date specified in the Federal Register notice.

In the event that commenters provide APHIS with information that shows that changes to the pest risk analysis are necessary, and if the changes made affect the conclusions of the analysis (e.g., that the application of the identified phytosanitary measures will not be sufficient to mitigate the risk posed by the identified pests), APHIS proceeds as follows:

• If additional phytosanitary measures beyond the designated phytosanitary measures are determined to be necessary to mitigate the risk posed by the particular fruit or vegetable, any further action on the fruit or vegetable follows the rulemaking process.

• If additional risk mitigation measures beyond those evaluated in the pest risk analysis are determined to be necessary, but the added measures only include one or more of the designated phytosanitary measures of the fruits and vegetables regulations or the designated phytosanitary measures of the Hawaii and territories regulations, APHIS may publish another notice announcing that the Administrator has determined that the application of one or more of the designated phytosanitary requirements will be sufficient to mitigate the risk that quarantine pests could be disseminated within the United States via the importation or interstate movement of the fruit or vegetable. The notice also explains the additional mitigation measures required for the importation or interstate movement of the fruit or vegetable to be authorized and how APHIS made its determination. APHIS then begins allowing the importation or interstate movement of the particular fruit or vegetable, subject to the conditions described in the revised pest risk analysis, beginning on the date specified in the Federal Register notice. Alternatively, if APHIS believes that the revisions to the pest risk analysis are substantial, and there may be continued uncertainty as to whether the designated measures are sufficient to mitigate the risk posed by importation of the fruit or vegetable, APHIS may elect to make the revised pest risk analysis available for public comment via a notice in the Federal Register, or may make any further action on approving the commodity for importation subject to rulemaking.

When commodities are approved for importation or interstate movement, either through rulemaking or the notice-based process, all permits issued list the commodity-specific importation requirements as determined by the pest risk analyses. Those requirements are also listed in Fruits and Vegetables Import Requirements (FAVIR) database,2 in the case of imported fruits and vegetables, as well as the appropriate manual, in the case of fruits and vegetables that are moved interstate from Hawaii and the U.S. territories. In order to ensure producer compliance with the listed procedures, an APHIS inspector or an official authorized by APHIS monitors any treatments (e.g., cold treatment, fumigation, irradiation) that are required. Upon arrival, consignments are inspected to ensure compliance with any particular shipping requirements, such as arrangement of fruits or vegetables on pallets or pest-exclusionary packaging, as well as for the presence of any pests of concern. In the event that a pest is discovered upon inspection at the port of first arrival, APHIS works with the inspectors and, in the case of imports, the NPPO of the exporting country, in order to investigate and, if necessary, re-evaluate shipments of the fruit or vegetable in question from that country or State.

On September 9, 2014, we published in the Federal Register (79 FR 53346-53352, Docket No. APHIS-2010-0082) a proposal3 to amend the regulations by expanding the use of the notice-based process to all decisions related to the importation and interstate movement of new fruits and vegetables. We also proposed to remove the remaining region- or commodity-specific phytosanitary requirements currently found in §§ 319.56-13, 319.56-20 through 319.56-70, 318.13-16, and 318.13-20 through 318.13-26. Since that time, § 319.56-71 through § 319.56-83 have been added to the regulations. This rule will remove those commodity-specific sections as well.

We solicited comments concerning our proposal for 60 days ending November 10, 2014. We reopened and extended the deadline for comments until January 29, 2015, in a document published in the Federal Register on December 4, 2014 (79 FR 71973, Docket No. APHIS-2014-0082) and reopened and extended the deadline for comments a second time ending March 10, 2015, in a document published in the Federal Register on February 6, 2015 (80 FR 6665, Docket No. APHIS-2010-0082). We received 22 comments on the proposed rule by that date. They were from representatives of State and foreign governments, industry organizations, importers and exporters, distributors, and private citizens. Two comments were supportive. The remainder of the comments are discussed below by topic.

Several commenters requested that we extend the comment period for the proposed rule. As stated previously, we extended the comment period twice. Along with the initial comment period on the proposed rule, these extensions gave the public 180 days in which to review the proposal and submit comments.

In addition to the comment period extension, several commenters said that APHIS should issue an additional notice to clarify the scope and application of the proposed rule.

One commenter observed that, in 2006 when we proposed a notice-based process for a limited number of fruit and vegetable import requests, APHIS provided four public field hearings to ensure adequate interested-party input. The commenter said that similar efforts were warranted in this case as well. Two commenters suggested that APHIS convene a stakeholder working group in association with the extension of the comment period in order to review the proposed rule. The commenters requested that special attention be paid to addressing significant barriers that impact trade within certain countries. The commenters argued that this working group would allow stakeholders to provide greater input for the proposed action.

While we did not issue an informational notice as suggested by the first commenters or convene a working group, we did host a webinar open to the public. This briefing provided an overview of the proposed changes and gave stakeholders an opportunity to learn more about the rule and to ask questions. Additionally, APHIS published an explanatory questions and answers (Q&A) document on the APHIS website.4 Unlike our 2006 action, which represented a new rulemaking procedure, we did not hold public meetings in association with the proposed rule because the noticed-based process has been successfully employed since that time and the proposed action was merely an expansion of the existing program.

Several commenters stated that the proposed rule did not make clear which administrative review steps would be eliminated if APHIS adopted a notice-based process.

Since notices are not considered rulemaking documents, we anticipate that the primary administrative time-savings will be a result of procedural steps that apply to rulemaking in the Federal Government, such as the development and publication of a proposed rule or final rule. The notice-based process is an informal adjudication process in that the Code of Federal Regulations (7 CFR parts 318 and 319) sets out general mitigation measures and criteria that will be applied for the interstate movement or importation of fruits and vegetables into the United States. For each interstate movement or import request, the agency will conduct a risk assessment applicable to the specific commodity/place of origin and adjudicate the matter through the publication of a notice announcing the availability of the risk analysis and the solicitation of comments. The final notice published in the Federal Register constitutes a final agency action which may be subject to challenge in court under the Administrative Procedure Act.

Another commenter stated that since the proposed changes would include a broad list of most or all available risk mitigation measures, which is far beyond currently established treatments, inspections, and certifications, APHIS should explain how efficacy and performance will be measured within each commodity import request in order to evaluate whether the notice-based process will enhance trade.

The commenter's characterization of the proposed designated measures as being beyond established treatments is incorrect. Any phytosanitary treatment required must be among those that appear in the Plant Protection and Quarantine (PPQ) treatment manual. Any additions to the listed treatments in the treatment manual are done so only after we provide notice via a Federal Register notice and evaluate any comments received on that notice. Mitigations apart from phytosanitary treatments will continue to be recognized as parts of systems approaches via FAVIR, which will include information on all other required mitigations.

One commenter cited the 2010-2015 APHIS Strategic Plan's characterization of the Agency's mission to “Protect the health and value of U.S. agricultural, natural and other resources.” The commenter claimed that the proposal was in contradiction with that statement and requested clarification on how the action aligns with the APHIS mission, particularly as it relates to benefits to U.S. agricultural resources.

This rule does not alter the way in which APHIS carries out its mission to protect the health and value of U.S. agricultural, natural, and other resources. Our risk-based decisionmaking will not change as a result of this rule, nor will the level of phytosanitary security provided by the mitigation measures we will assign to address identified risks. U.S. consumers and businesses will benefit from more timely access to fruits and vegetables, and the more timely approval of the interstate movement of fruits and vegetables from Hawaii and the U.S. territories will be beneficial to U.S. producers.

One commenter suggested that, as an alternative approach, APHIS should consider import requests for each commodity in a way that encompasses at least three different perspectives: Pests and diseases, economic impact, and possible environmental impact.

The process for developing PRAs and determining mitigation measures would remain the same, giving the public opportunity to review, evaluate, and comment. Additionally, the requirements of the National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 et seq.) will still apply. As such, for each additional fruit or vegetable approved for importation, APHIS will make available to the public documentation related to our analysis of the potential environmental effects of such new imports. This documentation will likely be made available at the same time and via the same Federal Register notice as the risk analysis for the proposed new import. Finally, while the notices published using the notice-based approach will not contain economic analyses, we will certainly continue to consider the potential economic consequences of pest introduction in the pest risk analysis. Similarly, we will document our consideration of trade volume and other economic factors. We commit to inclusion of an evaluation of the economic impacts of those actions that would have been deemed “economically significant” under Executive Order 12866 prior to the effective date of this final rule.

Several commenters said that APHIS should consider maintaining a dual track approach to considering import requests. The commenters suggested that requests that depend on a systems approach for risk mitigation be reviewed by APHIS so that APHIS could then make a determination as to whether a notice-based or rulemaking-based decision was appropriate based on a set of criteria that evaluate relative level of risk, the probability of success of the mitigation measures, and the economic impact of the associated pests in the event that an introduction took place. The commenters concluded that APHIS should then make the rationale for that determination available for public comment.

Under the expanded notice-based process, the development of pest risk analyses and determination of mitigation measures would remain the same, giving the public opportunity to review, evaluate, and comment. This action will not alter our science-based process for approval. If a risk analysis is conducted, the first step of which is typically a PRA or pest list, stakeholders will continue to have 30 days to consult on draft PRAs or pest lists before APHIS initiates the notice-based process. Once APHIS and the foreign NPPO have reached agreement on the PRA, the exporting country will notify APHIS about the mitigation measures they will be implementing. APHIS will then develop an RMD which includes specific requirements for addressing the pests of concern highlighted in the PRA or pest list. Market access requests developed via the notice-based process involving a systems approach will not be any less effective than rulemaking and will not compromise phytosanitary security.

Another commenter recommended that APHIS apply the expanded notice-based approach only to the importation of fruits and vegetables authorized after the regulations are finalized. The commenter added that market access requests currently under review should remain subject to the existing rulemaking process as transferring those requests from the existing rulemaking process into the new notice-based process could result in possible lost opportunities for the industry to review and provide comment. A second commenter wanted to know if the notice-based process would apply to pending decisions where draft PRAs have already been issued for public comment or only to new requests.

We disagree with the first commenter's suggestion. As stated in the proposed rule, initial notices in the Federal Register will be available for review and comment for a minimum of 60 days, which is identical to the comment period we typically set out for proposed rules. We also have the option of extending that comment period if necessary. This provides ample time for stakeholder review and engagement. As to the second commenter's question: This rule will be applied to all pending requests. If an importation or interstate movement request has already been submitted and the results of our pest risk analysis lead us to conclude that the commodity can be safely imported or moved interstate under one or more designated measures, then we will follow the notice-based approach. The final notice published in the Federal Register constitutes a final agency action which may be subject to challenge in court under the Administrative Procedure Act.

One commenter stated that APHIS should provide annual reports to the House and Senate Committees on Agriculture detailing import requests petitions addressed and granted each calendar year under the notice-based process. The commenter stated that these reports should be provided either annually or bi-annually.

While APHIS does not supply such reports currently, if either committee were to request documentation along these lines, we would supply it.

One commenter asked if rulemaking would still be an option after this final rule became effective, and, if so, what the threshold would be for initiating rulemaking.

As stated in the proposed rule, we are removing the region- or commodity-specific phytosanitary requirements currently found in the regulations concerning importation or interstate movement from Hawaii and the Territories. The rulemaking process regarding importation or interstate movement of commodities will be replaced by the notice-based process.

Two commenters asked if the notice-based process would apply only to amendments of existing importation and interstate movement requirements or to all decisions related to the importation and interstate movement of fruits and vegetables.

The notice-based process will apply to all decisions related to the importation and interstate movement of fruits and vegetables, both to changes in requirements for those already allowed under the regulations and new requests for importation or interstate movement.

One commenter stated that it is unclear how the process will work if the new approval of a commodity or a change in requirement involves a phytosanitary measure that is listed in the proposed list of designated phytosanitary measures, but is not aligned to some other subpart elsewhere in the APHIS regulations.

Under the revised regulations, all phytosanitary measures pertaining to the importation of fruits and vegetables would be removed from the regulations. As stated previously, importation and interstate movement requirements would be found in FAVIR, in the case of imported fruits and vegetables, as well as the appropriate manual, in the case of fruits and vegetables that are moved interstate from Hawaii and the U.S. territories. Treatments would continue to be listed in the PPQ Treatment Manual and new treatments would continue to be approved in accordance with 7 CFR part 305.

The same commenter asked for clarification regarding reference to treatments within the CFR. As an example of this scenario, the commenter wondered whether the acceptance of a new phytosanitary treatment depends on the availability of this treatment option under the treatments listed in 7 CFR part 305.

Section 305.3 of the regulations sets forth a notice-based process for adding, revising, and removing treatments contained in the PPQ Treatment Manual. Under those regulations, APHIS will publish in the Federal Register a notice describing our reasons for adding, revising, or removing a treatment schedule and provide for public comment on the action. After the close of the comment period APHIS will publish a notice announcing our final determination and, if appropriate, make available the final treatment schedule if any changes were made as a result of public comments.

One commenter suggested that communication regarding import requests in the form of notices might not receive the same careful attention from industry representatives as is currently given to proposals issued under the traditional rulemaking process.

We disagree. Stakeholders and other interested parties have reason to attend to any potential changes in their industries or other areas of interest. We will continue to provide our draft PRAs on the APHIS website for review and comment before publication of an initial notice. We will also continue to provide alerts via the PPQ Stakeholder Registry and issue press releases. Finally, the initial notice will include a comment period of at least 60 days. These actions provide the public ample opportunity to submit opinions and information on any given action.

Another commenter said that statements by APHIS personnel made in the webinar described previously appeared to indicate that the notice-based process will be of use for revisions to existing regulations that are minor in nature. The commenter also cited the questions and answers document as supporting this impression. The commenter was therefore puzzled by the broad scope of the process as described in the proposal.

We proposed to use the notice-based approach for all commodity import requests. Any reference to the time it takes APHIS to address minor changes to the regulations under traditional rulemaking was intended to serve as an example of how even a straightforward alteration to the regulations may end up taking a very long time under the current system. More complicated rulemakings are typically even more time-consuming. It is the success of our more limited notice-based process that indicates that this broad process may be successfully implemented.

One commenter stated that we should expand upon our explanation of which measure out of the previous list of designated measures APHIS no longer finds sufficient to mitigate the phytosanitary risk posed by importation or interstate movement and how this will affect existing approved measures.

We believe the commenter misunderstood our characterization of the action as it was set out in the proposed rule. None of the five designated phytosanitary measures that had been previously approved for use with the notice-based process were determined to be inadequate to mitigate the pest risks for which they have been used, we instead proposed to expand and reorganize the categories of designated measures in conjunction with an expanded notice-based process.

Another commenter asked how APHIS intends to handle importation situations that include a disease or pest not previously dealt with in connection with the commodity under consideration for importation or interstate movement.

The same commenter wanted to know how APHIS will address a situation where a substantial importation volume of a given commodity is expected when the commodity originates in an area where one or more pests and diseases of quarantine significance exist. The commenter observed that high volumes of an export put pressure on both the exporter to adhere to the required systems approach, and on inspections in the exporting country and the United States.

Systems approaches allow for flexibility in modifying mitigation requirements when evolving pest situations both in the United States and in exporting countries occur. As stated previously, the scientific basis for the application of mitigations will not change. A novel or high import volume situation such as the one described by the commenter would be thoroughly analyzed in the PRA and RMD prior to the approval of any importation or interstate movement. APHIS considers that market access requests through notice-based process involving a systems approach will not be any less effective than rulemaking and will not compromise phytosanitary security.

One commenter wanted to know when the proposed systems approach would be described under the notice-based process in order to allow for stakeholder input. As described in the proposed rule, the process for developing PRAs and determining mitigation measures will remain the same, giving the public opportunity to review, evaluate, and comment. PPQ will continue to make the draft PRAs, pest lists, or other pest risk documents available for review and comment by stakeholders upon completion. After incorporating any changes to the draft PRA, APHIS will then publish in the Federal Register, a notice announcing the availability of the pest risk analysis for a minimum of 60 days public comment. Each pest risk analysis made available for public comment through a notice specifies which of the designated phytosanitary measures APHIS would require to be applied, giving interested parties a chance to specifically comment on those measures. As previously mentioned, the final notice published in the Federal Register constitutes a final agency action which may be subject to challenge in court under the Administrative Procedure Act.

The same commenter stated that the operational workplans developed for use by APHIS and the NPPO of the exporting country are documents that can be changed quickly if the need arises. The commenter said that operational workplans are therefore not legally binding documents, particularly as compared to the weight and authority of traditional rulemaking. The commenter asked what the consequences would be if an exporting country were to violate the terms of the operational workplan.

Contrary to the commenter's assertion, operational workplans are binding documents. Every operational workplan includes a detailed description of the objectives, proposed activities, and expected results and benefits of the importation of a specific commodity and the related roles responsibilities, and resources contributed by each signatory. Penalties for violations of the terms of an operational workplan vary depending upon the violation in question, but can include such things as temporary or permanent ban on the importation of the commodity from the violating country.

The same commenter observed that the proposed rule did not address the way in which APHIS intends to handle or incorporate treatment of pest free areas under the expanded notice-based process.

The requirements regarding pest free area recognition are found in § 319.56-5 of the regulations and remain unchanged by this rule.

The same commenter asked what the principle source of information regarding a given commodity would be under the expanded notice-based system. The commenter hypothesized that this information would be kept in FAVIR and asked if that database would be updated and kept current with the issuance of final notices regarding imports.

As stated in the proposed rule, fruits or vegetables approved for import under this approach will be listed in FAVIR, which is available on the APHIS website. Similarly, approved fruits and vegetables from Hawaii and the territories and their corresponding movement requirements will be listed in APHIS' Hawaii and Puerto Rico/U.S. Virgin Islands manuals, which are available for viewing and download on APHIS' website. All information in these sources will be updated as new commodities are approved for import or interstate movement.

The same commenter said that we did not specify when a preclearance program in the exporting country would be required. The commenter observed that preclearance is an important aspect of import requests, made more so as systems approaches become more complex.

Under some circumstances, we find that inspection prior to exportation is a necessary part of mitigating pest risk and the exporting country would need to inspect the commodity. Such an inspection requirement would be one of the mitigations included in the pest risk analysis and determination of need would be made on a case-by-case basis.

One commenter observed that the PRA is simply a list of the pests and diseases present in the country requesting access to the U.S. market, while the more important issue for U.S. growers concerns the mitigation measures that will be required to address those pests and diseases. The commenter stated that this information should be made available in detail at the same time as the draft PRA is released for comment. The commenter also stated that, even if the RMD were to be released simultaneous to the draft PRA, it is fairly general in nature and does not provide details about the proposed systems approach.

As the commenter noted, mitigation measures for the pests of concern identified in the PRA are addressed in the RMD that is made available with the initial notice. This document is then subject to public comment for at least 60 days. As stated previously, we will continue to provide our draft PRAs on the APHIS website for review and comment before publication of an initial notice. Comments submitted during the 30 day review period for the draft PRA will be considered and may result in changes to the final PRA. The PRA also informs the process of country consultation, which occurs after development of the PRA. The RMD is drafted after this consultation has concluded. Generally, the measures included in the RMD are those that have been certified as effective, standardized, and proven via use on similar or identical pest complexes. Information on the specific steps necessary to meet the requirements of the systems approaches are located in the operational workplan established between APHIS and the exporting country. Copies of the operational workplan may be requested from APHIS.

The same commenter said that the removal of the PRA from the APHIS website after the close of the comment period makes no sense to stakeholders and industry observers. The commenter suggested that all PRAs remain available on the APHIS website for all interested parties to access.

The PRA to which the commenter refers is a draft document. We post all draft PRAs on the APHIS website for comment for 30 days prior to finalizing the PRA and RMD and subsequently publishing any rule or notice concerning those PRAs. After the close of the comment period we remove the PRA from the APHIS website in order to make any necessary changes. Subsequent versions of the PRA are made available for review and comment in association with the Federal Register notice on Regulations.gov. The draft PRA and a summary of any comments we received are preserved and are available upon request.

The same commenter noted that it is impossible to determine the priority assigned by APHIS to any specific import request, and thus the PRA that addresses that request, from the information available on the APHIS website. The commenter asked that APHIS provide some indication of the order in which the PRAs are being considered.

APHIS handles market access requests in the order that they are received. However, issues such as the need for additional information from the requesting country may delay a given request, at which point we often move on to the next request while awaiting necessary information.

Another commenter said that we should make the data underlying PRAs and RMDs more readily available to stakeholders. The commenter suggested that, where proprietary data issues occur, data summaries or other forms of explanation should be provided to stakeholders.

We disagree. PRAs and RMDs represent a synthesis of research, knowledge, and experience. As such, they offer the most complete picture of the pest and disease situation in any potential production area as well as the best representation of the measures APHIS believes will mitigate any phytosanitary risks. We do note that we include references in the completed documents, which interested parties may examine if they so choose.

Two commenters asked if details such as the credibility of the foreign NPPO, infrastructure of programs, and facilities being employed would be made available. The commenters particularly cited the State of Florida as having requested on many occasions to have the opportunity to work more closely with APHIS to lend expertise and increase their level of knowledge regarding import programs. The commenters concluded that it is not acceptable for the State of Florida to concur with a list of phytosanitary measures without knowing firsthand what is being done to assure compliance.

PPQ and the National Plant Board work together to utilize our respective Federal and State authorities, assets, and expertise to safeguard plant health and enable safe trade. While it is not appropriate from a policy standpoint nor practicable from a scheduling standpoint for individual States to directly participate in such activities on a regular basis, we do note that representatives from the State of Florida accompanied APHIS on a site visit to Peru in November 2014 in order to examine the cold treatment program for citrus from that country. In past years, representatives of other States such as California have been included in similar visits.

One commenter said that we should develop procedures for facilitating stakeholder consultation into the process prior to publication of the draft PRA, including a defined period for review and public comment on pest and disease lists.

With respect to allowing the public to comment on pest and disease lists during the drafting phase of the pest risk analyses, such a process would have a serious adverse impact on the timely preparation of these documents. We believe a process in which an analysis is prepared, reviewed, and brought to a point where wider circulation and publication for comment is appropriate yields constructive comments that can be considered before any analysis is finalized. Therefore, we do not plan to take comments on pest and disease lists while they are under development.

The same commenter suggested we include regulated non-quarantine pests and other pests of concern in the PRA in addition to pests of quarantine significance.

The pests described by the commenter are currently included in every PRA prepared by APHIS.

Another commenter observed that the expanded notice-based process will not provide time efficiencies in the pest risk analysis development process, which is responsible for long delays in the processing of pending import applications for fruit and vegetables. The commenter suggested that APHIS consider this part of the approval process with the goal of identifying options to create further efficiencies.

In 2011, APHIS began a business process improvement initiative to identify and ameliorate inefficiencies in the manner in which we evaluate and respond to import applications for fruits and vegetables. While this initiative does not pertain solely to pest risk analyses, we have been working on an ongoing basis to improve the pest risk analysis development process since the initiative began.

One commenter expressed concern that the time reduction associated with the notice-based process may negatively impact the scientific scrutiny needed for the assurance of safety against potential exotic pests and diseases. The commenter urged APHIS to ensure that any time reduction does not also include a less thorough review of the scientific and technical review process.

We agree with the commenter's point that APHIS should ensure that any time reduction does not result in a less thorough review. As stated in the proposed rule, we will continue our specific reviews following market access requests as we have always done and provide the public opportunity to review and comment on the documents produced as a result of those reviews. The amount of time we devote to developing these pest risk analyses will not change. The shortened time period discussed in the proposed rule was in reference to that portion of the rulemaking process that begins after the pest risk analysis is finalized.

Another commenter stated that the proposed expansion of the notice-based process increases the types of measures that may be used as part of approved systems approaches. The commenter questioned whether the additional measures, either alone or in concert, would maintain the efficacy of the more limited notice-based system currently in use. The commenter asked that APHIS clarify how a given performance standard would be set and where stakeholders would look in order to understand how the efficacy of these standards was measured. The commenter concluded that, while the RMD is supposedly where some of this information will be located, such documents do not necessarily include all of the data required for stakeholders to evaluate efficacy.

The documentation provided in support of an acceptable level of phytosanitary risk reduction will not change under the new process. The RMDs used for noticed-based process are identical to those used in traditional rulemaking. For new treatments we will also utilize a Treatment Evaluation Document, which specifically addresses the efficacy of those treatments with which we have less experience. We would note, however, that most treatments and mitigations required by APHIS are not novel. Various types of treatments (e.g., fumigation, heat treatment, and irradiation) and mitigations (e.g., pest-exclusionary structures, use of clean boxes for transit, and waxing) are effective against a wide variety of pests and diseases.

One commenter stated that we should consider limiting consignments of fruits and vegetables into States that have crops that are highly susceptible to infestation by pests and diseases from countries which do not have equivalent plant pest agencies. The commenter also stated that pest and risk information should be supplied to regulatory officials in those vulnerable States and regions.

We will continue to consider limiting distribution of imports on a case-by-case basis when the findings of pest risk analysis indicate that such an action might be necessary and if it is operationally feasible. Limited distribution is specifically cited as an example of a safeguarding and movement mitigation that may be applied. We provide our expertise via analysis in the form of pest risk assessments and other risk documentation, which is available to all interested parties via publication of material in the Federal Register as well as through PPQ's stakeholder registry.

Several commenters asked if economic impact studies and determinations of significance or economic significance would remain part of the streamlined process.

Our determination as to whether a new agricultural commodity can be safely imported is based on the findings of the pest risk analysis, not on economic factors. However, we will continue to consider the potential economic consequences of pest introduction in the PRA. Similarly, we will document our consideration of trade volume and other economic factors.

One commenter said that the proposal appeared to create disparity in the consideration of the importation of fruits and vegetables versus other commodities, such as meat, citing a lack of interagency review and economic analysis as two such examples. The commenter stated that the import review process for all commodities should currently be of equivalent depth and rigor. Finally, the commenter concluded that the rulemaking process across all of APHIS' activities, not only those concerning the importation of fruits and vegetables, must be similarly time-consuming and therefore all in need of streamlining so that importations of all commodities may be treated equivalently.

We disagree with the commenter that market access requests for fruits and vegetables would be subject to less rigor and interagency review under the proposed rule than market access requests for other agricultural commodities, live animals, or animal products. As we stated previously in this document, we will continue to conduct PRAs, and these PRAs will continue to evaluate the potential economic consequences of pest introduction associated with the importation of the fruit or vegetable.

We agree with the commenter, however, regarding the need to evaluate and, if possible, streamline our processes regarding the importation of other agricultural commodities, live animals and animal products. Indeed, there is an ongoing APHIS initiative to do precisely that. The initiative has yielded a final rule 5 (83 FR 11845-11867, Docket No. APHIS-2008-0011) to restructure our plants for planting regulations to make them less cumbersome to change, and we are currently evaluating our regulations regarding the importation of live animals and animal products to identify how they could potentially be streamlined.

Another commenter said that it is crucial to maintain a review of specific varieties of fruits and vegetables in connection with the origin of the commodity in order to properly analyze the risks associated with exporting the commodity to the United States. The commenter stated that each region and crop variety poses different risks and should be reviewed separately in order to identify proper phytosanitary mitigation measures and receive relevant public comment.

We agree with the commenter. Our proposal was not to eliminate review of specific varieties of fruits and vegetables in connection with those varieties' country or region of origin, it was merely to remove those specific references from the regulations. We will continue our specific reviews following market access requests as we have always done and provide the public opportunity to review and comment on the documents produced as a result of those reviews. However, the requirements for the importation of specific commodities will no longer be found in the regulations themselves. The requirements will continue to be located in the FAVIR database or APHIS' Hawaii and Puerto Rico/U.S. Virgin Islands manuals.

One commenter cited the World Trade Organization's (WTO) Article 5, “Assessment of Risk and Determination of the Appropriate Level of Sanitary or Phytosanitary Protection,” which states: “In assessing the risk to animal or plant life or health and determining the measure to be applied for achieving the appropriate level of sanitary or phytosanitary protection from such risk, Members shall take into account as relevant economic factors: the potential damage in terms of loss of production or sales in the event of the entry, establishment or spread of a pest or disease; the costs of control or eradication in the territory of the importing Member; and the relative cost-effectiveness of alternative approaches to limiting risks.” The commenter argued that the elimination of the economic impact analysis is in conflict with the WTO mandate, as it will impact APHIS' ability to consider such consequences. The commenter concluded that, given the rapid changes to global fruit and vegetable production patterns, it is not reasonable for APHIS to make a blanket determination that the future economic impact of unspecified foreign imports entering the United States will always be of little significance.

We disagree that our actions are in conflict with WTO Article 5. As stated previously, we will continue to consider the potential economic consequences of pest introduction in the PRAs. This shift to a fully notice-based system will not alter that approach.

One commenter expressed concern regarding the varying capabilities of countries seeking to export fruit and vegetables to the United States to meet the proposed expanded mitigation measures APHIS may recommend. The commenter recommended that APHIS proceed cautiously on approving new market access from countries with regulatory agencies that have questionable capacity in meeting the scientifically based import requirements needed to ensure the phytosanitary security of U.S. produce.

Several commenters noted that the more steps that are included in a systems approach, the more chance that exists for error in its application. One of the commenters suggested that, therefore, particular attention should be paid to the way in which systems approaches are designed, executed, and enforced.

We disagree with the commenters that the number of steps in a systems approach is necessarily correlated to the likelihood of error in its application. Most mitigation measures that are included in systems approaches, such as packinghouse inspections, follow generally applicable standard operating procedures that typically do not vary significantly from systems approach to systems approach or country to country. In our experience, a systems approach that consists solely of such routine measures is unlikely to encounter errors in its application.

Rather, in our experience, the likelihood of error in the application of mitigation measures most often occurs in those relatively rare instances where the application of a mitigation measure in the systems approach does vary from country to country or site to site, with the chance for error increasing relative to the degree to which those measures differ from more routine measures. In such instances, to address this possibility for error, we exercise a higher degree of APHIS oversight to implement those particular mitigation measures. We also are more likely to conduct a follow-up site visit in the exporting country to monitor the implementation of the operational workplan.

The same commenter stated that it is impossible to test systems approaches designed to address complex pest and disease situations, some of which are being used for the first time, until a considerable volume of fruits or vegetables are imported under the requirements.

Many of these systems are already utilized by U.S. domestic producers to meet requirements required by our trading partners when exporting commodities from the United States. Further, as stated above, very few if any of the elements of the systems approaches will be novel; their effects are well known to APHIS and backed by years of research, knowledge, and experience.

Another commenter said that part of the reduction in the overall timeframe for consideration of import requests comes from the elimination of the Office of Management and Budget's (OMB's) ability to review APHIS rules. The commenter asked how APHIS will ensure that adequate resources are being devoted to mitigation measures in exporting countries or that the appropriate standards for approval of import requests are being achieved if OMB is precluded from undertaking a review of APHIS' actions.

As stated previously, the standards set by APHIS are phytosanitary in nature and, as such, are solely based on sound science. APHIS generally reviews its operational workplans and importation agreements on a yearly basis to ensure that exporting countries are able to continue to meet those requirements. In addition, APHIS will continue to apprise OMB of all notice-based import or interstate movement actions.

One commenter stated that the domestic industry must be provided sufficient time for review and evaluation of any importation request and questioned whether the reduced timeframe afforded by the proposed streamlining process would provide adequate time for APHIS to properly conduct a pest risk analysis. The commenter also noted the absence of OMB review from the streamlined process.

Another commenter proposed that the expanded notice-based process would create a need for increased communication with U.S. stakeholders, specifically when those stakeholders are potentially impacted by specific commodities imported subject to phytosanitary mitigations. The commenter supposed that there would be an increased need for extended public comment periods as well as greater opportunity for stakeholders to evaluate the risk assessment process, including the data supporting inclusion of a given action within the required systems approach.

Another commenter questioned whether 60 days is sufficient time for the industry and other stakeholders to adequately review the science behind the PRA and risk mitigation document. The commenter argued that, depending upon the time of year that the notice is provided, the ability to gather adequate stakeholders with the technical expertise to provide useful input on APHIS' documents may be limited. The commenter asked whether APHIS intends to formally notify the industry upon receipt of a market access request and the beginning of the pest risk analysis development process. If not, the commenter wanted to know if an extension beyond the 60-day review period will be possible. A second commenter stated that stakeholders should be provided opportunities for comment and consultation prior to publication of the draft PRA.

In addition to the draft PRA review period of 30 days, the notices would provide for a comment period of at least 60 days, which would give interested parties a total of 90 days to review and comment on various aspects of the proposed action. While we will not be issuing notification when we first receive a market access request, as the pest risk analysis development process can be quite lengthy depending on the country, the pest situation, and the commodity, the notice-based process does not preclude us from extending the comment period when necessary. During the comment period for the initial notice, stakeholders will have further opportunity to comment on any aspect of the PRA they deem necessary. We have no plans to incorporate stakeholder review and consultation into the process prior to posting the draft PRA. The time savings and regulatory flexibility we anticipate as a result of this change will be realized only through shortening of the rule development process. We will continue to prepare scientific documentation with the same rigor as we have always utilized. In addition to the economic considerations required to be included in the PRA, APHIS will continue to apprise OMB of all notice-based import or interstate movement actions. Further, if the information that will be disseminated in a pest risk analysis is determined to be “influential” or “highly influential” as those terms are used in the Office of Management and Budget's “Final Information Quality Bulletin for Peer Review,” (see 70 FR 2664-2667, published January 14, 2005), then a peer review will be conducted in accordance with USDA's peer review guidance (see http://www.ocio.usda.gov/document/usdas-peer-review-guidelines).

The same commenter requested clarification of the current criteria for stakeholder notification in the event that a phytosanitary mitigation measure is no longer sufficient. The commenter also wanted to know how APHIS reaches such a conclusion via evaluation or review of technical data.

Interception of even one target quarantine pest for a commodity (usually those pests rated high or medium risk in the PRA) at a port of entry triggers an immediate review of the risk mitigations for that commodity. Other factors that may trigger review are an increase in the pest population in the exporting country and reports of a new pest in the exporting country. The procedures for adding or removing measures would be the same regardless of whether or not the fruit or vegetable in question was approved prior to the implementation of the proposed process.

Regarding our current process for notifying stakeholders in the event that we change the risk mitigations for a certain commodity, we issue a Federal Order alerting the general public to the changes in the mitigation measures; this Federal Order is issued through the APHIS Stakeholder Registry, among other means. Federal Orders constitute final agency action under the Administrative Procedure Act and may be subject to challenge in court. A Federal Order is usually accompanied by a letter to State plant regulatory officials regarding its issuance. As soon as possible, we update FAVIR and contact existing permit holders regarding the change. If the change in the mitigation structure will be permanent in nature, we initiate rulemaking to codify that change. The new process will be an initial and final notice regarding any permanent change to established mitigations.

Another commenter wanted to know what the process would be in the event that one or more of the designated phytosanitary measures is found insufficient to mitigate the phytosanitary risk associated with a given commodity or the pest risk analysis requires amendments as a result of stakeholder consultation.

Any necessary changes to the PRA based on stakeholder input would be made either at the end of the 30 day comment period specific to the PRA (prior to the publication of the initial notice) or following the close of the comment period on the initial Federal Register notice. Changes to the risk mitigation document would be made following the close of the comment period on the initial Federal Register notice. If information is provided during that time that leads us to conclude that the proposed mitigation measures are insufficient to mitigate the phytosanitary risk posed by the pests of concern, we would have the option of adding additional requirements to mitigate that risk or not finalizing the proposed action. We would notify stakeholders of our decision via Federal Register notice as well as other methods such as the PPQ Stakeholder Registry. Likewise, if the mitigation measures assigned to an already approved fruit or vegetable are found to be no longer sufficient, we will take measures appropriate to addressing the risk and communicate them through the same channels. In an emergency situation a Federal Order may be issued to alter the conditions of movement or halt it completely.

One commenter requested that APHIS provide more opportunity for stakeholders to provide input regarding import requests. The commenter argued that, in cases where exporting countries are less sophisticated in their agricultural practices than the United States, U.S. industry expertise would prove vital in designing an effective systems approach.

We disagree with the commenter's suggestion. If, based on the findings of our pest risk analysis, we determine that the fruit or vegetable cannot be imported safely, then we would not propose to allow for its importation. Our analyses have always included not only the efficacy of any required treatments or handling methods, but the ability of the exporting country to meet those standards. As stated previously, after initial approval for importation, we examine each program periodically to ensure that the NPPO and foreign exporters are operating according to established standards. The opportunity for public input, which is at least 60 days, is ample time in which stakeholders may address any concerns, questions, or additional necessary information to APHIS.

One commenter expressed concern about a potential trade imbalance due to the requirement for cost recovery associated with preclearance and verification inspections through trust fund arrangements. The commenter stated that this obligation creates high administrative cost for U.S. importers and creates an imbalance in relation with trading partners, such as the European Union, that do not engage in cost recovery for phytosanitary inspections undertaken in the United States.

APHIS employs trust fund agreements only for countries that operate under preclearance programs that require APHIS personnel to be stationed in the country. Only a few countries have such programs, and the programs themselves pertain only to a few commodities exported to the United States from those countries. For these reasons, we believe that the commenter overstated the trade imbalances associated with the use of trust fund agreements and cost recovery.

It is worth noting, moreover, that the United States generally does not require such programs, but enters into them typically at the request of the exporting country or an export group from that country. Countries or export groups that request such programs do so based on a belief that the time and cost savings associated with preclearance inspections, rather than inspection at the port of first arrival into the United States, will justify the costs associated with the preclearance inspections. In instances where concern has been raised about the costs of the preclearance program, APHIS has worked with the NPPO to explore ways to minimize those costs.

Another commenter asked what assurances domestic producers have that facilitating our import approval process will prompt a similar response from foreign countries. The commenter also noted that a review of imports and exports of fruits and vegetables in recent years reveals that while imports into the United States continue to grow, exports of U.S. fruits and vegetables lag at a considerable pace. The commenter stated that this result is in direct opposition to assurances made regarding the United States concurrence with the WTO Sanitary and Phytosanitary (SPS) Agreement.

USDA actively and vigorously pursues foreign market access for U.S. products. These efforts have yielded a significant increase in U.S. exports of agricultural products in recent years; indeed, between 2006 and 2014, U.S. agricultural exports more than doubled. Under the SPS Agreement, signatory countries may set the level of phytosanitary protection that they consider appropriate, as long as there is a scientific justification. The level of phytosanitary protection often has direct bearing on how long it takes to approve a market access request. In some instances, USDA has successfully worked with foreign governments to set new terms for market access, thereby facilitating the import approval process for U.S. products.

The same commenter asked that APHIS provide the number of staff hours currently dedicated to fruit and vegetable importation issues and compare that to the number of staff hours that have been dedicated to working on new export opportunities for the U.S. fruit and vegetable industry.

We cannot provide such an accounting given that a number of APHIS staff members work on multiple import and export requests simultaneously. Without clear benefit to associated with keeping such a record, to do so would be time-consuming and overly burdensome. Streamlining our administrative processes will allow the agency to concentrate its expertise on more complex tasks. As stated previously, we also view this rule as a measure for improving the timeliness of our action on import requests, and of our emphasis on science as a basis for decisionmaking while maintaining the fullest practicable opportunity for all interested parties to participate in the process.

The same commenter stated that APHIS indicated during the December webinar that approximately 34 requests for imports into the United States have been handled under the notice-based process since its inception in 2007. The commenter said that APHIS should provide information on how much progress has been made with respect to exports from the United States in that time.

As noted above, U.S. agricultural exports more than doubled between 2006 and 2014.

Another commenter observed that during the webinar, APHIS indicated that U.S. agricultural export interests would benefit due to future reciprocity from trading partners. The commenter said that domestic fruit and vegetable exporters currently face plant quarantine barriers in foreign markets that appear to have little scientific basis, but there is no basis for the assumption that foreign markets will follow the U.S. lead in facilitating the importation process for U.S. commodities. The commenter inquired if APHIS has undertaken any studies to determine whether this claim involving foreign market reciprocity is correct or if APHIS has received assurances from trading partners that they will provide reciprocal access.

APHIS has not performed any studies analyzing the trade reciprocity factor. As stated previously, we are obligated to follow the principles and procedures of the SPS Agreement, including the obligation to base our regulations on science. Other signatories of the SPS Agreement are obligated to do so as well.

We note that the proposed rule made reference to the fruit and vegetables manual PPQ maintained related to the importation of fruits and vegetables into the United States. Since the publication of the proposed rule, we have expanded the scope and detail of FAVIR, which rendered the fruit and vegetables manual unnecessarily duplicative. We have therefore discontinued that manual and removed references to it from this rule.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, with that one change.

This final rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget. APHIS considers this rule to be a deregulatory action under Executive Order 13771 as the action will allow the public faster access to fruits and vegetables not previously approved for importation or movement from Hawaii and U.S. territories. This will benefit importers by allowing more timely access to U.S. markets. Quicker approval of requests to import fruits and vegetables will also benefit consumers. Details are provided in the economic analysis prepared for this rule.

The economic analysis provides a cost-benefit analysis, as required by Executive Orders 12866 and 13563, which direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The economic analysis also provides a final regulatory flexibility analysis that examines the potential economic effects of this rule on small entities, as required by the Regulatory Flexibility Act. The economic analysis is summarized below. Copies of the full analysis are available on the Regulations.gov website (see footnote 3 in this document for a link to Regulations.gov) or by contacting the person listed under FOR FURTHER INFORMATION CONTACT.

Requirements for the importation of fruits and vegetables include risk mitigation measures such as treatments, inspections, and certifications. A fruit or vegetable is not allowed to be imported until APHIS has completed the rulemaking process or the notice-based process to approve entry of the fruit or vegetable, based on specific phytosanitary measures. This rule will establish a single performance standard that, when met, will allow notice-based approval of fruits and vegetables for importation into the United States. The region- and commodity-specific phytosanitary requirements currently in the regulations will be removed and replaced with this single performance standard. The rule will also establish an equivalent single performance standard that will govern the interstate movement of fruits and vegetables from Hawaii and U.S. territories.

The rule will benefit both APHIS in its operations and U.S. businesses and consumers. APHIS will be able to use its resources more efficiently and the public will have quicker access to fruits and vegetables newly approved for importation or movement from Hawaii and U.S. territories.

APHIS has already established a notice-based process for allowing the importation or movement from Hawaii and U.S. territories of certain fruits and vegetables, subject to one or more specified phytosanitary measures. For fruits and vegetables for which the risks are not adequately mitigated by these specified measures and thereby do not qualify under the current notice-based process, the rulemaking process can range from 18 months to over 3 years. The time needed for approval under the notice-based process ranges from 6 to 12 months, that is, 6 months to 2.5 years sooner.

Consumers and businesses will benefit from more timely access to fruits and vegetables for which entry or movement approval currently requires rulemaking. While certain businesses will face increased competition at an earlier time for the subject fruits and vegetables, if they are produced domestically, overall economic impacts of the rule will be positive. The rule will not alter the manner in which the risks associated with a fruit or vegetable import or interstate movement request are evaluated and mitigated. Principal industries that could be affected by the rule, fruit and vegetable farms and fruit and vegetable importers, are largely composed of small entities.

As a measure of the net benefit of the rule to U.S. businesses and consumers, we estimate net welfare gains that could have been realized for a set of past import actions (11 import rules allowing 8 commodities from 7 countries or regions, in various combinations) if the quicker, notice-based process for acquiring market access had been possible. The rules were in preparation or promulgated over the 7 year period, 2012 through 2018. The 7 year sum of annual net welfare gains is estimated to range from about $13.7 million to $47.5 million, yielding annual average net welfare gains from these import actions of $2.0 million to $6.8 million.

Net welfare gains that could have been realized under this rule for this set of import actions range from about $1 million to $17 million (calculated as the low-range annual net welfare gain multiplied by half year and the high-range annual net welfare gain multiplied by 2.5 years). These estimates are derived based on the time period and commodities specified, and are considered representative of future welfare gains that will be attributable to the rule. Net welfare gains actually realized will depend on the particular commodities that acquire market access, their source countries, and market conditions at that time.

Interpreting these gains as cost savings accrued by using the quicker notice-based process rather than having to wait for rule promulgation, and in accordance with guidance on complying with Executive Order 13771, the primary cost savings estimate for this rule is $562,500. This value is the mid-point estimate of cost savings annualized in perpetuity using a 7 percent discount rate.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are inconsistent with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

This rule has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with Tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian Tribes, on the relationship between the Federal Government and Indian Tribes or on the distribution of power and responsibilities between the Federal Government and Indian Tribes.

APHIS has assessed the impact of this rule on Indian Tribes and determined that this rule does not, to our knowledge, have Tribal implications that require tribal consultation under Executive Order 13175. If a Tribe requests consultation, APHIS will work with the Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions and modifications identified herein are not expressly mandated by Congress.

The majority of the regulatory changes in this document are nonsubstantive, and would therefore have no effects on the environment. However, this rule will allow APHIS to approve certain new fruits and vegetables for importation into the United States without undertaking rulemaking. Despite the fact that those fruits and vegetable imports will no longer be contingent on the completion of rulemaking, the requirements of the National Environmental Policy Act of 1969 (NEPA), as amended (42 U.S.C. 4321 et seq.) will still apply. As such, for each additional fruit or vegetable approved for importation, APHIS will make available to the public documentation related to our analysis of the potential environmental effects of such new imports. This documentation will likely be made available at the same time and via the same Federal Register notice as the risk analysis for the proposed new import.

In accordance with section 3507 (d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), some of the information collection requirements included in this final rule are approved by OMB under control number 0579-0346. In addition, on January 29, 2018, APHIS published a 60-day notice in the Federal Register (83 FR 4023-4024, Docket No. APHIS-2017-0108), to reinstate OMB control number 0579-0049 which includes burden activities implemented by this rule. In accordance with the procedure for reinstating an information collection, USDA will be publishing a 30-day notice in the Federal Register. Once OMB control number 0579-0049 is approved, as fruits and vegetables are approved for importation or interstate movement based on this rule, their associated burden activities and burden will be added to the information collection via the submission of a quarterly report to OMB.

The Animal and Plant Health Inspection Service is committed to compliance with the EGovernment 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. For information pertinent to E-Government Act compliance related to this rule, please contact Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2483.

Accordingly, we are amending 7 CFR parts 318 and 319 as follows:

The FAA published a final rule in the Federal Register (83 FR 42585, August 23, 2018) for Doc. No. FAA-2018-0328, amending Class D airspace, and Class E airspace extending upward from 700 feet or more above the surface at New Smyrna Beach Municipal Airport, New Smyrna Beach, FL. Subsequent to publication, the FAA found that the symbols of the longitude coordinate for Massey Ranch Airpark, listed in the description under Class E airspace extending upward from 700 feet or more above the surface, was printed incorrectly. Also, a parenthesis was omitted from the geographic coordinates of New Smyrna Beach Municipal Airport. This action corrects these errors.

Class D and E airspace designations are published in paragraphs 5000 and 6005, respectively, of FAA Order 7400.11B dated August 3, 2017, and effective September 15, 2017, which is incorporated by reference in 14 CFR part 71.1. The E airspace designations listed in this document will be published subsequently in the Order.

Accordingly, pursuant to the authority delegated to me, in the Federal Register of August 23, 2018 (83 FR 42585) FR Doc. 2018-18035, Amendment of D Airspace and Class E Airspace, and Revocation of Class E Airspace; New Smyrna Beach, FL, is corrected as follows:

To comply with the Do-Not-Call Registry Fee Extension Act of 2007 (Pub. L. 110-188, 122 Stat. 635) (“Act”), the Commission is amending the TSR by updating the fees entities are charged for accessing the Registry as follows: The revised rule increases the annual fee for access to the Registry for each area code of data from $62 to $63 per area code; and increases the maximum amount that will be charged to any single entity for accessing area codes of data from $17,021 to $17,406. Entities may add area codes during the second six months of their annual subscription; the fee for those additional area codes of data increases from $31 to $32.

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

The determination whether a fee change is required and the amount of the fee change involves a two-step process. First, to determine whether a fee change is required, we measure the change in the CPI from the time of the previous increase in fees. There was an increase in the fees for fiscal year 2018. Accordingly, we calculated the change in the CPI since last year, and the increase was 2.25 percent. Because this change is over the one percent threshold, the fees will change for fiscal year 2019.

Second, to determine how much the fees should increase this fiscal year, we use the calculation specified by the Act set forth above: The percentage change in the baseline CPI applied to the original fees for fiscal year 2009. The average value of the CPI for July 1, 2007 to June 30, 2008 was 211.702; the average value for July 1, 2017 to June 30, 2018 was 248.126, an increase of 17.21 percent. Applying the 17.21 percent increase to the base amount from fiscal year 2009, leads to a $63 fee for access to a single area code of data for a full year for fiscal year 2019, an increase of $1 from last year. The actual amount is $63.29, but when rounded, pursuant to the Act, $63 is the appropriate fee. The fee for accessing an additional area code for a half year increases from $31 to $32 (rounded from $31.65). The maximum amount charged increases to $17,406 (rounded from $17,405.69).

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

Pursuant to the Paperwork Reduction Act, 44 U.S.C. 3501-3521, the Office of Management and Budget (“OMB”) approved the information collection requirements in the Amended TSR and assigned the following existing OMB Control Number: 3084-0169. The amendments outlined in this Final Rule pertain only to the fee provision (§ 310.8) of the Amended TSR and will not establish or alter any record keeping, reporting, or third-party disclosure requirements elsewhere in the Amended TSR.

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

PBGC's regulations on Allocation of Assets in Single-Employer Plans (29 CFR part 4044) and Benefits Payable in Terminated Single-Employer Plans (29 CFR part 4022) prescribe actuarial assumptions—including interest assumptions—for valuing and paying plan benefits under terminating single-employer plans covered by title IV of the Employee Retirement Income Security Act of 1974 (ERISA). The interest assumptions in the regulations are also published on PBGC's website (http://www.pbgc.gov).

The interest assumptions in appendix B to part 4044 are used to value benefits for allocation purposes under ERISA section 4044. PBGC uses the interest assumptions in appendix B to part 4022 to determine whether a benefit is payable as a lump sum and to determine the amount to pay. Appendix C to part 4022 contains interest assumptions for private-sector pension practitioners to refer to if they wish to use lump-sum interest rates determined using PBGC's historical methodology. Currently, the rates in appendices B and C of the benefit payment regulation are the same.

The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the asset allocation regulation are updated quarterly; assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for October 2018 and updates the asset allocation interest assumptions for the fourth quarter (October through December) of 2018.

The fourth quarter 2018 interest assumptions under the allocation regulation will be 2.84 percent for the first 20 years following the valuation date and 2.76 percent thereafter. In comparison with the interest assumptions in effect for the third quarter of 2018, these interest assumptions represent a decrease of 5 years in the select period (the period during which the select rate (the initial rate) applies), an increase of 0.31 percent in the select rate, and an increase of 0.12 percent in the ultimate rate (the final rate).

The October 2018 interest assumptions under the benefit payments regulation will be 1.25 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for September 2018, these interest assumptions represent no change in the immediate rate and no changes in i1, i2, or i3.

PBGC has determined that notice and public comment on this amendment are impracticable and contrary to the public interest. This finding is based on the need to determine and issue new interest assumptions promptly so that the assumptions can reflect current market conditions as accurately as possible.

Because of the need to provide immediate guidance for the valuation and payment of benefits under plans with valuation dates during October 2018, PBGC finds that good cause exists for making the assumptions set forth in this amendment effective less than 30 days after publication.

PBGC has determined that this action is not a “significant regulatory action” under the criteria set forth in Executive Order 12866.

Because no general notice of proposed rulemaking is required for this amendment, the Regulatory Flexibility Act of 1980 does not apply. See 5 U.S.C. 601(2).

In consideration of the foregoing, 29 CFR parts 4022 and 4044 are amended as follows:

Executive Summary Purpose of the Regulatory Action

This final rule is needed to implement statutory changes under the Multiemployer Pension Reform Act of 2014 (MPRA) affecting mergers of multiemployer plans under title IV of the Employee Retirement Income Security Act of 1974 (ERISA) and to update PBGC's existing regulatory requirements applicable to mergers and transfers between multiemployer plans. On June 6, 2016, PBGC published a proposed rule to amend its regulation on Mergers and Transfers Between Multiemployer Plans (81 FR 36229). In this final rule, PBGC adopts its proposed changes implementing MPRA, with some modifications in response to public comments, and some of its proposed changes updating and reorganizing the existing regulation. To allow more consideration of the concerns raised by the public comments, PBGC is not adopting its proposed changes to provisions of the existing regulation related to plan solvency.

PBGC's legal authority for this action is based on section 4002(b)(3) of ERISA, which authorizes PBGC to issue regulations to carry out the purposes of title IV of ERISA, and section 4231 of ERISA, which sets forth the statutory requirements for mergers and transfers between multiemployer plans.

This final rule makes one major and numerous minor changes to PBGC's regulation on Mergers and Transfers Between Multiemployer Plans. The major change is the addition of procedures and information requirements for a voluntary request for a facilitated merger to implement MPRA's changes to section 4231 of ERISA. This final rule also reorganizes and updates existing provisions of PBGC's regulation. The changes to part 4231 and the related public comments are discussed below.

The Pension Benefit Guaranty Corporation (PBGC) is a Federal corporation created under title IV of Employee Retirement Income Security Act of 1974 (ERISA) to guarantee the payment of pension benefits under private-sector defined benefit pension plans.

PBGC administers two insurance programs—one for single-employer pension plans, and one for multiemployer pension plans. This final rule applies only to the multiemployer program.

Under section 4231(b) of ERISA, mergers of two or more multiemployer plans and transfers of assets and liabilities between multiemployer plans must comply with four requirements:

(1) The plan sponsor must notify PBGC at least 120 days before the effective date of the merger or transfer;

(2) No participant's or beneficiary's accrued benefit may be lower immediately after the effective date of the merger or transfer than the benefit immediately before that date;

(3) The benefits of participants and beneficiaries must not be reasonably expected to be subject to suspension as a result of plan insolvency under section 4245 of ERISA; and

(4) An actuarial valuation of the assets and liabilities of each of the affected plans must have been performed during the plan year preceding the effective date of the merger or transfer, based upon the most recent data available as of the day before the start of that plan year, or as prescribed by PBGC's regulation.

Section 4231(a) of ERISA grants PBGC authority to vary these requirements by regulation. Part 4231 of PBGC's regulations implements and interprets these requirements by providing a procedure under which plan sponsors must notify PBGC of any merger or transfer between multiemployer plans and may request a compliance determination from PBGC.

Under section 4261 of ERISA, PBGC provides financial assistance to multiemployer plans that are or will be insolvent under section 4245 of ERISA. Generally, a plan is insolvent when it is unable to pay benefits when due during the plan year. PBGC provides financial assistance to an insolvent plan in the form of a loan sufficient to pay its participants' and beneficiaries' guaranteed benefits.

In a few cases before the enactment of MPRA, PBGC provided financial assistance (within the meaning of section 4261 of ERISA) to facilitate the merger of a soon-to-be insolvent multiemployer plan into a larger, more financially secure multiemployer plan. The financial assistance provided was a single payment that generally covered the cost of guaranteed benefits under the failing plan. In exchange, the larger, more financially secure plan assumed responsibility for paying the full plan benefits of the participants and beneficiaries in the failing plan with which it merged. As a result, the participants and beneficiaries in the failing plan received more than they would have in the absence of a facilitated merger from a financially secure plan that was more likely to remain ongoing. In addition, the financial assistance provided was generally less than PBGC's valuation of the present value of future financial assistance to the failing plan.

MPRA was enacted in December 2014 and contains several statutory reforms to assist financially troubled multiemployer plans and to improve the financial condition of PBGC's multiemployer insurance program. Sections 121 and 122 of MPRA provide that PBGC may assist financially troubled multiemployer plans under certain conditions.1 This rule is necessitated by section 121 of MPRA.

Section 121 of MPRA authorizes PBGC to facilitate multiemployer plan mergers. Facilitation includes various forms of technical assistance as well as financial assistance (within the meaning of section 4261) if certain statutory conditions are met. The decision to facilitate a merger is within PBGC's discretion. Furthermore, before PBGC may exercise this discretion, it must first determine—in consultation with the Participant and Plan Sponsor Advocate 2 —that the merger is in the interests of the participants and beneficiaries of at least one of the plans and is not reasonably expected to be adverse to the overall interests of the participants and beneficiaries of any of the plans.

As added by MPRA, section 4231(e)(1) of ERISA provides that, upon request by the plan sponsors, PBGC may take such actions as it deems appropriate to promote and facilitate the merger of two or more multiemployer plans. Facilitation may include training, technical assistance, mediation, communication with stakeholders, and support with related requests to other government agencies.

Under section 4231(e)(2), PBGC may also provide financial assistance (within the meaning of section 4261) to facilitate a merger that it determines is necessary to enable one or more of the plans involved to avoid or postpone insolvency, if the following statutory conditions are satisfied:

• Critical and declining status. Under section 4231(e)(2)(A) of ERISA, one or more of the plans involved in the merger must be in critical and declining status as defined in section 305(b)(6). Generally, a plan is in critical and declining status if it is in critical status under any subparagraph of section 305(b)(2) and is projected to become insolvent within 15-20 years.

• Long-term loss and plan solvency. Under section 4231(e)(2)(B), PBGC must reasonably expect that—

• Financial assistance will reduce PBGC's expected long-term loss with respect to the plans involved; and

• Financial assistance is necessary for the merged plan to become or remain solvent.

• Certification. Under section 4231(e)(2)(C), PBGC must certify to Congress that its ability to meet existing financial assistance obligations to other plans will not be impaired by the financial assistance.

• Source of funding. Under section 4231(e)(2)(D), financial assistance must be paid exclusively from the PBGC fund for basic benefits guaranteed for multiemployer plans.

In addition, section 4231(e)(2) requires that, not later than 14 days after the provision of financial assistance, PBGC provide notice of the financial assistance to the Committee on Education and the Workforce of the House of Representatives; the Committee on Ways and Means of the House of Representatives; the Committee on Finance of the Senate; and the Committee on Health, Education, Labor, and Pensions of the Senate.

On February 18, 2015, PBGC published in the Federal Register (80 FR 8712) a request for information (RFI) to solicit information on issues PBGC should consider for a proposed rule; PBGC received 20 comments in response to the RFI.3 In general, commenters expressed strong support for MPRA's changes to the merger rules under section 4231 of ERISA, and urged PBGC to issue timely guidance to the public on the types of information, documents, data, and actuarial projections needed for a request to be complete.

On June 6, 2016, PBGC published (81 FR 36229) a proposed rule to amend PBGC's regulation on Mergers and Transfers Between Multiemployer Plans (29 CFR part 4231) to implement MPRA's changes to section 4231 of ERISA.4 PBGC also proposed to reorganize and update provisions of the existing regulation to reflect other changes in law.

PBGC provided a 60-day comment period for the proposed rule and received 10 comments from: Employers contributing to multiemployer plans; a union; and associations representing multiemployer plans, pension practitioners, and employers contributing to multiemployer plans. With some modifications in response to public comments it received, PBGC adopts in this final rule its proposed changes implementing MPRA. PBGC also adopts some of its proposed changes updating and reorganizing the existing regulation. To allow more consideration of public comments, PBGC is not adopting its proposed changes to provisions of the existing regulation related to plan solvency. The comments, PBGC's responses to the comments, and the changes adopted in this final rule are discussed below.

This final rule makes one major and numerous minor changes to PBGC's regulation on Mergers and Transfers Between Multiemployer Plans. The major change is the addition of procedures and information requirements for a voluntary request for a facilitated merger under section 4231(e) of ERISA, added by MPRA. This final rule also reorganizes and updates existing provisions of PBGC's regulation. The changes and the related public comments are discussed below.

Under this final rule, like the proposed, part 4231 provides guidance on: (1) The process for submitting a notice of merger or transfer, and a request for a compliance determination or facilitated merger; (2) the information required in such notices and requests; (3) the notification process for PBGC decisions on requests for facilitated mergers; and (4) the scope of PBGC's jurisdiction over a merged plan that has received financial assistance. This final rule reorganizes part 4231 by dividing it into subparts. Subpart A contains the general merger and transfer rules. Subpart B provides guidance on procedures and information requirements for facilitated mergers, including those involving financial assistance.

Section 4231 of ERISA and part 4231 do not address the requirements of title I of ERISA (other than section 406(a) and (b)(2), in the event of a compliance determination). In most instances, implementation of the mergers and transfers addressed in this final rule, including facilitated mergers, will involve conduct that is also subject to the fiduciary responsibility standards of part 4 of subtitle B of title I of ERISA. Among other things, these standards, which are enforced by the Department of Labor (DOL), require that a fiduciary with respect to a plan act prudently, solely in the interest of the participants and beneficiaries, and for the exclusive purpose of providing benefits to participants and their beneficiaries and defraying reasonable expenses of administering the plan. The fact that a merger or transfer, including a facilitated merger, may satisfy title IV of ERISA and the regulations thereunder is not determinative of whether it satisfies the requirements of part 4 of subtitle B of title I of ERISA (other than section 406(a) and (b)(2), in the event of a compliance determination).

Most comments to PBGC's proposed rule addressed PBGC's proposed changes to provisions in its existing regulation—in particular, changes to the safe harbor solvency tests and to which plans must satisfy the more rigorous test for “significantly affected plans.” PBGC's regulation provides “plan solvency” tests under § 4231.6 that operate as regulatory safe harbors under section 4231(b)(3) of ERISA. Section 4231(b)(3) of ERISA prohibits a merger or transfer unless “the benefits of participants and beneficiaries are not reasonably expected to be subject to suspension under section 4245.” Section 4245, in turn, provides that an insolvent plan must suspend benefits that are above the level guaranteed by PBGC to the extent the plan has insufficient assets to pay such benefits. PBGC's experience suggests that its proposed changes to the “plan solvency” tests would result in a more reliable demonstration that benefits are not reasonably expected to be subject to suspension under section 4245 of ERISA because of insolvency.

For a plan that is not a significantly affected plan, § 4231.6(a) provides two alternative “plan solvency” tests. PBGC proposed to change the test in § 4231.6(a)(1) by increasing the multiple by which plan assets after the transaction must equal or exceed benefit payments for the plan year before the transaction from “five times the benefit payments” to “ten times the benefit payments.” PBGC also proposed to change the test in § 4231.6(a)(2) by increasing the number of years after the transaction for which assets, contributions, and investment earnings must cover expenses and benefit payments from “five plan years” to “ten plan years.” 5

PBGC proposed similar changes to the “plan solvency” test in § 4231.6(b) for significantly affected plans. PBGC proposed to change the requirement in § 4231.6(b)(1) that contributions satisfy the minimum funding requirement for the first “five plan years” after the transaction to the first “ten plan years.” PBGC also proposed to change the requirement in § 4231.6(b)(2) that assets cover the total benefit payments for the first “five plan years” after the transaction to “ten plan years.” Finally, PBGC proposed to change the amortization period in § 4231.6(b)(4)(i) from 25 to 15 years to reflect the amortization period generally applicable to changes in funding of multiemployer plans under PPA.6

PBGC also proposed to change which plans would be subject to the more rigorous test for significantly affected plans. PBGC proposed to amend the definition of “significantly affected plan” in § 4231.2 to include a plan in endangered or critical status, as defined in section 305(b) of ERISA,7 that engages in a transfer (other than a de minimis transfer). In PBGC's view, endangered and critical status plans generally present a greater risk of insolvency, and when these plans engage in non-de minimis transfers their risk of insolvency may increase.

Eight commenters responded to PBGC's proposed changes to the “plan solvency” tests and to the definition of a “significantly affected plan.” The commenters stated, in part, that PBGC's proposed changes to the “plan solvency” tests would make mergers and transfers more difficult or prohibit them, would substantially expand burden for plan sponsors, and would restrict options for plans. For example, commenters stated that two critical and declining status plans engaging in a merger, resulting in a merged plan projected to become insolvent in more than five but less than 10 years, would likely satisfy the applicable “plan solvency” test in § 4231.6(a) of the existing regulation but not the proposed regulation. In addition, commenters stated that a critical status plan engaging in a transfer would be unlikely to satisfy PBGC's proposed changes to the “plan solvency” test for a significantly affected plan—specifically, the requirement in § 4231.6(b)(1) that contributions satisfy the minimum funding requirement for 10 plan years after the transaction.

These commenters also considered PBGC's proposed change to the definition of a “significantly affected plan” unduly restrictive. Some commenters agreed with PBGC's assessment of the heightened risk of insolvency associated with transfers by endangered and critical status plans. But commenters suggested that PBGC could address this risk directly by requiring that the transaction postpone the date when the plan is projected to become insolvent.

In addition, these commenters stated that PBGC's proposed change to the definition of a “significantly affected plan” would prohibit transfers permitted under PBGC's existing regulation, even if the transfers would be beneficial for the plans and their participants. For example, a critical and declining status plan engaging in a non-de minimis transfer of accrued benefits and less than 15% of its assets would not be a significantly affected plan under PBGC's existing regulation and would likely satisfy the applicable “plan solvency” test in § 4231.6(a). But under PBGC's proposed changes, a critical and declining status plan that engages in a non-de minimis transfer would be a significantly affected plan and would not satisfy the applicable “plan solvency” test in § 4231.6(b). According to commenters, such a transfer from a critical and declining status plan could postpone the date the plan is projected to become insolvent and would effectively eliminate the risk of loss associated with the transferred benefits.

Moreover, four commenters stated that PBGC should otherwise update the solvency test for significantly affected plans. According to one commenter, the solvency test in § 4231.6(b) of the existing regulation is very difficult to demonstrate for most significantly affected plans. These commenters agreed that the requirement in § 4231.6(b)(3)—that contributions cover benefit payments in the first plan year after the transaction—could not be demonstrated for most mature plans, including plans that are well funded and projected to remain solvent indefinitely.

Four commenters also requested guidance on how an enrolled actuary may “otherwise demonstrate” solvency. PBGC's existing regulation provides that an enrolled actuary may “otherwise demonstrate” under § 4231.3(a)(3)(ii) that benefits under the plan are not reasonably expected to be subject to suspension under section 4245 of ERISA. This option is an alternative to the applicable “plan solvency” test under § 4231.6. Three of these commenters requested this guidance even if PBGC doesn't adopt its proposed changes. PBGC is considering these comments and whether to propose guidance on how an enrolled actuary may “otherwise demonstrate” solvency.

Seven commenters advocated for PBGC to change its existing regulation to provide a means for plans facing insolvency to satisfy the solvency requirement under section 4231(b)(3) of ERISA. According to commenters, PBGC could exercise its regulatory authority under section 4231(a) of ERISA to allow these plans to engage in transactions that may be beneficial. For example, as two commenters stated, a critical and declining status plan that cannot show that it will avoid insolvency with benefit suspensions under section 305(e)(9) of ERISA may be able to make that showing after it engages in a transfer (or the transfer might lessen the amount of benefit suspensions needed to avoid insolvency). A critical and declining status plan (which, among other criteria, is projected to become insolvent) may not, however, satisfy the solvency requirement under section 4231(b)(3) of ERISA and PBGC's regulation for a transfer. Even so, as one commenter stated, most plans can satisfy the solvency test in PBGC's regulation for plans that are not significantly affected—that assets equal or exceed five times the benefit payments—including many plans that are projected to be insolvent several years in the future.

PBGC continues to consider these comments to its proposed changes and to provisions of the existing regulation interpreting the solvency requirement under section 4231(b)(3) of ERISA. To allow more consideration of the concerns raised by the public comments, PBGC will not adopt its proposed changes to the “plan solvency” tests under § 4231.6 and to the definition of a “significantly affected plan” under § 4231.2. PBGC may eventually re-propose changes to provisions in the existing regulation interpreting the solvency requirement under section 4231(b)(3) of ERISA in consideration of these comments.

In addition, PBGC proposed to amend § 4231.3 to provide that plan sponsors may engage in informal consultations with PBGC to discuss proposed mergers and transfers. Two commenters supported this change. One of the commenters stated that having access to PBGC for informal consultation will be extremely helpful and may result in a more efficient process. Thus, PBGC is adopting its proposed voluntary option for assistance in this final rule.

PBGC proposed new rules to implement the facilitated merger provisions added by MPRA. Two commenters requested examples of the types of facilitation, other than financial assistance, that PBGC might approve for a facilitated merger. Section 4231(e)(1) of ERISA provides examples of facilitation that PBGC may provide if it makes a determination, in consultation with the Participant and Plan Sponsor Advocate, about the interests of the participants and beneficiaries. One example of facilitation is “communication with stakeholders.” In that regard, PBGC could, for example, participate in meetings or a town hall to discuss or answer questions about a potential merger with stakeholders.

The other comments to the facilitated merger provisions in PBGC's proposed rule addressed mergers facilitated with financial assistance (financial assistance mergers). In the preamble of the proposed rule, PBGC discussed the amount of financial assistance it generally expects to be available for financial assistance mergers. PBGC stated that, while it imposes no additional limitations on the amount of financial assistance available, MPRA requires PBGC to certify that its ability to meet existing financial obligations to other plans will not be impaired by the financial assistance provided for a merger or partition.8 In addition, PBGC stated that it anticipates that the amount of financial assistance available to a critical and declining status plan for a financial assistance merger generally will not exceed the amount available to that plan for a partition (and could be less). This is because the funds available for financial assistance mergers under section 4231(e), partitions under section 4233, and financial assistance to insolvent plans under 4261, are derived from the same source—the revolving fund for basic benefits guaranteed under section 4022A (the multiemployer revolving fund). Finally, although PBGC will decide the structure of financial assistance on a case-by-case basis, PBGC stated that it expects that in most cases the financial assistance it provides in a facilitated merger will be in the form of periodic payments.

One commenter requested a more complete discussion of PBGC's rationale for linking the amount of financial assistance available to a critical and declining status plan for a financial assistance merger to the amount available to that plan for a partition. The commenter noted that the financial assistance available to a plan for a partition “relates only to a portion of the plan's liabilities.” The commenter suggested that it would be more appropriate to limit financial assistance to an amount generally less than the present value of the amount of future financial assistance to the critical and declining status plan.

This comment overlooks a statutory condition on PBGC's provision of financial assistance for a merger. While MPRA requires PBGC to reasonably expect that the financial assistance provided for a merger will reduce PBGC's expected long-term loss with respect to the plans involved,9 MPRA also requires that the financial assistance provided for a merger not impair PBGC's ability to meet existing financial obligations to other plans.

Since publication of the proposed rule, PBGC has provided its interpretation of the statutory condition that the financial assistance provided for a merger will not impair PBGC's ability to meet existing financial obligations to other plans.10 Looking at the statute as a whole, PBGC interprets this condition to require that the financial assistance provided for a merger not materially advance the date when PBGC's multiemployer insurance fund is projected to become insolvent. This interpretation is based on PBGC's current understanding of the universe of potentially eligible multiemployer plans, and the financial condition of the multiemployer insurance program, which can change over time.

Although application of the non-impairment condition may result in limiting financial assistance for a merger to the amount available for a partition, there may be situations where it does not. Therefore, PBGC will rely on the non-impairment test described above. PBGC's analysis of the non-impairment condition is highly fact-specific. PBGC encourages plans to engage in informal consultation with PBGC to help determine how much financial assistance would be permitted by the statute.

Under §§ 4231.12 through 4231.16, PBGC proposed information requirements for a request for a facilitated merger. PBGC requires the information proposed so that it could determine whether the statutory conditions are satisfied. One commenter stated that a plan would incur considerable cost to provide the information PBGC requires for a financial assistance merger “solely for purposes of showing PBGC that the financial assistance is no more than the cost of a hypothetical partition.” Financial assistance mergers, unlike partitions, seek assistance to continue to pay plan benefits. Accordingly, the commenter suggested that plans shouldn't have to provide the same substantiation as with partition, unless the request is coupled with a request to the Department of the Treasury (Treasury) for approval of benefit suspensions.

In consideration of this comment, PBGC will not adopt its proposed information requirements about the maximum benefit suspensions permissible under section 305(e)(9) of ERISA, which are required for partition. Thus, PBGC will not adopt its proposed requirement under § 4231.15 that each critical and declining status plan provide a projection of benefit disbursements reflecting maximum benefit suspensions. Also, PBGC will not adopt its proposed requirement under § 4231.16 to include with participant census data the monthly benefit reduced by the maximum benefit suspension. If the amount of financial assistance requested for a merger is at the margins of satisfying the statutory condition that PBGC's ability to meet existing financial obligations to other plans will not be impaired, PBGC may request this information to help the critical and declining status plan(s) determine whether a partition is more likely to satisfy this statutory condition.

Under § 4231.15, PBGC proposed guidance on the required demonstration that financial assistance is necessary for the merged plan to become or remain solvent. One commenter stated that requiring a merged plan to project solvency for a minimum of 20-30 years for a financial assistance merger is inconsistent with MPRA's purpose. The commenter suggested that the demonstration should be that the plans will postpone insolvency with the financial assistance merger. While PBGC may exercise its discretion to approve a financial assistance merger that it determines necessary to allow one or more of the plans to avoid or postpone insolvency,11 section 4231(e)(2)(B)(ii) of ERISA requires that PBGC reasonably expect that the financial assistance is necessary for the merged plan to become or remain solvent. PBGC interprets the requirement that the merged plan become or remain solvent to mean that solvency must be demonstrated for the merged plan over a period, not that insolvency is postponed.

PBGC proposed differentiated solvency demonstrations based on the financial health of the merged plan, allowing flexibility for healthier merged plans. Under § 4231.15, the type of projection required depends on whether the merged plan would be in critical status under section 305(b) of ERISA immediately after the merger (without taking the proposed financial assistance into account), as reasonably determined by the actuary. For example, if a critical and declining status plan merges into an endangered status plan, and the actuary anticipates that the merged plan would be in critical status under section 305(b)(2) of ERISA immediately after the merger without financial assistance, then the merged plan would be in critical status for purposes of the projections. Alternatively, if the actuary anticipates that the merged plan would not satisfy the criteria for critical status under section 305(b)(2) of ERISA immediately after the merger, then the merged plan would not be in critical status for purposes of the projections (even if the merged plan could elect to be in critical status).

PBGC proposed that the plan's enrolled actuary may use any reasonable estimation method for determining the expected funded status of the merged plan. The preamble of the proposed rule also suggested that the funded status of the merged plan could be determined based on the combined data and projections underlying the status certifications of each of the plans for the plan year immediately preceding the merger (including any selected updates in the data based on the experience of the plans in the immediately preceding plan year). PBGC requested comments on this issue. Two commenters responded in favor of each approach. One commenter suggested that PBGC should take care to allow the enrolled actuary to make reasonable adjustments to the data and projections from the most recent status certifications if the above alternative is included in the final regulations. PBGC agrees with these comments. Because the use of status certifications for the preceding year is intended to provide a simpler and cost-effective alternative, PBGC will allow, but not require, reasonable adjustments to be made. Thus, § 4231.15 of this final rule adopts the option, supported by commenters, for the enrolled actuary to base the determination on the combined data and projections underlying the status certifications of each of the plans for the plan year immediately preceding the merger, including any selected updates in the data based on the experience of the plans in the immediately preceding plan year (reasonable adjustments are permitted but not required).

To encourage the merger of critical and declining status plans into financially stable plans, PBGC proposed a solvency demonstration based on the circumstances and challenges specific to the merged plan. For a merged plan that would not be in critical status and for which solvency could be demonstrated for 20 years without taking financial assistance into account (or with less than the full amount taken into account), PBGC proposed a demonstration that financial assistance is necessary to mitigate the adverse effects of the merger on the merged plan's ability to remain solvent. In the preamble of the proposed rule, PBGC provided as examples that the merger might have an impact on the plan's funding requirements, increase the ratio of inactive to active participants, or decrease the funded percentage of the healthy plan in a manner that can be demonstrated to adversely affect the merged plan's ability to remain solvent long-term. PBGC requested comments on this issue.

One commenter stated that, “the solvency measure should be that the merger does not increase the risk of insolvency for the merged plan.” If the merger would have no effect on the merged plan's ability to remain solvent, financial assistance would not be necessary for the merged plan to become or remain solvent as required by the statute.

Two commenters were concerned that a financially stable plan for which solvency is projected after the merger (without taking financial assistance into account) would not be able to show adverse effects of the merger on the merged plan's ability to remain solvent. One of these commenters provided the example of a financially stable plan that would have a lower funded percentage after the merger but for which solvency would still be projected. The commenter stated that the financially stable plan would likely not agree to that merger without financial assistance, because the merger would increase the plan's risk of insolvency if there were adverse plan experience in the future. The commenters suggested that the demonstration focus on the merger's impact on metrics such as the financially stable plan's ability to satisfy funding requirements or its funded percentage. The commenters also suggested permitting consideration of unfavorable future experience. One of these commenters suggested that PBGC provide that the demonstration may be based on stress testing over a long-term period (which could consider unfavorable future experience).

To demonstrate that financial assistance is necessary for the merged plan to become or remain solvent, the enrolled actuary must show that the merger has adverse effects on the merged plan's ability to remain solvent. If no adverse effect on solvency can be demonstrated, financial assistance is not necessary. In response to the above comments, PBGC will allow this demonstration to consider unfavorable future experience. Thus, PBGC will add in this final rule that the demonstration that financial assistance is necessary to mitigate the adverse effects of the merger on the merged plan's ability to remain solvent may be based on stress testing over a long-term period (and may reflect reasonable future adverse experience), using a reasonable method in accordance with generally accepted actuarial standards.

For example, one possible demonstration that financial assistance is necessary to mitigate the adverse effects of the merger on the merged plan's ability to remain solvent could be based on a projection of the merged plan's insolvency within 30 years using an investment return assumption no less than one-half of a standard deviation less than the best estimate assumption, and using a current set of capital market assumptions from a recognized investment consultant and the plans' current asset allocation.

This demonstration may also be based on stochastic modeling. For example, while not a threshold, a possible demonstration may be based on stochastic modeling showing that the merged plan's probability of insolvency within 30 years of the merger exceeds 65% without the requested financial assistance.

Plans in critical and declining status may suspend benefits under section 305(e)(9) of ERISA under certain conditions. Treasury has interpretative jurisdiction over the subject matter in section 305. In the preamble of the proposed rule, PBGC suggested that plan sponsors must carefully consider how the various requirements under sections 305(e)(9) and 4231 would apply.

For example, a critical and declining status plan could merge into a large, well-funded multiemployer plan. In such a case, to the extent any of the benefits previously provided by the critical and declining status plan had been subject to suspension under section 305(e)(9) or become subject to suspension concurrently with the merger, the plan sponsor of the merged plan would become responsible for making the annual determinations necessary for continued benefit suspensions under section 305(e)(9) and the implementing regulations. Under section 305(e)(9)(C)(ii) of ERISA, benefits may continue to be suspended for a plan year only if the plan sponsor determines, in a written record to be maintained throughout the period of the benefit suspension, that although all reasonable measures to avoid insolvency have been and continue to be taken, the plan is still projected to become insolvent unless benefits are suspended.12 PBGC suggested that, absent these determinations, restoration of the suspended benefits would be required.

Four commenters stated that it is contrary to MPRA's remedial intent to restore suspended benefits following a merger if the merged plan could not demonstrate that continued suspensions are required to avoid insolvency. The commenters urged PBGC to work with Treasury to issue guidance so that the statute is not interpreted to require restoration under these circumstances. In addition, the commenters stated that critical and declining status plans that suspend benefits would be significantly more likely to attract merger partners, who may view benefit suspensions as a necessary condition to merger. Commenters suggested that, for purposes of the annual determination required for suspensions, Treasury could permit a separate accounting of assets and liabilities attributable to the “plan” that suspended benefits before the merger. The suspended benefits would be restored only if the annual determination couldn't be made for this notional plan. These comments are beyond the scope of this final rule and should be addressed to Treasury, which has jurisdiction over section 305 of ERISA.

One of these commenters stated that section 4231(b)(2) of ERISA isn't implicated if the benefit suspensions under section 305(e)(9) of ERISA occur before a merger. Section 4231(b)(2) of ERISA requires that no accrued benefit is lower immediately after a merger or transfer than the benefit immediately before the transaction. This requirement would, however, prohibit a merger or transfer that is contemporaneous with benefit suspensions. To allow this transaction, PBGC adds in this final rule under § 4231.4 that it may waive this requirement to the extent the accrued benefit is suspended under section 305(e)(9) of ERISA contemporaneously with a merger or transfer.

Section 4231.1 describes the purpose and scope of part 4231, which is to prescribe notice requirements for mergers and transfers of assets or liabilities among multiemployer plans and to interpret other requirements under section 4231 of ERISA. In this final rule, PBGC adopts the minor changes it proposed to § 4231.1.13

Section 4231.2 defines terms for purposes of part 4231. In this final rule, like the proposed, PBGC amends the existing regulation by adding new definitions, and by moving existing definitions elsewhere in the regulation to § 4231.2. For example, this final rule moves the existing definition of “effective date” from § 4231.8(a) to § 4231.2.14 In response to comments and pending further consideration, PBGC will not adopt its proposed change to the existing definition of a “significantly affected plan” (see above, “Discussion of Comments”).

Section 4231.3 provides guidance on the statutory requirements for mergers and transfers. PBGC proposed to clearly provide that plan sponsors may engage in informal consultations with PBGC to discuss proposed mergers and transfers. Two commenters supported this change. PBGC agrees with those comments. Thus, PBGC is adopting its proposed voluntary option for assistance in this final rule.15

PBGC did not propose any changes to § 4231.4 of the existing regulation. That section provides guidance on the requirement under section 4231(b)(2) of ERISA that no participant's or beneficiary's accrued benefit may be lower immediately after the effective date of a merger or transfer than the benefit immediately before that date.

In this final rule, PBGC maintains this existing guidance without change in a new paragraph (a). To allow a merger or transfer that is coupled with benefit suspensions under section 305(e)(9) of ERISA, PBGC provides in a new paragraph (b) that it may waive the requirement under section 4231(b)(2) of ERISA to the extent the participant's or beneficiary's accrued benefit is suspended under section 305(e)(9) of ERISA contemporaneously with a merger or transfer (see above, “Discussion of Comments”). Section 4231.4(b) also provides that, if PBGC grants this waiver, the plan provision described under § 4231.4(a) may exclude accrued benefits only to the extent those benefits are suspended under section 305(e)(9) of ERISA contemporaneously with the merger or transfer.

Section 4231.5 provides guidance on the actuarial valuation requirement under section 4231(b)(4) of ERISA. Under § 4231.5(a) of the existing regulation, a plan that is not a significantly affected plan (or that is a significantly affected plan only because the transaction involves a plan terminated by mass withdrawal under section 4041A(a)(2) of ERISA) satisfies this requirement if an actuarial valuation has been performed for the plan based on the plan's assets and liabilities as of a date not more than three years before the date on which the notice of the merger or transfer is filed. Under § 4231.5(b) of the existing regulation, a significantly affected plan (other than a plan that is a significantly affected plan only because the transaction involves a plan terminated by mass withdrawal) must have an actuarial valuation performed for the plan year preceding the proposed effective date of the merger or transfer.

Multiemployer plans are now generally required to perform actuarial valuations not less frequently than once every year.16 Thus, PBGC proposed to amend § 4231.5 to require, as section 4231(b)(4) of ERISA states, that each plan involved in a merger or transfer have an actuarial valuation performed for the plan year preceding the proposed effective date of the merger or transfer. PBGC also proposed to provide that if the valuation is not complete as of the date the plan sponsors file the notice of merger or transfer, the plan sponsors may provide the most recent actuarial valuation performed for the plans with the notice, and the required valuations when complete. PBGC received no comments on these proposed changes and adopts them in this final rule.17

Section 4231.6 provides guidance on “plan solvency” tests that operate as safe harbors under section 4231(b)(3) of ERISA. PBGC proposed changes to the tests in § 4231.6(a) and (b) (see above, “Discussion of Comments”). Pending further consideration, PBGC is not adopting in this final rule the major changes it proposed to the tests in § 4231.6(a) and (b) (see above, “Discussion of Comments”). In this final rule, PBGC is adopting the minor changes it proposed to the tests in § 4231.6(a) and (b); PBGC received no comments about these minor changes.18

Section 4231.6(c) provides rules for determinations about the requirements set forth under § 4231.6. PBGC proposed to amend § 4231.6(c)(1) by requiring withdrawal liability payments to be listed separately from contributions. PBGC received no comments on its proposed change to § 4231.6(c)(1) and adopts this change in this final rule.

PBGC did not propose any changes to § 4231.7 of the existing regulation. That section continues to set forth special rules for de minimis mergers and transfers.

Section 4231.8 provides guidance on the requirement under section 4231(b)(1) of ERISA that the plan sponsor notify PBGC of a merger or transfer, and on requests for compliance determinations under section 4231(c). In general, a notice of a merger or transfer must be filed well in advance of the transaction's effective date (or not less than 45 days in advance in the case of a merger for which a compliance determination is not requested). Section 4231.8(f) permits PBGC to waive the timing of the notice requirements under certain circumstances.

In the case of a facilitated merger, PBGC proposed to amend § 4231.8(a) to require that notice of a proposed facilitated merger be filed not less than 270 days before the proposed effective date of a facilitated merger. PBGC received no comments on its proposed changes to § 4231.8 and adopts them in this final rule.19

Section 4231.9 of this final rule, like the proposed, generally retains the information requirements under § 4231.8(e) of the existing regulation, with minor modifications. For example, the de minimis exception under § 4231.8(e)(6) of the existing regulation does not apply to a request for a financial assistance merger. PBGC received no comments on its proposed changes to § 4231.9 and adopts them in this final rule.20

Section 4231.10 of this final rule, like the proposed, describes the additional information required for a request for a compliance determination.21 In addition to some minor changes, PBGC proposed to amend this section to make clear that a request for a compliance determination must be filed contemporaneously with a notice of merger or transfer.22 PBGC received no comments on its proposed changes to § 4231.10 and adopts them in this final rule.

Section 4231.11 of this final rule, like the proposed, describes the requirements for actuarial calculations and assumptions.23 PBGC proposed to conform these requirements to section 304(c)(3) of ERISA, to specify that calculations must be performed by an enrolled actuary, and to expand the bases upon which PBGC may require updated calculations. PBGC received no comments on its proposed changes under § 4231.11 and adopts them in this final rule.

Section 4231.12 of this final rule, like the proposed, provides general guidance on a request for a facilitated merger. A request for a facilitated merger, including a financial assistance merger, must satisfy the requirements of section 4231(b) of ERISA and the general provisions of subpart A of the regulation, in addition to section 4231(e) of ERISA and the additional rules for facilitated mergers of subpart B. The procedures set forth in this final rule represent the exclusive means by which PBGC will approve a request for a facilitated merger, including a financial assistance merger. Any financial assistance provided by PBGC will be limited by section 4261 of ERISA and based on the guaranteed benefits of the plans involved in the merger that are in critical and declining status.

Section 4231.12 of this final rule, like the proposed, states that a request must include the information required for a notice of merger or transfer (§ 4231.9) and request for compliance determination (§ 4231.10), as well as a detailed narrative description with supporting documentation demonstrating that the proposed merger is in the interests of participants and beneficiaries of at least one of the plans, and is not reasonably expected to be adverse to the overall interests of the participants and beneficiaries of any of the plans. The narrative description and supporting documentation should reflect, among other things, any material efficiencies expected as a result of the merger and the basis for those expectations.

In addition, a request for a financial assistance merger must contain information about the plans (§ 4231.13), information about the proposed financial assistance merger (§ 4231.14), actuarial and financial information (§ 4231.15), and participant census data (§ 4231.16). This final rule, like the proposed, provides that PBGC may require additional information to determine whether the requirements of section 4231(e) of ERISA are met or to enable it to facilitate the merger. As with the proposed, this final rule also imposes an affirmative obligation on plan sponsors to promptly notify PBGC in writing if a plan sponsor discovers that any material fact or representation contained in or relating to the request for a facilitated merger, or in any supporting documents, is no longer accurate, or has been omitted.

PBGC received no comments on its proposed § 4231.12 and adopts it in this final rule.

Section 4231.13 of this final rule, like the proposed, provides guidance on the various categories of plan-related information required for a request for a financial assistance merger, such as trust agreements, plan documents, summary plan descriptions, summaries of material modifications, and rehabilitation or funding improvement plans. PBGC expects that most, if not all, of the information required under this section should be readily available and accessible by plan sponsors. PBGC received no comments on its proposed § 4231.13 and adopts it in this final rule.

Section 4231.14 of this final rule, like the proposed, sets forth information requirements relating to the proposed structure of a financial assistance merger. The information required includes a detailed description of the financial assistance merger, including any larger integrated transaction of which the proposed merger is a part (including, but not limited to, an application for suspension of benefits under section 305(e)(9)(G) of ERISA), and the estimated total amount of financial assistance the plan sponsors request for each year. It also requires a narrative description of the events that led to the sponsors' decision to request a financial assistance merger, and the significant risks and assumptions relating to the proposed financial assistance merger and the projections provided. PBGC received no comments on its proposed § 4231.14 and adopts it in this final rule.

Section 4231.15 of this final rule, like the proposed, identifies the actuarial and financial information required for a request for a financial assistance merger. Section 4231.15(a) and (b) of this final rule, like the proposed, relate to plan actuarial reports and actuarial certifications, which should ordinarily be within the possession of the plan sponsors or plan actuaries. Section 4231.15(c)-(e) of this final rule, like the proposed, requires the submission of certain actuarial and financial information specific to the proposed financial assistance merger, which are necessary for PBGC to evaluate the solvency requirements under section 4231(e)(2) of ERISA. PBGC adopts its proposed § 4231.15 in this final rule with the modifications discussed below, which respond to comments it received (see above, “Discussion of Comments”).

Section 4231.15 of this final rule, like the proposed, provides that each critical and declining status plan must demonstrate that its projected date of insolvency without the merger is sooner than the projected date of insolvency of the merged plan. The plan(s) may take the proposed financial assistance into account in this demonstration.

Section 4231.15 of this final rule, like the proposed, also provides guidance on the required demonstration that financial assistance is necessary for the merged plan to become or remain solvent. The type of projection required depends on whether the merged plan would be in critical status under section 305(b) of ERISA immediately following the merger (without taking the proposed financial assistance into account), as reasonably determined by the actuary. This final rule adds the option, supported by commenters, for the enrolled actuary to base the determination of whether the merged plan would be in critical status on the combined data and projections underlying the status certifications of each of the plans for the plan year immediately preceding the merger, including any selected updates in the data based on the experience of the plans in the immediately preceding plan year (reasonable adjustments are permitted but not required) (see above, “Discussion of Comments”). This final rule also clarifies that the statement of whether the merged plan would be in critical status must be certified by an enrolled actuary.

Under § 4231.15 of this final rule, like the proposed, if the merged plan would be in critical status under section 305(b) of ERISA (without taking the proposed financial assistance into account), the plans must demonstrate that financial assistance is necessary for the merged plan to “avoid insolvency” under section 305(e)(9)(D)(iv) of ERISA and the regulations thereunder (excluding stochastic projections). This solvency standard is consistent with the “emergence” test under section 305(e)(4)(B) of ERISA, which requires a plan in critical status to show that it is not projected to become insolvent for any of the 30 succeeding plan years.

If the merged plan would not be in critical status under section 305(b) of ERISA (without taking the proposed financial assistance into account), under § 4231.15 of this final rule, like the proposed, the plans must demonstrate that the merged plan is not projected to become insolvent during the 20 years beginning after the proposed effective date of the merger with the proposed financial assistance. In this final rule, like the proposed, if this demonstration can be satisfied without taking the proposed financial assistance into account, or if the amount of financial assistance requested exceeds the amount that satisfies this demonstration, the plan sponsors must demonstrate that financial assistance is necessary to mitigate the adverse effects of the merger on the merged plan's ability to remain solvent. In response to comments, PBGC adds in this final rule that the demonstration that financial assistance is necessary to mitigate the adverse effects of the merger on the merged plan's ability to remain solvent may be based on stress testing over a long-term period (and may reflect reasonable future adverse experience), using a reasonable method in accordance with generally accepted actuarial standards (see above, “Discussion of Comments”).

In response to a comment, PBGC will not adopt in this final rule its proposed requirement that each critical and declining status plan provide a projection of benefit disbursements reflecting maximum benefit suspensions (see above, “Discussion of Comments”).

Finally, to provide a cost-effective alternative, PBGC adds the option to estimate benefit disbursements to satisfy the requirement that each critical and declining status plan provide a projection of benefit disbursements reflecting reduced benefit disbursements at the PBGC-guarantee level. This final rule also clarifies that the projection of benefit disbursements must include the supporting data, calculations, assumptions, and, if applicable, a description of estimates used.

Under § 4231.16, PBGC proposed that a request for a financial assistance merger include certain types of participant census data. In response to a comment, PBGC will not adopt in this final rule its proposed requirement that this participant census data include the monthly benefit reduced by the maximum benefit suspension permissible under section 305(e)(9) of ERISA (see above, “Discussion of Comments”). Otherwise, in this final rule, PBGC adopts its proposed § 4231.16 with the clarification that the projections for which the census data must be provided include the projection in § 4231.15(d).

Section 4231.17 of this final rule, like the proposed, describes how PBGC will notify a plan sponsor(s) of PBGC's decision on a request for a facilitated merger. PBGC will approve or deny a request for a facilitated merger in writing and in accordance with the standards set forth in section 4231(e) of ERISA.24 If PBGC denies a request, PBGC's written decision will state the reason(s) for the denial. If PBGC approves a request for a financial assistance merger, PBGC will provide a financial assistance agreement detailing the total amount and terms of the financial assistance as soon as practicable after notifying the plan sponsor(s) in writing of its approval. The decision to approve or deny a request for facilitated merger under section 4231(e) of ERISA is within PBGC's discretion and constitutes a final agency action not subject to PBGC's rules for reconsideration or administrative appeal. PBGC received no comments on its proposed § 4231.17 and adopts it in this final rule.

Section 4231.18 of this final rule, like the proposed, describes PBGC's jurisdiction over the merged plan resulting from a financial assistance merger. PBGC has determined that maintaining oversight is necessary to ensure compliance with financial assistance agreements, and proper stewardship of PBGC financial assistance. Based on the foregoing, § 4231.18(a) provides that PBGC will continue to have jurisdiction over the merged plan resulting from a financial assistance merger to carry out the purposes, terms, and conditions of the financial assistance merger, sections 4231 and 4261 of ERISA, and the regulations thereunder. Section 4231.18(b) states that PBGC may, upon notice to the plan sponsor, make changes to the financial assistance agreement(s) in response to changed circumstances consistent with sections 4231 and 4261 of ERISA and the regulations thereunder. PBGC received no comments on its proposed § 4231.18 and adopts it in this final rule.

Because this rulemaking relates to transfer payments, it is not subject to the requirements of Executive Order 13771. PBGC further notes that it results in no more than de minimis net costs. The rule has been determined to be “significant” under Executive Order 12866. Accordingly, the Office of Management and Budget (OMB) has reviewed this final rule under E.O. 12866.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, and 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 Orders 12866 and 13563 require a comprehensive regulatory impact analysis to be performed for any economically significant regulatory action, defined as an action that would result in an annual effect of $100 million or more on the national economy or that would have other substantial impacts. It has been determined that this final rule is not economically significant. Thus, a comprehensive regulatory impact analysis is not required. But PBGC has examined the economic and policy implications of this rule and has concluded that the net effect of the action is to reduce costs in relation to benefits.

This final rule will enable plans to request a facilitated merger, including a request for financial assistance. Given the limits on PBGC's financial assistance for mergers and partitions imposed by the requirement that such assistance not impair PBGC's existing financial assistance obligations,25 PBGC expects that fewer than 20 plans would be approved for either financial assistance merger or partition over the next three years (about six plans per year), and that the total financial assistance PBGC would provide under both provisions for basic benefits guaranteed for multiemployer plans would be less than $60 million per year.

Even with the limits on PBGC's resources for multiemployer plans, which are financed by insurance premiums, facilitated mergers under this final rule will help plans preserve retirement benefits for America's workers and retirees. In addition to receiving enough financial assistance to remain solvent, merged plans may gain efficiencies from lower administration and investment expenses. As a result, benefits in the merged plan would be more secure.

This final rule has new information requirements pertaining to financial assistance mergers, but the benefits of these facilitated mergers greatly outweigh the costs of the new filing requirements. PBGC estimates that the transfer impacts of this final rule will be about $65.19 million, and the net costs of the final rule will be about $184,500, as shown in the following table and as explained in more detail below.

The “net” column shows the effect of this final rule (the “after” column minus the “before” column). The estimated net transfer amounts and net costs of this final rule are based on financial assistance mergers. The benefits preserved, reduced expenses, and costs are explained in more detail below.

In addition to preserving benefits and enabling administrative efficiencies, this final rule may provide qualitative benefits. First, the merged plan may be able to have additional investment diversification opportunities because of its larger pool of assets. Second, the employer contribution base generally expands and may be more diverse and, thus, less at risk to localized problems.

This final rule preserves participants' benefits that would be reduced if the plan did not merge and became insolvent. When a multiemployer plan becomes insolvent, PBGC guarantees benefits up to the legal limit of $12,870 per year for an individual with 30 years of service. A PBGC study shows that, 54 percent of the time, participants facing a benefit reduction, in plans that have terminated and that are expected to become insolvent, are projected to lose 10 percent or more of their benefits.27 In 2010, the average monthly benefit received by retirees in all multiemployer plans was $922.28 PBGC estimates $1,200/participant per year in benefits preserved based on an estimate of $100/participant per month—10 percent of the $922 average monthly benefit (rounded). PBGC further estimates that about 50 percent of participants 29 in the merged plans, or about 650 participants 30 per plan, will have their benefits preserved for an estimated total of $4,680,000 per year ($1,200 × 650 participants × 6 plans).

Merged plans may gain administrative and investment efficiencies, preserving assets to pay plan benefits. While expenses vary depending on plan size, PBGC estimates the following expenses would be reduced for each financial assistance merger:

Plan sponsors are required under section 4231(b)(1) of ERISA to file with PBGC notices of proposed merger or transfer. As discussed in this final rule, plan sponsors requesting financial assistance mergers must prepare and file additional information, including the compilation of merger information, plan information, actuarial and financial information, and participant census data information. As discussed further in the Paperwork Reduction Act section (see below), the cost to prepare the notices to PBGC, excluding financial assistance mergers, is $43,550. PBGC assumes that it will receive a total of six requests for financial assistance mergers, with a cost of $184,500.

The Regulatory Flexibility Act 31 imposes certain requirements with respect to rules that are subject to the notice and comment requirements of section 553(b) of the Administrative Procedure Act and that are likely to have a significant economic impact on a substantial number of small entities. Unless an agency determines that a final rule is not likely to have a significant economic impact on a substantial number of small entities, section 603 of the Regulatory Flexibility Act requires that the agency present a final regulatory flexibility analysis at the time of the publication of the final rule describing the impact of the rule on small entities and seeking public comment on such impact. Small entities include small businesses, organizations, and governmental jurisdictions.

For purposes of the Regulatory Flexibility Act requirements with respect to this final rule, PBGC considers a small entity to be a plan with fewer than 100 participants. This is substantially the same criterion PBGC uses in other regulations 32 and is consistent with certain requirements in title I of ERISA 33 and the Internal Revenue Code (Code),34 as well as the definition of a small entity that DOL has used for purposes of the Regulatory Flexibility Act.35

Thus, PBGC believes that assessing the impact of this final rule on small plans is an appropriate substitute for evaluating the effect on small entities. The definition of small entity considered appropriate for this purpose differs, however, from a definition of small business based on size standards promulgated by the Small Business Administration 36 under the Small Business Act. PBGC requested comments on the appropriateness of the size standard used in evaluating the impact of its proposed rule on small entities. PBGC received no comments on this point.

Based on its definition of small entity, PBGC certifies under section 605(b) of the Regulatory Flexibility Act that the amendments in this rule will not have a significant economic impact on a substantial number of small entities. Based on data for the most recent premium filings, PBGC estimates that only 38 plans of the approximately 1,400 plans covered by PBGC's multiemployer program are small plans. Furthermore, plans may, but are not required to, merge or request financial assistance to merge. As discussed above, plans that merge will obtain economic benefits from reduced expenses and preserved plan benefits. A facilitated merger can improve the plans' ability to remain solvent and to continue paying participants' benefits. Merger may be particularly useful for small plans due to economies of scale. Accordingly, as provided in section 605 of the Regulatory Flexibility Act, sections 603 and 604 do not apply.

PBGC is submitting the information collection requirements under part 4231 to OMB for review and approval under the Paperwork Reduction Act. The collection of information under part 4231 is currently approved under OMB control number 1212-0022 (expires September 30, 2020). 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.

Multiemployer plans requesting a merger or transfer are required to file a notice with PBGC with required information under part 4231. PBGC needs the information submitted by plans to provide a basis for determining whether a merger or transfer satisfies statutory requirements. Plans may also request a compliance determination by providing additional information to enable PBGC to make an explicit finding that the merger or transfer requirements have been satisfied.

PBGC's current approval for the collection of information under part 4231 is for an estimated 14 transactions each year for which plan sponsors submit notices and requests for a compliance determination. Changes in this final rule that affect mergers and transfers that are not subject to the new requirements for facilitated mergers are not expected to have an impact on the burden of the information collection. The current approved annual burden for the collection of information is 10 hours in-house and $42,800 for work done by outside contractors, including attorneys and actuaries.

Most of the information filing requirements under part 4231 are for financial assistance mergers. PBGC estimates that under this final rule there will be six requests for a financial assistance merger. The estimated annual burden is 60 hours in-house (10 hours per application) with an estimated dollar equivalent of $4,500, based on an assumed blended hourly rate of $75 for administrative, clerical, and supervisory time. The estimated annual cost burden is $180,000 ($30,000 per application) for work done by outside contractors, including attorneys and actuaries. This estimate is based on 450 contracted hours (six applications x 75 hours) and assumes an average hourly rate of $400.

The total annual burden for the collection of information under part 4231 to prepare the notices and comply with the additional requirements for financial assistance mergers is 70 hours and $222,800, as shown in the following table:

The California Department of Transportation has requested a temporary change to the operation of the Tower Drawbridge over the Sacramento River, mile 59.0, at Sacramento, CA. The drawbridge navigation span provides a vertical clearance of 30 feet above Mean High Water in the closed-to-navigation position. The draw operates as required by 33 CFR 117.189(a). Navigation on the waterway is commercial and recreational.

The drawspan will be secured in the closed-to-navigation position from 12 noon through 10 p.m. on September 30, 2018, to allow the community to participate in the Farm-to-Fork Dinner event. This temporary deviation has been coordinated with the waterway users. No objections to the proposed temporary deviation were raised.

Vessels able to pass through the bridge in the closed position may do so at anytime. The bridge will be able to open for emergencies with a 2-hour notification to the bridge owner and there are no immediate alternate routes for vessels to pass. The Coast Guard will also inform the users of the waterway through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.

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

The site to be deleted from the NPL is: Recticon/Allied Steel Corp Superfund Site, East Coventry Twp, PA. A Notice of Intent to Delete for this Site was published in the Federal Register (83 FR 33186-33191) on July 17, 2018.

The closing date for comments on the Notice of Intent to Delete was August 16, 2018. No adverse or site-specific public comments were received. As a result, a responsiveness summary was not prepared.

EPA maintains the NPL as the list of sites that appear to present a significant risk to public health, welfare, or the environment. Deletion from the NPL does not preclude further remedial action. Whenever there is a significant release from a site deleted from the NPL, the deleted site may be restored to the NPL without application of the hazard ranking system. Deletion of a site from the NPL does not affect responsible party liability in the unlikely event that future conditions warrant further actions.

For reasons set out in the preamble, 40 CFR part 300 is amended as follows: