Federal Register Vol. 83, No.188,

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it would modify the route structure as necessary to preserve the safe and efficient flow of air traffic within the National Airspace System.

Interested parties are invited to participate in this proposed rulemaking by submitting such written data, views, or arguments as they may desire. Comments that provide the factual basis supporting the views and suggestions presented are particularly helpful in developing reasoned regulatory decisions on the proposal. Comments are specifically invited on the overall regulatory, aeronautical, economic, environmental, and energy-related aspects of the proposal.

Communications should identify both docket numbers (FAA Docket No. FAA-2018-0817; Airspace Docket No. 18-ASW-1) and be submitted in triplicate to the Docket Management Facility (see ADDRESSES section for address and phone number). You may also submit comments through the internet at http://www.regulations.gov.

Commenters wishing the FAA to acknowledge receipt of their comments on this action must submit with those comments a self-addressed, stamped postcard on which the following statement is made: “Comments to FAA Docket No. FAA-2018-0817; Airspace Docket No. 18-ASW-1.” The postcard will be date/time stamped and returned to the commenter.

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

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

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

This document proposes to amend FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is planning to decommission the Hobby VOR/DME in April 2019 in support of construction activities for a new international terminal and associated parking garage at the William P. Hobby Airport, Houston, TX. The ATS routes effected by the Hobby VOR/DME decommissioning are jet routes J-37, J-138, and J-177, and VOR Federal airways V-15, V-20, V-68, V-76, V-194, V-198, V-548, and V-558.

With the planned decommissioning of the Hobby VOR/DME, the remaining ground-based NAVAID coverage in the area is insufficient to enable the continuity of the effected ATS routes. As such, proposed modifications to the effected jet routes and VOR Federal airways would result in gaps in those routes. To overcome the gaps, 2 high altitude RNAV Q-routes (Q-24 and Q-56) are proposed to be amended and 4 low altitude RNAV T-routes (T-200, T-220, T-224, and T-256) are proposed to be established to replace the jet route and VOR Federal airway segments proposed to be removed over the Hobby VOR/DME. The proposed amended Q-routes would provide the route structure necessary for departures from the Austin, Houston, and San Antonio terminal areas to transition to the en route environment. The proposed new T-routes would provide the Tower En Route structure through the airspace delegated to the Houston Terminal Radar Approach Control facility necessary to allow flights to continue along the en route structure that extends from San Antonio along the Gulf Coast into Florida.

Instrument flight rules (IFR) traffic that cannot fly Q-routes could use adjacent jet routes J-29 between the Palacios, TX, VORTAC and Humble, TX, VORTAC; J-22 between the Palacios, TX, VORTAC and Lake Charles, LA, VORTAC; and J-2, J-86 and J-31 between the San Antonio, TX, VORTAC and Harvey, LA, VORTAC to circumnavigate the affected area. Similarly, IFR traffic that cannot fly T-routes could use adjacent VOR Federal Airways V-70 between the Palacios, TX, VORTAC and Sabine Pass, LA, VOR/DME; V-556 between the Eagle Lake, TX, VOR/DME and Sabine Pass, LA, VOR/DME; and V-212, V-571, and V-222 between the Industry, TX, VORTAC and Beaumont, LA, VOR/DME to circumnavigate the affected area. Additionally, IFR traffic could file point to point through the affected area using fixes that will remain in place, or receive air traffic control (ATC) radar vectors through the area. Visual flight rules pilots who elect to navigate via the airways through the affected area could also take advantage of the adjacent jet routes, VOR Federal airways or ATC services listed previously.

The FAA is proposing an amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 to modify 3 jet routes, 2 Q-routes, and 8 VOR Federal airways, and establish 4 T-routes due to the planned decommissioning of the Hobby, TX, VOR/DME. The proposed ATS route amendments are to the descriptions of J-37, J-138, J-177, Q-24, Q-56, V-15, V-20, V-68, V-76, V-194, V-198, V-548, and V-558, and the proposed new T-routes would be designated T-200, T-220, T-224, and T-256. The proposed amended and new ATS route end points are listed below. Full route descriptions are in “The Proposed Amendment” section of this document.

The proposed jet route amendments are as follows:

J-37: J-37 currently extends between the Hobby, TX, VOR/DME and the Coyle, NJ, VORTAC; and between the Kennedy, NY, VOR/DME and the Massena, NY, VORTAC. The FAA proposes to remove the airway segment between the Hobby, TX, VOR/DME and the Harvey, LA, VORTAC. The unaffected portions of the existing airway would remain as charted.

J-138: J-138 currently extends between the Fort Stockton, TX, VORTAC and the Semmes, AL, VORTAC. The FAA proposes to remove the airway segment between the San Antonio, TX, VORTAC and the Lake Charles, LA, VORTAC. The unaffected portions of the existing airway would remain as charted.

J-177: J-177 currently extends between the Humble, TX, VORTAC and the Tampico, Mexico, VOR/DME, excluding the portion south of lat. 26°00′00″ N. The FAA proposes to remove the airway segment between the Humble, TX, VORTAC and the Palacios, TX, VORTAC. The unaffected portions of the existing airway would remain as charted.

The proposed Q-route amendments are as follows:

Q-24: Q-24 currently extends between the Lake Charles, LA, VORTAC and the PAYTN, AL, fix. The FAA proposes to extend the route west of the Lake Charles, LA, VORTAC to the San Antonio, TX, VORTAC. The San Antonio, TX, VORTAC and MOLLR, TX, WP would be added prior to the Lake Charles, LA VORTAC. The unaffected portions of the existing airway would remain as charted.

Q-56: Q-56 currently extends between the CATLN, AL, fix and the KIWII, VA, WP. The FAA proposes to extend the route south of the CATLN, AL, fix to the San Antonio, TX, VORTAC. The San Antonio, TX, VORTAC; MOLLR, TX, WP; PEKON, LA, fix; Harvey, LA, VORTAC; and Semmes, AL, VORTAC would be added prior to the CATLN, AL, fix. Additionally, the KBLER, GA, WP would be removed between the CATLN, AL, fix and the KELLN, SC, WP. The unaffected portions of the existing airway would remain as charted.

The proposed VOR Federal airway amendments are as follows:

V-15: V-15 currently extends between the Hobby, TX, VOR/DME and the Neosho, MO, VOR/DME; and between the Sioux City, IA, VORTAC and the Minot, ND, VORTAC. The FAA proposes to remove the airway segment between the Hobby, TX, VOR/DME and the Navasota, TX, VOR/DME. The unaffected portions of the existing airway would remain as charted.

V-20: V-20 currently extends between the McAllen, TX, VOR/DME and the Nottingham, MD, VORTAC. The FAA proposes to remove the airway segment between the Palacios, TX, VORTAC and the Beaumont, TX, VOR/DME. The unaffected portions of the existing airway would remain as charted.

V-68: V-68 currently extends between the Montrose, CO, VOR/DME and the Hobby, TX, VOR/DME. The FAA proposes to remove the airway segment between the Industry, TX, VORTAC and the Hobby, TX, VOR/DME. The unaffected portions of the existing airway would remain as charted.

V-76: V-76 currently extends between the Lubbock, TX, VORTAC and the Hobby, TX, VOR/DME. The FAA proposes to remove the airway segment between the Industry, TX, VORTAC and the Hobby, TX, VOR/DME. The unaffected portions of the existing airway would remain as charted.

V-194: V-194 currently extends between the Cedar Creek, TX, VORTAC and the Meridian, MS, VORTAC; and between the Liberty, NC, VORTAC and the intersection of the Cofield, NC, VORTAC 077° and Norfolk, VA, VORTAC 209° radials (SUNNS fix). The FAA proposes to remove the airway segment between the College Station, TX, VORTAC and the Sabine Pass, TX, VOR/DME. The unaffected portions of the existing airway would remain as charted.

V-198: V-198 currently extends between the San Simon, AZ, VORTAC and the Craig, FL, VORTAC. The FAA proposes to remove the airway segment between the Eagle Lake, TX, VOR/DME and the Sabine Pass, TX, VOR/DME. The unaffected portions of the existing airway would remain as charted.

V-548: V-548 currently extends between the Hobby, TX, VOR/DME and the Waco, TX, VORTAC. The FAA proposes to remove the airway segment between the Hobby, TX, VOR/DME and the College Station, TX, VORTAC. The unaffected portions of the existing airway would remain as charted.

V-558: V-558 currently extends between the Llano, TX, VORTAC and the Hobby, TX, VOR/DME. The FAA proposes to remove the airway segment between the Eagle Lake, TX, VOR/DME and the Hobby, TX, VOR/DME. The unaffected portions of the existing airway would remain as charted.

The proposed new T-routes are as follows:

T-200: T-200 would extend between the College Station, TX, VORTAC and the Sabine Pass, TX, VOR/DME.

T-220: T-220 would extend between the Industry, TX, VORTAC and the Sabine Pass, TX, VOR/DME.

T-224: T-224 would extend between the Palacios, TX, VORTAC and the Lake Charles, LA, VORTAC.

T-256: T-256 would extend between the San Antonio, TX, VORTAC and the Sabine Pass, TX, VOR/DME.

All radials in the route descriptions below are unchanged and stated in True degrees.

Jet routes are published in paragraph 2004, high altitude RNAV Q-routes are published in paragraph 2006, Domestic VOR Federal airways are published in paragraph 6010(a), and low altitude RNAV T-routes are published in paragraph 6011 of FAA Order 7400.11C dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR 71.1. The jet routes, Q-routes, VOR Federal airways, and T-routes listed in this document will be subsequently published in the Order.

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

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

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

Most broker-dealers registered with the Commission must file annual reports with the Commission.1 The annual reports must include a financial report and either a compliance report or an exemption report.2 In addition, the annual reports generally must include reports prepared by an independent public accountant covering the financial report and, as applicable, the compliance or exemption report.3 The independent public accountant must be registered with the Public Company Accounting Oversight Board (“PCAOB”) if required by the Sarbanes-Oxley Act of 2002.4 In addition, the accountant's reports must be prepared in accordance with standards of the PCAOB.5

However, a broker-dealer is not required to engage an independent public accountant to provide the accountant's reports if, since the date of the registration of the broker-dealer with the Commission or of the previous annual reports filed with the Commission, the securities business of the broker-dealer “has been limited to acting as broker (agent) for the issuer in soliciting subscriptions for securities of the issuer, the broker has promptly transmitted to the issuer all funds and promptly delivered to the subscriber all securities received in connection with the transaction, and the broker has not otherwise held funds or securities for or owed money or securities to customers[.]” 6

The Commission first adopted the exemption in 1957.7 At that time, the pertinent rule text provided that the exemption was available to a broker-dealer if “his or its securities business has been limited to acting as broker (agent) for the issuer in soliciting subscriptions for securities of such issuer, said broker has promptly transmitted to such issuer all funds . . .” 8 The Commission stated in the adopting release that the “exemption is available to a broker who, from the date of his previous report, has limited his securities business to soliciting subscriptions as an agent for issuers, has transmitted funds and securities promptly and has not otherwise held funds or securities for or owed money or securities to customers (i.e. one who would have been exempt during that entire period from the Commission's aggregate-indebtedness-net-capital § 240.15c3-1 (Rule 15c3-1) by reason of paragraph (b)(1) thereof).” 9

In 1975, as part of a set of comprehensive amendments to broker-dealer reporting rules, the Commission amended the text of the exemption to provide, in pertinent part, that the exemption was available if “the securities business of such broker or dealer has been limited to acting as broker (agent) for the issuer in soliciting subscriptions for securities of such issuer . . .”.10 The Commission did not explain the purpose of the amendment. In 1977, the Commission again amended the text of the exemption to modify the phrase “has been limited to acting as broker (agent) for the issuer” to “has been limited to acting as broker (agent) for an issuer.” 11 Although the Commission did not explain the purpose of the amendment in the adopting release, the Commission later clarified that the exemption applies only to a broker-dealer acting as an agent for a single issuer.12

While the 1977 amendment was published in the Federal Register, an error was made when printing the amended rules in the Code of Federal Regulations. In particular, the Code of Federal Regulations continued to describe the exemption as limited to a broker that acts as an agent “for the issuer.” 13

Finally, in 2013, the exemption provision was amended again, but solely to modernize certain terms in the rule text.14 However, in making these amendments, the release used the rule text as then published in the Code of Federal Regulations and, therefore, inadvertently re-introduced the language of the exemption as it existed prior to 1977 (i.e., amended the exemption provision to provide that the exemption applied if the broker solicited subscriptions for “the issuer” rather than “an issuer”). Today, the Commission is proposing an amendment to correct that error and to clarify that the exemption applies to a broker-dealer whose securities business has been limited to acting as broker (agent) for a single issuer in soliciting subscriptions for securities of that issuer.

Section 17(e)(1)(A) of the Exchange Act, among other things, requires a registered broker-dealer to file certain audited financial statements annually with the Commission.15 Section 17(e)(1)(C) of the Exchange Act provides that the Commission may exempt any registered broker-dealer from any provision of Section 17(e)(1) “if the Commission determines that the exemption is consistent with the public interest and the protection of investors.” 16 The Commission adopted Rule 17a-5 under the Exchange Act (“Rule 17a-5”), in part, under these provisions.

The Commission is proposing to amend the exemption provision in paragraph (e)(1)(i)(A) of Rule 17a-5 to clarify in the rule text that the exemption is limited to a broker-dealer that acts as an agent for a single issuer. Specifically, the Commission is proposing to replace the phrase “has been limited to acting as broker (agent) for the issuer in soliciting subscriptions for securities of the issuer” with the phrase “has been limited to acting as broker (agent) for a single issuer in soliciting subscriptions for securities of that issuer.”

Broker-dealers serve an important capital formation role by performing numerous services. These services include, among others, underwriting securities issuances, facilitating purchases and sales of securities on behalf of customers, making markets in securities, participating in private placements of securities, and providing investment research and recommendations. The annual reports broker-dealers file with the Commission are used by the Commission and the broker-dealer's designated examining authority to monitor the financial and operational condition of the broker-dealer. The annual reports also are one of the primary means of monitoring compliance with the Commission's broker-dealer financial responsibility rules. The requirement that the annual reports be certified by an independent public accountant is intended to enhance the reliability of the information filed by the broker-dealer, including information relevant to its financial condition and ability to continue as a going concern. This also benefits investors who are customers or potential customers of the broker-dealer and who do not have access to the same level of information about the financial condition and operations of the broker-dealer as the independent public accountant performing the audit. These investors rely on the independent public accountant to audit this information, which—as noted above—is relevant to the broker-dealer's financial condition and ability to continue as a going concern.

This very limited exemption to the requirement that a broker-dealer's annual reports be certified by an independent public accountant is consistent with the objectives of the rule. In particular, the exemption applies when the broker-dealer's sole reason for being registered with the Commission as a broker-dealer is to act as an agent to solicit subscriptions for the securities of a single issuer—typically an affiliate of the broker-dealer.17 In this case, the issuer is the broker-dealer's only customer. Due to this special relationship, the issuer likely has the ability to access sufficient information about the financial condition and operations of the broker-dealer to make an informed decision about continuing to use the broker-dealer to effect transactions in its securities.18 Therefore, requiring that an independent public accountant audit this information would not provide the single customer of the broker-dealer (i.e., the issuer) a meaningful benefit. The risk of harm from not requiring that an independent public accountant audit the information would be mitigated by the single customer's ability to access any necessary information regarding the broker-dealer's operational and financial condition, as noted above. Moreover, any harm would be limited to the broker-dealer's single customer. Further, based on the annual reports broker-dealers filed with the Commission, it appears that only three broker-dealers have relied on the exemption in the past year.

The Commission generally requests comment on all aspects of the proposal. This request for comment is limited to the proposed rule amendment; the Commission is not requesting comment on any other aspect of Rule 17a-5.

The proposed rule amendment would clarify the scope of an existing exemption available to certain broker-dealers from the requirement to engage an independent public accountant to provide the reports required under paragraph (d)(1)(i)(C) of Rule 17a-5.19 The proposed rule amendment does not create any new, or revise any existing, collection of information pursuant to the Paperwork Reduction Act of 1995.20 Accordingly, no information has been submitted to the Office of Management and Budget for review.

The Commission requests comment on the assertion that the proposed rule amendment will not create any new, or revise any existing, collection of information pursuant to the Paperwork Reduction Act.

The Commission is mindful of the costs imposed by, and the benefits obtained from, its rules. Whenever the Commission engages in rulemaking and is required to consider or determine whether an action is necessary or appropriate in the public interest, Section 3(f) of the Exchange Act requires the Commission to consider whether the action would promote efficiency, competition, and capital formation, in addition to the protection of investors. Further, when engaged in rulemaking under the Exchange Act, Section 23(a)(2) of the Exchange Act requires the Commission to consider the impact such rules would have on competition. Section 23(a)(2) of the Exchange Act also prohibits the Commission from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act. The following analysis considers the potential economic effects that may result from the proposed rule amendment, including the benefits and costs to market participants as well as the broader implications of the proposal for efficiency, competition, and capital formation.

As noted above, broker-dealers serve an important role in capital formation by performing numerous services, including with respect to the distribution of securities. Broker-dealer annual reports are one of the primary means of monitoring compliance with the Commission's broker-dealer financial responsibility rules, and the requirement that the annual reports be certified by an independent public accountant is intended to help enhance the reliability of the information filed by the broker-dealer. The exemption in paragraph (e)(1)(i)(A) of Rule 17a-5 is designed to streamline regulatory compliance for certain broker-dealers by permitting broker-dealers that underwrite offerings by a single issuer—typically an affiliate of the broker-dealer—to do so without needing to meet this requirement.

With respect to the baseline, broker-dealers rarely rely on the very limited exemption in paragraph (e)(1)(i)(A) of Rule 17a-5. Staff analysis of annual reports filed by broker-dealers revealed that only three broker-dealers—out of approximately 4,000 registered with the Commission—relied on the exemption in the last year. The low level of use suggests that broker-dealers generally do not avail themselves of the existing exemption to compete with one another or to improve the efficiency of their underwriting activities.

The Commission recognizes the value of requiring that broker-dealer annual reports be certified by an independent public accountant. However, when a broker-dealer is acting solely as an agent for a single issuer's securities, typically an affiliate, the issuer is likely to have sufficient information about the broker-dealer's financial and operational condition. In that case, there would be minimal benefit in a requirement that the broker-dealer-dealer's annual reports be certified by an independent public accountant. At the same time, a broker-dealer required to obtain certification for its annual reports could bear significant costs to do so.21

In cases where a broker-dealer is acting solely as an agent for a single unaffiliated issuer, the benefits of certification are likely to be higher because the larger degree of information asymmetry between the broker-dealer and the unaffiliated issuer makes third-party certification more valuable. The Commission believes the likelihood of such a narrow arrangement between a broker-dealer and a single unaffiliated issuer is low because for such a broker-dealer, the costs of certification are likely lower than the expected benefits from acting as an agent for additional unaffiliated issuers.

The Commission expects the amendment to benefit issuers that rely on broker-dealers to underwrite securities offerings by providing increased regulatory certainty about a broker-dealer's obligation to have its annual reports certified by an independent public accountant when the broker-dealer acts as an agent for multiple issuers. This will benefit issuers by helping ensure that broker-dealers do not inappropriately rely on the exemption in paragraph (e)(1)(i)(A) of Rule 17a-5. When the broker-dealer is not acting solely as an agent for a single affiliate's securities, the benefits of certification are likely to be more substantial because the issuers are less likely to have sufficient information about the broker-dealer's financial condition.

The Commission acknowledges that, to the extent this proposal limits use of the exemption, broker-dealers that would no longer be able to use the exemption in the future could bear costs as a result of the proposed amendment. For such a broker-dealer, the Commission believes the cost of a small broker-dealer obtaining certification of its annual reports by an independent public accountant in accordance with paragraph (d)(1)(i)(C) of Rule 17a-5 could be approximately $3,200 per year.22 Based on the low reliance on the exemption currently, and the expectation that the number of broker-dealers relying on the exemption will not materially increase or decrease as a result of the amendment, the overall economic impact of the proposal is likely to be small.

The Commission expects the proposed amendment to have only a marginal impact on efficiency, competition, and capital formation. This assessment is primarily based on the belief that the amendment does not revise the scope of the exemption or change current practice and that the exemption is claimed by only a few broker-dealers. The Commission nevertheless acknowledges that the proposed amendment may marginally impair capital formation if it prompts broker-dealers to reduce underwriting activity or to increase the price of underwriting activities for potential issuers.

The Commission considered several alternatives in terms of the scope of the exemption. First, the Commission considered broadening the scope of the exemption to include broker-dealers whose securities business is limited to acting as an agent for multiple issuers. Staff analysis of information provided by broker-dealers indicates that a substantial number of registered broker-dealers underwrite corporate securities or are selling group participants for corporate securities and may otherwise be eligible to take advantage of the exemption if its scope were broadened in this way.23

Rule 17a-5 provides only two exemptions from the requirement that broker-dealer annual reports be certified by an independent public accountant.24 The Commission has provided for only these very limited exemptions from the requirement that annual reports of broker-dealers be audited due to the importance of reliable financial and operational information concerning registered broker-dealers for investor protection and the integrity of the capital markets. Broadening the exemption could benefit broker-dealers by no longer requiring them to engage independent public accountants when they act as an agent for multiple issuers in soliciting subscriptions for securities and thereby reducing their costs. However, an alternative that broadens these exceptions could impose costs on issuers to the extent that making the certification by the independent public accountant voluntary for broker-dealers that serve multiple issuers reduces the reliability of these broker-dealers' annual reports.

Given the significance of the verification of a broker-dealer's financial and operational information by an independent public accountant, the Commission is not proposing to broaden the scope of the exemption to include broker-dealers whose securities business is limited to acting as an agent for multiple issuers. When a broker-dealer acts as an agent on behalf of an issuer, the financial condition of the broker-dealer is important to the issuer because if a broker-dealer is financially constrained, it may be less able to bear the risks associated with underwriting activities, such as holding securities in inventory. If a broker-dealer acts as an agent on behalf of multiple issuers, its financial condition is important to capital formation for multiple issuers, and so the benefits of certification are likely higher for the broker-dealer. Moreover, the Commission notes that the benefits to broker-dealers from such an alternative may be limited by competitive effects, because an issuer that is concerned about the reliability of a broker-dealer's financial statements may choose to hire a broker-dealer with certified annual reports to act as its agent.

Second, the Commission considered eliminating the exemption. While the Commission is mindful of the significance of broker-dealer audits, as explained above, the Commission believes that the cost of this alternative to broker-dealers who are now eligible to take advantage of the exemption does not justify the benefits that would accrue to the broker-dealer's single customer, typically an affiliate of the broker-dealer, as a result of an audit. Therefore, the Commission preliminarily believes the exemption should continue to be available only where a broker-dealer is acting as an agent for a single issuer in soliciting subscriptions for securities of that issuer.

Finally, the Commission considered further specifying that the limited exemption in paragraph (e)(1)(i)(A) of Rule 17a-5 would apply only if the broker-dealer were engaged in underwriting the securities of an affiliate. While this alternative would narrow the limited exemption, based on its observation of broker-dealers' use of this exemption to date, the Commission does not believe the benefits yielded by narrowing the exemption would be substantial.

Section 3(a) of the Regulatory Flexibility Act requires the Commission to undertake an initial regulatory flexibility analysis of the impact of the proposed rule on small entities unless the Commission certifies that the amendments, if adopted, would not have a significant economic impact on a substantial number of small entities. As discussed above, the proposed rule would not change the status quo in terms of the broker-dealers that would or would not qualify for the exemption from paragraph (d)(1)(i)(C) of Rule 17a-5.25 For additional discussion of the impact of the proposal (including on small entities), please see section V above. The Commission hereby certifies, pursuant to 5 U.S.C. 605(b), that the proposed amendment to Rule 17a-5, if adopted, would not have a significant economic impact on a substantial number of small entities.

The Commission encourages written comments regarding this certification. The Commission solicits comment as to whether the proposed amendments could have an effect that the Commission has not considered and requests that commenters describe the nature of any impact on small entities and provide empirical data to support the extent of the impact.

For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996,26 a rule is “major” if it has resulted, or is likely to result, in:

• An annual effect on the economy of $100 million or more;

• a major increase in costs or prices for consumers or individual industries; or

• significant adverse effects on competition, investment, or innovation.

The Commission requests comment on the potential impact of the proposed rule on the economy on an annual basis. The Commission requests that commenters provide empirical data and other factual support for their views.

The Commission is proposing an amendment to Rule 17a-5 under the Exchange Act (17 CFR 240.17a-5) pursuant to the authority conferred by Exchange Act Sections 17(e)(1)(A), 17(e)(1)(C), and 36.27

In accordance with the foregoing, the Commission proposes that Title 17, Chapter II of the Code of Federal Regulation be amended as follows.

I. Executive Summary

The youth-employment provisions of the FLSA ensure that when youth work, the work is safe and does not jeopardize their health, well-being, or education.1 Pursuant to those provisions, 16- and 17-year-old employees generally cannot work in a nonagricultural occupation governed by any of the Department's HOs. As relevant to this proposal, HO 7 prohibits 16- and 17-year-old employees from working in occupations involving the operation of a power-driven hoisting apparatus.2 The Department originally issued HO 7 in 1946. It primarily covers devices used in industrial contexts, such as forklifts, backhoes, and cranes—which, as discussed below, differ both in form and function from patient lifts. When originally enacted, HO 7 contained an exemption for electric or air-operated hoists not exceeding a one-ton capacity. HO 7 therefore did not encompass power-driven patient lifts used to transport patients and residents in medical settings such as hospitals, nursing homes, and long-term care facilities. In 2010, however, the Department amended HO 7 to, in part, eliminate the longstanding exemption for electric or air-operated hoists not exceeding a one-ton capacity. As a result, HO 7 now encompasses power-driven patient lifts. Power-driven patient lifts, however, are far less dangerous to workers than the alternative of manual patient lifting, which causes a significant number of worker injuries. Power-driven patient lifts are different in form and function from the other kinds of machines listed in HO 7. Typically speaking, power-driven patient lifts do not have nearly the same size, power, mass, speed, or complexity as many of those other machines; they are used in health care rather than industrial facilities; and from 2012 to 2016 only 1 worker fatality was attributed to a patient hoist or lifting harness, in comparison to 930 worker fatalities associated with cranes, overhead hoists, bucket or basket hoists, manlifts, and forklifts.

After the 2010 expansion of HO 7, numerous stakeholders asked the Department to reconsider the HO's inclusion of patient lifts because, among other things, it severely restricts employment opportunities for 16- and 17-year-olds in the health care industry and the alternative of manually lifting patients is more dangerous to workers than the use of powered lifts. Those stakeholders voicing concerns and requesting changes to HO 7 included multiple members of the Senate and House of Representatives from both political parties. In response to this public input, the Department issued a nonenforcement policy in 2011, specifying that it would not assert a violation of HO 7 when a trained 16- or 17-year-old, under certain specified conditions, assists a trained adult in the operation of patient lifts. The Department, however, has continued to hear concerns from the public and a bipartisan group of legislators that 16- and 17-year-olds' inability to independently operate such devices decreases their employment and training opportunities in health care occupations; often necessitates those who work in such occupations to manually lift patients—a practice that is more dangerous than using a patient lift; and, in some cases, hinders health care providers' ability to care for patients due to a lack of staff available to timely move patients. Given these and other considerations outlined below, the Department is proposing to enhance employment, training, and apprenticeship opportunities for 16- and 17-year-olds in health care by excluding power-driven patient lifts from the scope of HO 7.

This proposed rule is expected to be an Executive Order (E.O.) 13771 deregulatory action. Details on the estimated cost savings of this proposed rule can be found in the rule's economic analysis.

An important task in health care occupations, particularly in facilities that care for the elderly and disabled, is the safe handling and moving of patients. Without patient lifts, health care personnel sometimes manually lift patients who cannot transport themselves. Such practices can lead to musculoskeletal disorders, such as muscle strains and lower back injuries, among manual lifters. Among health care occupations, 40 percent of injuries resulting in days away from work are caused by overexertion or bodily reaction, which includes motions such as lifting, bending, or reaching—motions related to patient handling.3 In contrast, the use of mechanical lifting equipment, such as powered patient lifts or hoists, has been shown to reduce exposure to manual lifting injuries by up to 95 percent.4 Because powered patient lifts significantly reduce the risk of musculoskeletal disorders compared to manual lifting, many facilities encourage or require their use. Since 2010, however, HO 7 has prohibited 16- and 17-year-old youth from operating power-driven patient lifts.5

After hearing significant concerns about the application of HO 7 to power-driven patient lifts from members of the public and a bipartisan group of elected officials, the Department issued a non-enforcement policy in 2011 that applies when trained 16- and 17-year-olds, under specified conditions, assist a trained adult in the operation of patient lifts.6 The nonenforcement policy, however, does not permit these youth to operate patient lifts independently. The Department has received correspondence and other feedback that this continued prohibition adversely affects the ability of youth to receive employment and training opportunities in health care professions, encourages youth who work in health care to engage in unsafe manual lifting, and hampers health care providers' ability to promptly and safely assist patients. The authors of this correspondence have also stated that, in their experience, 16- and 17-year-olds are capable of operating patient lifts safely.

This information, as well as other information discussed below, suggests that the operation of power-driven patient lifts may not be particularly hazardous to youth employed in health care occupations or detrimental to their health or well-being. The Department, therefore, proposes to exclude the operation of power-driven patient lifts from the list of prohibited devices under HO 7. The Department seeks public comment on this proposal, and, specifically, whether the operation of power-driven patient lifts is particularly hazardous to 16- and 17-year-olds or is otherwise detrimental to their health or well-being.

The Department expects that, if adopted in a final rule, the proposed amendment to HO 7 will encourage the creation of more employment, apprenticeship, and other training opportunities in health care by removing a regulatory restriction that bars 16- and 17-year-olds from operating power-driven patient lifts, a foundational job duty in the health care industry. The Department recognizes the importance of providing young people with opportunities to safely train and work in rewarding and meaningful health care careers. The Department also recognizes that regulatory restrictions on youth operating power-driven patient lifts may unnecessarily impede training and employment opportunities for youth interested in pursuing careers in this fast-growing field.

Early employment and training opportunities can teach 16- and 17-year-olds workplace safety, responsibility, organization, and time management. These opportunities can also help them establish good work habits, gain valuable experience, expand their networks, and achieve financial stability. Research confirms the many advantages of working during high school—especially for low-income youth—including higher employment rates, higher wages in later years, and a lower probability of dropping out of high school.7 Part-time work during high school correlates with more schooling and work after high school graduation, and also correlates with the receipt of a college degree.8

Opportunities for youth employment can be particularly helpful in reducing the number of youth who become disconnected from school or work. A 2012 study found that each young person who “disconnects” from school or work costs the economy an estimated $704,020 over their lifetime due to lost earnings, lower economic growth, lower tax revenues, and higher government spending.9 Many young people lose their connection to school and work at ages 16 and 17, when high-school dropout and unemployment rates are highest. Early employment and training opportunities can benefit these youth and improve their future employment prospects. In a survey commissioned by the Bill and Melinda Gates Foundation, for example, 81 percent of high school dropouts surveyed reported that having real-world experiences that connected school with work would have helped keep them in school.10 One such program, Career Academies, was shown to increase earnings by 11 percent for as many as eight years after high school.11

Consistent with the President's E.O. on expanding apprenticeships in the United States,12 the Department is interested in promoting workforce training program models in health care that offer safe and impactful apprenticeship opportunities. Apprenticeships in high-growth, emerging sectors, such as health care, can yield significant benefits. Research has found, for example, that apprenticeships can lead to better workplace performance, higher wages, reduced worker turnover, and portable occupational credentials. The average starting wage for apprentices is $15.00 per hour, and wages increase as apprentices gain skills and knowledge.13 A study of a cross-section of apprenticeships by Mathematica Policy Research found that participants who participated in an apprenticeship program earned, on average, nearly $100,000 more over their careers than nonparticipants did. For those apprentices who completed their program, the average earnings premium was more than $240,000.14

The need for safe employment, apprenticeship, and training opportunities for youth is particularly acute in health care, which is among the fastest growing industries in the United States.15 The Bureau of Labor Statistics (BLS) projects that numerous professions in health care will grow either faster or much faster than the national average growth rates in the next decade.16 There are already approximately 1 million job openings in health care and social assistance.17 According to a National Federation of Independent Business poll of its members, the top two reasons that employers did not hire applicants were lack of experience and lack of job-specific/occupational skills.18 This further underscores the need for early employment, training, and apprenticeship opportunities—which help close the skills gap between the skills employers seek and the skills job seekers currently have. Removing unnecessary barriers to entry for youth in health care will give them more opportunities to gain those critical skills. Many jobs in health care, such as certified nursing assistant (CNA) positions, present excellent entry-level positions for young workers, including teens still in high school who seek to begin a career in health care. There are also numerous apprenticeable occupations in health care, such as certified nurse aide, home health aide, rehabilitative aide, licensed practical nurse, and CNA.19 To help ensure that those who need care can receive it from workers who are skilled, qualified, and familiar with continuing advances in technology and service delivery, federal regulations should encourage, and not unnecessarily hinder, opportunities for younger workers to pursue careers in health care.

The youth employment provisions of the FLSA, which Congress enacted in 1938, ensure that when young people work, the work is safe and does not jeopardize their health, well-being, or educational opportunities. The FLSA distinguishes between youth employed in agricultural work and youth employed in nonagricultural work. FLSA section 203(l) establishes a minimum age of 16 years for nonagricultural employment and prohibits 16- and 17-year-olds from working in any occupation that the Secretary of Labor (the Secretary) has found to be particularly hazardous or detrimental to their health or well-being. Under this authority, the Secretary has issued 17 HOs for nonagricultural employment.

HO 7, originally issued on July 16, 1946, prohibits 16- and 17-year-old employees from working in occupations involving a power-driven hoisting apparatus.20 It prohibits 16- and 17-year-old employees from “operating, tending, riding upon, working from, repairing, servicing, or disassembling an elevator, crane, derrick, hoist, or high-lift truck, except operating or riding inside an unattended automatic operation passenger elevator.” 21 It also prohibits such employees from “operating, tending, riding upon, working from, repairing, servicing, or disassembling a manlift or freight elevator, except 16- and 17-year-olds may ride upon a freight elevator operated by an assigned operator.” 22 For purposes of these prohibitions, “[t]ending such equipment includes assisting in the hoisting tasks being performed by the equipment.” 23 The 1946 study that supported these prohibitions concluded that operating hoisting apparatus is “inherently dangerous because it involves complicated mechanical equipment and because of the ever-present danger of falling or being struck by falling material should the load be dropped.” 24

Until 2010, HO 7 did not prohibit 16- and 17-year olds from operating power-driven patient lifts. The study that supported HO 7 did not address patient lifts, but it did conclude that electric or air-operated hoists with a capacity of one ton or less were “much less dangerous to operate than larger hoists,” were used for light work, and were simple to operate.25 The Department accordingly included an exemption in HO 7 for electric or air-operated hoists with a capacity of one ton or less, and patient lifts fall within that category. Thus, between 1946 and 2010, HO 7 did not prohibit the operation of patient lifts.

On May 20, 2010, the Department issued a final rule amending several HOs, including HO 7.26 The amendment to HO 7, among other things, eliminated the exemption for hoists with a capacity of one ton or less.27 This decision was informed, in part, by a statement in a 2002 report from the National Institute for Occupational Safety and Health (NIOSH) that “[a] hoisted load weighing less than one ton has the potential to cause injury or death as a result of falling, or being improperly rigged or handled.” 28 The 2010 Final Rule also expanded HO 7 to prohibit repairing, servicing, disassembling, and assisting in the operation of the machines.29

In July 2010, the Department released Fact Sheet 52, which explained that the amended HO 7 barred 16- and 17-year-olds from operating or assisting in the operation of power-driven hoists designed to lift and move patients. The Department thereafter received a number of inquiries from a bipartisan group of legislators regarding this matter. The inquiries raised a number of concerns, including businesses' need to meet critical staff shortages at health care facilities, particularly in rural areas, through 16- and 17-year-old trainees; the continued success of nursing aide education programs; the future careers of youth in health care; the need for staff to use power-driven patient lifts; and the safety of workers and health care facility residents. For example, then-Congressman Michael Michaud (D-ME) noted that many facilities have adopted “zero-lift policies” that prohibit the lifting of patients without safe assistance. As a result of the regulatory change, however, young CNAs' only method to assist a patient may be the unsafe practice of manually lifting the patient. Similarly, a letter from then-Senator Herb Kohl (D-WI), Senator Amy Klobuchar (D-MN), then-Senator Mike Johanns (R-NE), and then-Senator Kent Conrad (D-ND) asserted that the Department's restrictions were “discouraging long-term care facilities from employing and training minors at the very point in time that this employment sector needs to grow rapidly in order to accommodate the needs of our now rapidly-aging population” and “hampering youth employment programs for high school students, and those health care facilities that wish to employ them.” They also asserted that power-driven patient lifts are safe for both residents and workers, including 16- and 17-year-old workers. For example, Senators Kohl, Klobuchar, Johanns, and Conrad stated that power-driven patient lifts are “extremely safe” because they “move quite slowly, and have multiple safety and failsafe features.” Likewise, a letter from then-Congressman Earl Pomeroy (D-ND) stated that “according to the North Dakota Workforce Safety and Insurance (WSI) Department, not one 16- or 17-year-old worker has been found to be injured by using an electronic patient lift.”

The Department also heard from interested stakeholders, particularly health care providers and their representatives. By way of example, a March 2011 statement by the American Health Care Association and the National Center for Assisted Living noted that some community colleges and apprenticeship programs had ceased accepting 16- and 17-year-olds into their programs as a result of the regulatory change, imperiling the supply of health care workers in nursing homes. Similarly, several small nursing facilities in North Dakota that employed 16- and 17-year-old CNAs expressed concern that the regulatory change may prevent them from employing these individuals as CNAs—which would both create staff shortages and discourage youth from pursuing careers in health care—and may encourage 16- and 17-year-old CNAs to engage in unsafe manual lifting. Some facilities stated that they instituted procedures in which an adult would be summoned to operate a power-driven patient lift when needed. According to these facilities, such procedures not only caused delays and made patients feel that they were unduly burdening staff, but also deprived 16- and 17-year-olds of valuable work experience. Like the legislators, these stakeholders also asserted that power-driven patient lifts were safe for workers, including 16- and 17-year-old workers, to operate. A letter from the Healthcare Education Industry Partnership Council noted that staff using or assisting with lifts, regardless of age, are trained on how to safely operate patient lifts, and receive such training both as part of their nursing assistant curriculum and when hired by health care providers. Another letter from a health care provider stated that the facility had never had an employee injured using power-driven patient lifts, but had countless employees injured from failing to use such equipment.

In October 2010, the Department asked NIOSH for assistance to determine when 16- and 17-year-old employees could safely operate or assist in the operation of power-driven patient lifts.30 In March 2011, NIOSH opined that 16- and 17-year-olds could only perform these tasks safely when assisting an experienced caregiver.31 NIOSH did not express any specific concerns about the actual operation of the equipment. Rather, it cited the force necessary to place slings under patients and to push a lift loaded with a patient. NIOSH also stated that adolescent workers often underestimate dangers associated with hazardous tasks and concluded that specific training alone is insufficient to protect young workers in this context. NIOSH also agreed that manually lifting patients is far more likely to result in lower back injuries than using a power-driven patient lift, and recommended that WHD consider regulations prohibiting youth under 18 from manually lifting patients.32

The Department issued a Field Assistance Bulletin (FAB) on July 13, 2011, establishing a nonenforcement policy when, under specified conditions, trained 16- and 17-year-olds assist a trained adult in the operation of power-driven patient lifts/hoists.33 In the FAB, the Department stated that it would not “assert child labor violations involving 16- and 17-year-olds who assist a trained adult worker . . . in the operation of floor-based vertical powered patient/resident lift devices, ceiling-mounted vertical powered patient/resident lift devices, and powered sit-to-stand patient/resident lift devices (lifting devices)” when the youth worker met specific training requirements, was not injured in the process, did not make “hands on” physical contact with the patient during the lifting or transferring process, and, among other things, received necessary documentation in advance.

Nonetheless, stakeholders and legislators have continued to voice concerns about the strict limitations that HO 7 and the nonenforcement policy place on 16- and 17-year-olds' ability to operate power-driven patient lifts. In general, these stakeholders and legislators have argued that the current limits on the use of power-driven patient lifts are both unnecessary and far too restrictive. They have argued, for instance, that power-driven patient lifts are safer than manual lifting; that the demand for workers in health care can often exceed supply; that the restrictions resulting from the 2010 Final Rule and the 2011 FAB prevent health care facilities from recruiting sufficient employees; and that these restrictions deprive 16- and 17-year-olds of valuable training opportunities.

These commenters have argued that HO 7 and the 2011 FAB unnecessarily restrict programs that train high school students to become nursing assistants and allow them to apprentice in medical settings such as nursing homes and long-term care facilities. They further argue that the 16- and 17-year-old students in these programs are trained in the operation of power-driven patient lifts and therefore can operate the lifts safely. For example, letters in 2017 from Senator Tammy Baldwin (D-WI), Representative Ron Kind (D-WI), and Senator Ron Johnson (R-WI) cited an organization that enables students in Wisconsin to take college-level nursing courses, receive CNA certifications, and work as apprentices with employers. Highlighting the difficulties such programs have faced, a 2012 survey of vocational schools by the Massachusetts Department of Public Health's Teens at Work Project indicated that nearly 60 percent of respondents said that employers had commented about increased burdens due to restrictions on teens' use of power-driven patient lifts, and that 23 percent of respondents reported that students had to change jobs as a result of the revised HO 7.34 Survey respondents further indicated that the restrictions made it more difficult to place students participating in cooperative education job programs in health care. Notably, some students performed more manual lifting. And even when employers were willing and able to adjust the job duties of youth to comply with the FAB, such adjustments were often extremely time- and resource-consuming.35

The Department has regularly reviewed and revised the criteria for permissible youth employment to address amendments to the FLSA, improvements in workplace safety, the introduction of new processes and technologies, the emergence of new types of businesses in which young workers may find employment opportunities, the existence of differing federal and state standards, divergent views on how best to correlate school and work experiences, and changing needs of employers and businesses in the economy.36 Consistent with these principles, and based on the information provided by stakeholders and available data, the Department is considering whether the operation of power-driven patient lifts is indeed particularly hazardous to youth employed in the health care occupations or detrimental to their health or well-being. This Notice of Proposed Rulemaking proposes to exclude power-driven patient lifts from the list of devices covered under HO 7 and asks for comment on that proposal.

As explained above, the Department has received numerous letters, including from health care providers and a bipartisan group of Members of Congress, requesting that the Department reconsider its policies with respect to patient lifts to address industry needs and to promote learning opportunities and safety for youth workers. These letters contained useful information in support of their arguments, including indications that the restrictions stemming from HO 7 interfere with facilities' ability to care for patients, potentially encourage 16- and 17-year-olds to engage in less safe manual lifting, and hinder the employment of 16- and 17-year-olds in health care.

Although they fit within the technical definition of devices covered by HO 7, power-driven patient lifts differ in significant ways from the other devices addressed by that HO. For example, power-driven patient lifts are used in settings far different from the industrial settings in which most of the other devices addressed by that HO are used (and for which HO 7 was principally promulgated).37 Moreover, data from BLS shows that from 2012 through 2016, only one worker fatality was attributed to patient hoists or lifting harnesses. By contrast, during this same period, 221 worker fatalities were associated with cranes, 10 were associated with overhead hoists, 200 were associated with bucket or basket hoists, 35 were associated with manlifts, and 464 were associated with forklifts.38 BLS data also shows that, during the same period, the annual median days lost associated with injuries caused by patient lifts ranged from 5 to 10, compared to 5 to 41 for manlift injuries; 14 to 21 for forklift injuries, 4 to 23 for overhead hoist injuries, 8 to 27 for bucket or basket hoist injuries, and 14 to 34 for crane injuries.39 Put simply, a power-driven patient lift is different, both in form and function, from a forklift, backhoe, crane, and the numerous other industrial devices mentioned in HO 7. The Department believes that it is important to separately consider the potential risks and benefits to youth using this equipment because patient lifts differ so significantly from the other covered equipment in HO 7.

Use of power-driven patient lifts also has important benefits for worker safety. In particular, as NIOSH recognized in its 2011 report, power-driven patient lifts have significantly reduced the risk of lower back injuries to workers, which is much more prevalent when caregivers use their own physical strength to transfer patients manually.40 DOL's Occupational Safety and Health Administration (OSHA) has also recommended that manual lifting of nursing home residents “be minimized in all cases and eliminated when feasible.” 41 Thus, while the operation of power-driven patient lifts is not risk-free, these devices ultimately improve worker safety. Given that power-driven patient lifts are widely regarded as safer for the worker than manual lifting, the Department believes that it is incongruous for 16- and 17-year-olds to be prohibited from independently operating power-driven patient lifts but permitted to manually lift patients without any restrictions (since manual lifting of patients is not prohibited by any HO). Such a framework creates incentives that are inconsistent with worker and patient safety.

Additionally, best practices developed by OSHA and other government agencies can help mitigate the risks associated with power-driven patient lifts. NIOSH informed WHD that research has demonstrated that “comprehensive safe patient handling and movement programs that incorporate power-driven patient lifts have made an enormous difference in reducing musculoskeletal disorders among health care workers in the United States.” 42 The Department believes that adhering to such best practices, rather than a blanket prohibition on the independent operation of power-driven patient lifts, may be the best way to ensure that 16- and 17-year-old workers can operate these devices safely. For example, guidance developed in part by the Veterans Health Administration and Department of Defense provides recommendations for the circumstances under which one, two, or three or more caregivers are appropriate to operate a lift.43 Generally, this guidance recommends that two to three caregivers are appropriate when lifting or transferring a patient who cannot bear weight, cannot offer assistance, or is uncooperative, but that under certain circumstances, only one caregiver is needed for a patient who can bear at least partial weight and is cooperative. OSHA's guidelines for nursing homes concur with these recommendations.44 Additional guidance for employers who are considering engaging 16- and 17-year-olds in the operation of power-driven patient lifts is available through NIOSH.45

Finally, requirements under other federal and state statutes and regulations may help ensure that 16- and 17-year-olds can operate power-driven patient lifts safely. For example, regulations under the Federal Nursing Home Reform Act, part of the Omnibus Budget Reconciliation Act of 1987, require that nurses' aides in nursing facilities or skilled nursing facilities complete a competency evaluation and receive at least 75 hours of training, including at least 16 hours of supervised practical or clinical training, under the supervision of a registered nurse who has at least two years of nursing experience.46 “Transfers, positioning, and turning” are required parts of the training.47 Over half of states require more training hours than this federal minimum, and 13 states require at least 120 training hours.48 Many states require that CNAs learn about transitioning or moving a patient using power-driven patient lifts as part of their curriculum.

In light of these considerations, the Department proposes to remove the operation of power-driven patient lifts from HO 7. The Department welcomes comments on this proposal. The proposed rule defines “patient lift” as a power-driven device, either fixed or mobile, used to lift and transport a patient or resident (such as of a medical care, nursing, long-term care, or assisted living facility) in the horizontal or other required position from one place to another, as from a bed to a bath, including any straps and a sling used to support the patient. This definition derives from two definitions of patient lifts in U.S. Food and Drug Administration regulations on medical devices, 21 CFR 880.5500 and 880.5510. The Department welcomes comments on whether the Department's proposed definition is appropriate or, if not, how the proposed definition should be revised. In addition, the Department proposes minor conforming and technical edits to existing paragraph 570.58(c).

The Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., and its attendant regulations, 5 CFR part 1320, require the Department to consider the agency's need for its information collections, their practical utility, the impact of paperwork and other information collection burdens imposed on the public, and how to minimize those burdens. The PRA typically requires an agency to provide notice and seek public comments on any proposed collection of information contained in a proposed rule.49

This NPRM does not contain a collection of information subject to OMB approval under the Paperwork Reduction Act. The Department welcomes comments on this determination.

Under E.O. 12866, OMB's Office of Information and Regulatory Affairs determines whether a regulatory action is significant and, therefore, subject to the requirements of the E.O. and OMB review.50 Section 3(f) of E.O. 12866 defines a “significant regulatory action” as an action that is likely to result in a rule that: (1) Has an annual effect on the economy of $100 million or more, or adversely affects in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities (also referred to as economically significant); (2) creates serious inconsistency or otherwise interferes with an action taken or planned by another agency; (3) materially alters the budgetary impacts of entitlement grants, user fees, or loan programs, or the rights and obligations of recipients thereof; or (4) raises novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the E.O. OIRA has determined that this proposed rule is not significant under section 3(f) of E.O. 12866.

On October 08, 2014, the Coast Guard published a temporary final rule titled, “Regulated Navigation Area; South Bristol Gut Bridge Replacement, South Bristol, ME.” in the Federal Register (79 FR 60745) to enforce a regulated navigation area during bridge replacement operations. This regulated navigation area allowed the Coast Guard to enforce speed and wake restrictions and prohibit all vessel traffic through the regulated navigation area during bridge replacement operations. This rule was effective until April 30, 2017. No comments were received during the public comment period of this rule making.

On August 21, 2018, the Maine Department of Transportation (MEDOT) notified the Coast Guard that it will be removing bedrock in the areas between Rutherford Island and Bristol Neck underneath The Gut Bridge. The removal operations include removing bedrock from between the bridge abutments and areas near the navigation channel both upstream and downstream of The Gut Bridge. To remove the bedrock workers will need to utilize the waterway underneath the bridge span and prohibit people and vessels from entering the safety zone at various times. Removal operations are expected to take place between November 2018 and March 2019. However, we only anticipate a continuous 35 day full closure of the waterway. The Captain of the Port (COTP) Northern New England has determined that the potential hazards associated with the removal operations will be a safety concern for anyone transiting within a 50-yard radius of the center point of The Gut Bridge.

The purpose of this rulemaking is to ensure the safety of vessels and personnel from potential hazards associated with the removal of bedrock within a 50-yard radius of the center point of The Gut Bridge during scheduled bedrock removal operations. The Coast Guard proposes this rulemaking under authority in 33 U.S.C. 1231.

The Captain of the Port (COTP) Northern New England proposes to establish a safety zone from 12:01 a.m. on November 8, 2018 to 11:59 on March 31, 2019. While the safety zone would be effective throughout this period, it would only be enforced during periods of active bedrock removal operations. The safety zone would include all navigable waters from surface to bottom within a 50 yard radius from the center point of The Gut Bridge between Rutherford Island and Bristol Neck in South Bristol, ME. During times of enforcement, no vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

The Coast Guard will notify the public and local mariners of this safety zone through appropriate means, which may include, but are not limited to, publication in the Federal Register, the Local Notice to Mariners, and Broadcast Notice to Mariners via marine Channel 16 (VHF-FM) in advance of any enforcement.

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

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

This regulatory action determination is based on the size, location, duration, and selective enforcement of the safety zone. The safety zone will impact only a small designated portion on The Gut waterway for 143 days. This waterway is typically transited by small recreational craft on an infrequent basis after Labor Day Weekend and prior to Memorial Day Weekend. Vessel traffic would be able to safely transit around this safety zone with a slight delay (approximately 20-60 minutes) by transiting around Rutherford Island to reach any destination on the other side of The Gut. Additionally, the safety zone will only be enforced during active bedrock removal operations necessitating closure of the waterway or during an emergency. Moreover, the rule allows vessels to seek permission to enter the zone. The Coast Guard will notify the public of enforcement of this rule via appropriate means, such as via Local Notice to Mariners and Broadcast Notice to Mariners via marine Channel 16 (VHF-FM)

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

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

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

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

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

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

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

We have analyzed this proposed rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a safety zone that would prohibit entry within a 50-yard radius of the center point of a bridge. Normally such actions are categorically excluded from further review under paragraph L60 (a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

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

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

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

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

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

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

Table of contents I. Overview of the Proposed Action A. Summary of Proposed Amendments and Projected Impacts B. Potentially Affected Entities C. Statutory Authority and Proposed Determinations Concerning Rulemaking Procedures and Judicial Review D. Proposed Effective Date II. Background A. The NOX SIP Call B. The NOX Budget Trading Program (NBTP) and Related Trading Programs C. The NOX SIP Call's Contributions to Attainment of the NAAQS III. Proposed Amendments to the NOX SIP Call Regulations A. Emissions Monitoring Requirements B. Good Neighbor Obligations Under the 1997 8-Hour Ozone NAAQS C. Emissions Budget and Emissions Inventory Provisions D. Interstate Trading Program Options E. Procedural Provisions F. Editorial Revisions IV. Impacts of the Proposed Amendments V. Request for Comment VI. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review, and Executive Order 13563: Improving Regulation and Regulatory Review B. Executive Order 13771: Reducing Regulations and Controlling Regulatory Costs C. Paperwork Reduction Act D. Regulatory Flexibility Act E. Unfunded Mandates Reform Act F. Executive Order 13132: Federalism G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments H. Executive Order 13045: Protection of Children From Environmental Health and Safety Risks I. Executive Order 13211: Actions That Significantly Affect Energy Supply, Distribution, or Use J. National Technology Transfer Advancement Act K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations I. Overview of the Proposed Action

This section provides an overview of the proposed action, including a summary of the proposed amendments and their projected impacts as well as information concerning potentially affected entities, statutory authority, EPA's proposed determinations concerning applicable rulemaking and judicial review provisions, and the proposed effective date.

Section II provides additional background. In section III, EPA describes the proposed amendments and the supporting rationales. Section IV discusses the projected impacts of the proposed amendments. EPA's request for comment is in section V. Section VI addresses reviews required under various statutes and Executive Orders.

In 1998, EPA promulgated the NOX SIP Call which, as implemented, required 20 states and the District of Columbia to revise their SIPs to reduce seasonal NOX emissions contributing to interstate ozone pollution. Since implementation of emission controls under the NOX SIP Call began in 2003, the regulations have required these jurisdictions to include provisions in their SIPs under which certain large electricity generating units (EGUs) and large non-EGU boilers and turbines must monitor their seasonal NOX emissions according to the procedures in 40 CFR part 75. The sources formerly met these requirements through participation in the NOX Budget Trading Program (NBTP), which was discontinued after 2008. Almost all the affected large EGUs currently participate in the Acid Rain Program or Cross-State Air Pollution Rule (CSAPR) trading programs, which have comparable monitoring requirements, but few of the affected large non-EGUs participate in these other programs. Over time, many of the originally affected large non-EGUs have retired or switched to cleaner fuels, and newly affected large non-EGUs generally have lower emission rates, so total NOX emissions from the group are considerably lower than in the past. Several NOX SIP Call states have expressed interest in establishing alternate, potentially lower-cost monitoring requirements for the remaining large non-EGUs.

This proposal would revise the existing NOX SIP Call regulations to allow states to amend their SIPs to establish emissions monitoring requirements for NOX SIP Call purposes other than Part 75 monitoring requirements. Ultimately, such alternate monitoring requirements could be made available to approximately 310 units—mostly large non-EGUs—through states' revisions to their SIPs. States, not EPA, would decide whether to revise the monitoring requirements in their SIPs, and EPA lacks complete information on the remaining monitoring requirements that the sources would face, but EPA expects that at least some states would revise their SIPs, resulting in reduced monitoring costs for at least some sources. Almost all the large EGUs would still be required to perform NOX monitoring according to 40 CFR part 75 under the Acid Rain Program or the CSAPR trading programs, thereby providing comparable monitoring data for most of the collective NOX mass emissions from the set of large EGUs and large non-EGU boilers and turbines affected under the NOX SIP Call. Further, the monitoring data for recent years show that the sets of large EGUs and large non-EGU boilers and turbines in all NOX SIP Call states are collectively complying with the portions of the statewide emissions budgets assigned to these types of sources by substantial margins. Given these circumstances, EPA believes that other forms of monitoring for the remaining large EGUs (i.e., those not covered under the Acid Rain Program or the CSAPR trading programs) and large non-EGU boilers and turbines can now provide sufficient assurance that the NOX SIP Call's required emissions reductions will continue to be achieved.

EPA is also proposing to eliminate several obsolete provisions that no longer have any substantive effect on the regulatory requirements faced by states or sources. For example, the NOX SIP Call originally rested independently on parallel findings regarding interstate ozone pollution that EPA made with respect to two distinct NAAQS: The 1979 1-hour ozone NAAQS and the 1997 8-hour ozone NAAQS. The findings made with respect to the 1997 ozone NAAQS were stayed by EPA in 2000 and have since been superseded by findings made in more recent actions based on updated analyses. In this action, EPA is proposing to rescind the indefinitely stayed findings made in the NOX SIP Call with respect to the 1997 ozone NAAQS. EPA is also proposing to remove obsolete provisions concerning options to revise the NOX SIP Call emissions budgets and baseline emissions inventories, options to issue credits supplementing the emissions budgets, and options to comply with the emissions budgets by using the NBTP or state-developed interstate trading programs. An obsolete provision concerning SIP submission procedures would also be removed.

Finally, EPA is proposing to make clarifying amendments to the remaining NOX SIP Call regulations. Most notably, existing regulatory text mischaracterizing the incremental emissions reductions required in states' Phase II SIP submissions as “Phase II incremental budget” amounts and “portions of” the final NOX budgets would be replaced by simpler text referencing the Phase I and final NOX budgets. The proposed clarifications would not substantively alter any existing regulatory requirements.

No substantive amendments are proposed to any existing requirements of the NOX SIP Call except the existing requirement for SIPs to include provisions under which large EGUs and large non-EGU boilers and turbines must monitor their NOX emissions in accordance with 40 CFR part 75. The emissions reductions achieved by the NOX SIP Call have been relied on to support numerous final actions redesignating areas to attainment of a NAAQS, and consistent with that reliance the emissions reductions must be permanent and enforceable. To ensure the permanence and enforceability of the emissions reductions, other existing NOX SIP Call requirements regarding large EGUs and large non-EGU boilers and turbines, including requirements for SIPs to contain provisions establishing some form of enforceable seasonal NOX mass emissions limits for these sources supported by some form of monitoring requirements, are not affected by the proposed amendments and would remain in place, as would all of the more broadly applicable requirements regarding SIPs and the statewide emissions budgets. EPA is not reopening, and thus is not accepting comment on, any of the NOX SIP Call provisions other than the ones proposed for revision. With respect to the NOX SIP Call provisions proposed for revision other than the provision concerning Part 75 monitoring requirements, EPA is not reopening any of the provisions on a substantive basis and is accepting comment solely on whether the provisions proposed for removal as obsolete in fact are obsolete and on whether the proposed clarifications in fact achieve clarification.

EPA is not proposing to amend any other regulations under which some sources affected under the NOX SIP Call may also face monitoring requirements. Such other regulations include, but are not limited to, regulations for the Acid Rain Program (40 CFR parts 72 through 78) and the CSAPR trading programs (40 CFR part 97, subparts AAAAA through EEEEE). EPA is not reopening, and thus is not accepting comment on, any such other regulations.

This proposed action would not apply directly to any emissions sources but instead would amend existing regulatory requirements applicable to the SIPs of Alabama, Connecticut, Delaware, Illinois, Indiana, Kentucky, Maryland, Massachusetts, Michigan, Missouri, New Jersey, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, West Virginia, and the District of Columbia. If an affected jurisdiction chooses to revise its SIP in response to these amendments, sources in the jurisdiction could be indirectly affected if they are subject to emissions monitoring requirements for purposes of the NOX SIP Call and are not independently subject to comparable requirements under another program such as the Acid Rain Program or a CSAPR trading program. Generally, the types of sources that could be affected are fossil fuel-fired boilers and stationary combustion turbines with heat input capacities over 250 million British thermal units per hour (mmBtu/hr) or serving electricity generators with capacities over 25 megawatts (MW). Sources meeting these criteria operate in a variety of industries, including but not limited to the following:

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

On June 22, 2010 (75 FR 35520), EPA promulgated a revised primary NAAQS for SO2 at a level of 75 parts per billion (ppb), based on a 3-year average of the annual 99th percentile of 1-hour daily maximum concentrations. Pursuant to section 110(a)(1) of the CAA, states are required to submit SIPs meeting the applicable requirements of section 110(a)(2) within 3 years after promulgation of a new or revised NAAQS or within such shorter period as EPA may prescribe.1 These SIPs, which EPA has historically referred to as “infrastructure SIPs,” are to provide for the “implementation, maintenance, and enforcement” of such NAAQS, and the requirements are designed to ensure that the structural components of each state's air quality management program are adequate to meet the state's responsibility under the CAA. A detailed history, interpretation, and rationale of these SIPs and their requirements can be found, among other citations, in EPA's May 13, 2014 (79 FR 27241) proposed rule titled, “Approval and Promulgation of Air Quality Implementation Plans; Illinois, Michigan, Minnesota, Wisconsin; Infrastructure SIP requirements for the 2008 Lead NAAQS” in the section, “What is the scope of this rulemaking?” Section 110(a) of the CAA imposes the obligation upon states to make a SIP submission to EPA for a new or revised NAAQS, but the contents of individual state submissions may vary depending upon the facts and circumstances, and may also vary depending upon what provisions the state's approved SIP already contains.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

Sections 111 and 129 of the Act set forth EPA's statutory authority for regulating new and existing solid waste incineration units. Section 111(b) directs EPA to publish and periodically revise a list of categories of stationary sources which cause or significantly contribute to air pollution, and to establish new source performance standards (NSPS) within these categories. Section 111(d) grants EPA statutory authority to require states to submit to the agency implementation plans for establishing performance standards applicable to existing sources belonging to those categories established in section 111(b).

Section 111(d) of the Act requires states to submit plans to control certain pollutants (designated pollutants) at existing facilities (designated facilities) whenever standards of performance have been established under section 111(b) for new sources of a source category and EPA has established emission guidelines (EGs) for designated facilities. 40 CFR 60.21(a) and (b). Section 129 of the Act is specific to solid waste combustion, and requires EPA to establish performance standards pursuant to section 111 of the Act for each category of solid waste incineration units, which includes the categories addressed in today's action.

The regulations at 40 CFR part 60, subpart B, contain general provisions applicable to the adoption and submittal of state plans for the control of designated pollutants from designated facilities under section 111(d) of the Act, including those pollutants and facilities designated pursuant to section 129 of the Act. Further, 40 CFR part 62, subpart A, provides the procedural framework by which EPA will approve or disapprove such plans submitted by a state. If a state fails to submit a satisfactory plan, the Act provides EPA with the authority to prescribe a plan for regulating the designated pollutants at the designated facilities. The EPA prescribed plan, also known as a Federal plan, is used to regulate designated facilities when there is no EPA approved state-specific plan. Further, if there are no designated facilities within a state's jurisdiction, the state may submit to EPA a letter of certification to that effect (referred to as a “negative declaration”) in lieu of a state plan to satisfy the state's obligation. 40 CFR 60.23(b) and 62.06. The negative declaration exempts the state from the requirement to submit a state plan for the designated pollutants and facilities. Therefore, if a state submits a negative declaration for a category of solid waste incineration units, the state is not required to submit a state plan for that source category.

On December 1, 2000, EPA promulgated new source performance standards for new CISWI units, 40 CFR part 60, subpart CCCC, and EGs for existing CISWI units, 40 CFR part 60, subpart DDDD. 65 FR 75338. On March 21, 2011, EPA, after voluntarily remanding the 2000 CISWI standards and EGs, promulgated final CISWI standards and EGs. 76 FR 15704. Correspondingly, on the same date, EPA promulgated a final rule under the Resource Conservation and Recovery Act (RCRA) to identify which non-hazardous secondary materials, when used as fuels or ingredients in combustion units, are “solid wastes.” 76 FR 15456; see 40 CFR part 241, Solid Wastes Used as Fuels or Ingredients in Combustion Units (also known as the “Non-Hazardous Secondary Material Rule”). The identification of solid waste in the Non-Hazardous Secondary Material Rule is used to determine whether a combustion unit is required to meet the emissions standards for solid waste incineration units issued under sections 111 and 129 of the Act, or meet the emissions standards for commercial, industrial, and institutional boilers issued under section 112 of the Act. EPA subsequently promulgated amendments to both rules on February 7, 2013: Commercial and Industrial Solid Waste Incineration Units: Reconsideration and Final Amendments; Non-Hazardous Secondary Materials That Are Solid Waste; Final Rule. 78 FR 9112. Reconsideration of certain aspects of the final CISWI rule resulted in minor amendments. 81 FR 40956 (June 23, 2016). Pursuant to sections 111(d) and 129 of the Act and 40 CFR part 60, subpart B, states were required to revise their state plans for existing CISWI units to comply with the amended regulations.

A CISWI unit is defined in 40 CFR 60.2875 as any distinct operating unit of any commercial or industrial facility that combusts, or has combusted in the preceding 6 months, any solid waste, as the term “solid waste” is defined in the Non-Hazardous Secondary Material Rule. A state plan must address all existing CISWI units that commenced construction on or before June 4, 2010, or for which modification or reconstruction was commenced on or before August 7, 2013, with limited exceptions as provided in 40 CFR 60.2555. 40 CFR 60.2550.

However, as discussed above, if there are no existing designated facilities in a state, the state may submit a negative declaration in lieu of a state plan. EPA will provide public notice of receipt of a state's negative declaration with respect to that solid waste incineration unit category. 40 CFR 60.2530. If any unit of a solid waste incineration category is subsequently identified in a state for which a negative declaration had been submitted, the Federal plan implementing the EGs for that source category would apply to that unit. In the case of a CISWI unit, subpart DDDD would automatically apply to that CISWI unit until a state plan is approved. 40 CFR 60.2530.

EPA promulgated new source performance standards and EGs for OSWIs on December 16, 2005. 70 FR 74870. The standards and EGs are codified at 40 CFR part 60, subparts EEEE and FFFF, respectively. Thus, states were required to submit plans for existing OSWIs pursuant to sections 111(d) and 129 of the Act and 40 CFR part 60, subpart B.

An OSWI unit is defined in 40 CFR 60.3078 as a very small municipal waste combustor and institutional waste incinerator. The designated facilities to which the original EGs applied to are existing OSWI units that commenced construction on or before December 9, 2004.

On February 3, 2017, MPCA submitted its CISWI negative declaration, in which MPCA certified that there are no existing CISWI units currently operating in Minnesota. Two non-waste determinations under the Non-Hazardous Secondary Materials Rule were critical elements of MPCA's February 3, 2017 negative declaration letter. Specifically, on September 25, 2015, in response to a petition to Region 5, the Regional Administrator made a non-waste determination under the Non-Hazardous Secondary Materials Rule provision at 40 CFR 241.3(c), with regard to the poultry litter burned as fuel in the boiler at the Benson Power, LLC power plant in Benson, Minnesota. The Regional Administrator determined that the poultry litter at issue was not a solid waste. Further, by letter dated October 15, 2015, ReConserve of Minnesota Inc., d/b/a Endres Processing, Rosemount, Minnesota, certified to Region 5 that it had made a non-waste self-determination under the Non-Hazardous Secondary Materials Rule provision at 40 CFR 241.3(b), with regard to the refuse derived fuel that it processes, as defined at 40 CFR 241.2, and which meets the legitimacy criteria for fuels at 40 CFR 241.3(d)(1), that the refuse derived fuel is not a solid waste. Correspondingly, by technical review document dated February 23, 2018, Region 5's Land and Chemicals Division reviewed and confirmed the non-waste self-determination. EPA's Office of Resource Conservation and Recovery correspondingly concurred with the Region's review and conclusion.

On June 21, 2017, MPCA submitted its OSWI negative declaration, in which it certified that there are no existing OSWI units currently operating in Minnesota.

EPA is notifying the public of EPA's receipt of MPCA's negative declarations for both CISWI and OSWI facilities and that EPA is amending 40 CFR part 62 to reflect both negative declarations. For CISWI, EPA received the negative declaration on February 3, 2017, and for OSWI, EPA received the negative declaration on June 21, 2017.

This action is not a “significant regulatory action” under the terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and therefore is not subject to review by the Office of Management and Budget under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011). For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because this action is not significant under E.O. 12866. This action merely approves state law as meeting Federal requirements and merely notifies the public of EPA's receipt of negative declarations from an air pollution control agency without any existing CISWI or OSWI units in its state. This action imposes no requirements beyond those imposed by the state. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because this rule pertains to pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). This rule is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it does not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely provides notice of receipt of negative declarations, and does not alter the relationship or the distribution of power and responsibilities established in the Act. This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it just notifying the public regarding receipt of the negative declarations.

In reviewing state plan submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Act. With regard to negative declarations for designated facilities received by EPA from states, EPA's role is to notify the public of the receipt of such negative declarations and revise 40 CFR part 62 accordingly. In this context, in the absence of a prior existing requirement for the state to use voluntary consensus standards (VCS), EPA has no authority to disapprove a state plan submission or negative declaration for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a state plan or negative declaration submission, to use VCS in place of a state plan or negative declaration submission that otherwise satisfies the provisions of the Act. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

This is a summary of the Commission's document, Report No. 3102, released September 10, 2018. The full text of the Petition is available for viewing and copying at the FCC Reference Information Center, 445 12th Street SW, Room CY-A257, Washington, DC 20554. It also may be accessed online via the Commission's Electronic Comment Filing System at: http://apps.fcc.gov/ecfs/. The Commission will not send a Congressional Review Act (CRA) submission to Congress or the Government Accountability Office pursuant to the CRA, 5.U.S.C. 801(a)(1)(A), because no rules are being adopted by the Commission.

Subject: Amendment of parts 1 and 22 of the Commission's Rules with Regard to the Cellular Service, Including Changes in Licensing of Unserved Area, FCC 18-92, published at 83 FR 37760, August 2, 2018, in WT Docket No. 12-40. This document is being published pursuant to 47 CFR 1.429(e). See also 47 CFR 1.4(b)(1) and 1.429(f), (g).

Number of Petitions Filed: 1.

This advance notice of proposed rulemaking (ANPRM) is organized as follows:

If you submit a comment, please include the docket number for this document (FMCSA-2016-0102), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these methods. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that the Agency can contact you if it has questions regarding your submission.

To submit your comment online, go to http://www.regulations.gov and put the docket number, “FMCSA-2016-0102” in the “Keyword” box, and click “Search”. When the new screen appears, click on the “Comment Now!” button and type your comment into the text box in the following screen. Choose whether you are submitting your comment as an individual or on behalf of a third party and then submit. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the facility, please enclose a stamped, self-addressed postcard or envelope.

Confidential Business Information (CBI) is commercial or financial information that is customarily not made available to the general public by the submitter. Under the Freedom of Information Act, CBI is eligible for protection from public disclosure. If you have CBI that is relevant or responsive to this document, it is important that you clearly designate the submitted comments as CBI. Accordingly, please mark each page of your submission as “confidential” or “CBI.” Submissions designated as CBI and meeting the definition noted above will not be placed in the public docket of this document. Submissions containing CBI should be sent to Mr. Brian Dahlin at the address shown above under the heading ADDRESSES. Any commentary that FMCSA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

FMCSA will consider all comments and materials received during the comment period.

To view comments, go to http://www.regulations.gov and insert the docket number, “FMCSA-2016-0102” in the “Keyword” box and click “Search”. Next, click the “Open Docket Folder” button and choose the document listed to review. If you do not have access to the internet, you may view the docket by visiting the Docket Management Facility in Room W12-140 on the ground floor of the DOT West Building, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

In 2012, Congress enacted the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Pub. L. 112-141, 126 Stat. 405, 822), specifically, section 32918 which contained requirements for the financial security of brokers and freight forwarders that amended 49 U.S.C. 13906.

Section 32918 raised the financial security amount for brokers to $75,000 and, for the first time, established financial security requirements for freight forwarders. A “broker” is a “person . . . that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C. 13102(2); see also 49 CFR 371.2(a)(FMCSA regulatory definition of “Broker”). A “freight forwarder” is defined as “a person holding itself out to the general public (other than as a pipeline, rail, motor, or water carrier) to provide transportation of property for compensation and in the ordinary course of its business” (1) performs certain services including assembly, break-bulk or distribution services, (2) “assumes responsibility for the transportation from the place of receipt to the place of destination” and (3) “uses for any part of the transportation a carrier” such as a motor carrier. 49 U.S.C. 13102(8); see also 49 CFR 387.401(a)(FMCSA regulatory definition of freight forwarder).

FMCSA implemented those MAP-21 financial responsibility limit requirements in a 2013 Omnibus rulemaking, 78 FR 60226 (Oct. 1, 2013), codified at 49 CFR 387.307(a) (brokers) and 49 CFR 387.403T(c) and 387.405 (freight forwarders). Under the existing regulations, brokers and freight forwarders must have in effect a surety bond or trust fund in the amount of $75,000. As a condition to obtain registration, brokers and freight forwarders must provide evidence of the surety bond by filing a form BMC-84 or the trust fund by filing a form BMC-85 with the Agency.

In addition to increasing and extending the minimum financial responsibility requirements, MAP-21 also gave FMCSA the authority to accept a “group surety bond, trust fund, or other financial security” as evidence of financial responsibility (49 U.S.C. 13906(b)(1)(B), (c)(1)(B)). MAP-21 authorized FMCSA to accept trust funds or other financial security only if they consist of “assets readily available to pay claims without resort to personal guarantees or collection of pledged accounts receivable” (49 U.S.C. 13906(b)(1)(C), (c)(1)(D)). The statute also clarified the types of claims that broker and freight forwarder surety bonds/trust funds are designed to cover (49 U.S.C. 13906(b)(2)(A), (c)(2)(A)).

Section 32918 of MAP-21 requires the Agency to “immediately suspend” broker/freight forwarder operating authority registration if the “available financial security” of the broker or freight forwarder falls below $75,000 (49 U.S.C. 13906(b)(5), (c)(6)), and also established claims payment procedures in the event of broker or freight forwarder “financial failure or insolvency” (49 U.S.C. 13906(b)(6), (c)(7)). Additionally, MAP-21 gave FMCSA the authority to take direct enforcement action against surety providers, through court action, civil penalty proceedings or suspension of providers' ability to make financial security filings with the Agency (49 U.S.C. 13906(b)(7), (c)(8)). Finally, section 32918 clarified that the form of broker/freight forwarder financial responsibility and who provides such security must be approved by FMCSA (49 U.S.C. 13906(b)(1)(A), (c)(1)(A)).1

The Agency moved a step further toward implementation of section 32918 in its 2014 Advance Notice of Proposed Rulemaking (2014 ANPRM) pertaining to Financial Responsibility for Motor Carriers, Freight Forwarders and Brokers. 79 FR 70839 (Nov. 28, 2014).2 Although that 2014 ANPRM focused primarily on motor carrier minimum financial responsibility limits, the Agency did ask three questions pertaining to BMC-84/85 filers. Specifically, the Agency sought information pertaining to BMC-85 providers' posting of claims information on their websites, the public notification by BMC-85 providers in the event of broker or freight forwarder financial failure, and the possible need for the BMC-84/85 forms to be adjusted to provide claims handling instructions to the surety or trustee. 79 FR at 70843. The Agency received several comments in response to its request.3 After reviewing all public comments to the ANPRM, FMCSA determined that it had insufficient data or information to support moving forward with a rulemaking proposal, and withdrew the 2014 ANPRM on June 5, 2017. See 82 FR 25753.

On April 27, 2016, the Agency announced that it would host an informal roundtable discussion pertaining to broker and freight forwarder financial responsibility, 81 FR 24935 (Apr. 27, 2016). In its April 27 meeting notice, FMCSA sought comment on denials of claims by BMC-85 providers, the current and prospective composition of BMC-85 trust fund assets, non-FMCSA regulation of BMC-85 providers, actions that FMCSA could take to ensure that motor carriers and shippers can collect on legitimate claims filed with BMC-85 providers, and issues associated with the financial stability of BMC-85 providers. 81 FR at 24937. The Agency received a total of 29 comments in response to the roundtable discussion notice.

On May 20, 2016, the Agency held the full-day informal roundtable discussion at DOT Headquarters in Washington, DC. Stakeholders from around the country attended the event, along with members of FMCSA's Senior Leadership and staff. Public participants included representatives from the BMC-84 surety bond and BMC-85 trust fund industries, broker and freight forwarder trade associations, and motor carrier trade associations. On October 20, 2016, the Agency placed notes summarizing the public meeting and a list of the meeting attendees in this docket.4

After careful consideration of the public comments the Agency received in response to the 2014 ANPRM and the April 27, 2016 notice, TIA's 2014 Petition for Rulemaking, and the May 20 Roundtable itself, FMCSA has decided to initiate a second rulemaking pertaining to MAP-21 section 32918.5 Accordingly, the Agency is issuing this ANPRM to signal its preliminary intentions in connection with such a rulemaking and to seek additional data or information to support moving forward with a rulemaking proposal. As noted above, this ANPRM will render moot TIA's May 9, 2014 Petition for Rulemaking.

Discussions at the May 20, 2016, informal roundtable revealed that stakeholders are focused on two key issues pertaining to broker/freight forwarder financial responsibility. First, there was widespread agreement among participants that a significant cause of non-payment of motor carriers by brokers or freight forwarders 6 is the ability of brokers and freight forwarders to continue to operate for 30 days after the surety or trust fund provider notifies FMCSA that it is cancelling the broker's or freight forwarder's financial responsibility. FMCSA does not revoke the broker or freight forwarder's operating authority registration pursuant to 49 U.S.C. 13905(e) until that 30-day period has lapsed. In contrast, the MAP-21 provisions pertaining to immediate suspension of broker or freight forwarder operating authority when the “available financial security” falls below $75,000 (49 U.S.C. 13906(b)(5), (c)(6)), appear to be designed to address this lag between surety/trust fund notice of cancellation and removal of the broker/freight forwarders' ability to operate lawfully. The Agency is therefore considering adopting a rule to suspend immediately any broker's/freight forwarder's operating authority when there is an actual drawdown on the bond/trust fund below the $75,000 minimum requirement or when the broker/freight forwarder does not respond after the surety/trust fund provider provides notice of a valid claim.

Second, at the roundtable discussion, certain stakeholders made it clear to the Agency that there is concern about the financial wherewithal of BMC-85 trust providers, and the sufficiency of the assets within those funds to pay legitimate claims by motor carriers or shippers. On the other hand, representatives of the BMC-85 trust fund provider community, both at the roundtable discussion and in comments filed after the meeting,7 asserted that, with one limited exception,8 no evidence has been produced showing that BMC-85 providers have failed to pay legitimate claims made on their trusts. While FMCSA acknowledges the BMC-85 providers' position, the Agency must implement the express will of Congress as reflected in the requirement at 49 U.S.C. 13906(b)(1)(C), (c)(1)(D) that trust funds consist of “assets readily available to pay claims without resort to personal guarantees or collection of pledged accounts receivable.”

While the Agency always welcomes input on its implementation of statutory mandates, as evidenced by the frank, open, and robust discussions at the May 20, 2016 roundtable, FMCSA's primary mission remains the promotion of motor carrier safety. 49 U.S.C. 113(b). Accordingly, in its implementation of section 32918, FMCSA must avoid unnecessary diversion of scarce resources away from critical safety functions. FMCSA's discussion of approaches in today's ANPRM reflects that statutory and operational reality, and the Agency requests that stakeholders consider such constraints in whatever comments they provide in response to this document.

After careful consideration, the Agency has decided to focus on eight core areas in this ANPRM: (1) Group surety bonds/trust funds, (2) assets readily available, (3) immediate suspension of broker/freight forwarder operating authority, (4) surety or trust responsibilities in cases of broker/freight forwarder financial failure or insolvency, (5) enforcement authority, (6) entities eligible to provide trust funds for BMC-85 filings, (7) BMC-84 and BMC-85 revisions and (8) HHG.9 The following discussion addresses each of these in turn.

MAP-21 section 32918 authorizes, but does not require, the Agency to accept group surety bonds or trust funds on behalf of brokers or freight forwarders to meet their financial responsibility requirements. 49 U.S.C. 13906(b)(1)(B) and 13906(c)(1)(B). In Registration and Financial Security Requirements for Brokers of Property and Freight Forwarders, 78 FR 54720 (Sep. 5, 2013), the Agency stated that it would not be accepting group instruments at that time. 78 FR at 54721. The Agency indicated it would re-examine the issue, however.

While the term “group surety bond” does not appear to be commonly used, the Agency has identified and examined a group surety bond provision within the Federal Maritime Commission (FMC) regulations. 46 CFR 515.21. FMC regulates Ocean Transportation Intermediaries (OTIs), consisting of Non-Vessel Operating Common Carriers (NVOCCs) (similar to FMCSA-regulated freight forwarders), and freight forwarders (similar to FMCSA-regulated brokers). These OTIs are required to submit evidence of financial responsibility to FMC and can submit group surety bonds as evidence of such financial responsibility. In a group surety bond arrangement, OTI members pay a fee to belong to a group, which then provides the required surety bond for each member. FMC's group surety bond provision allows the group to establish financial responsibility in the amount required for each individual member or $3,000,000 in aggregate, whichever is less.

FMCSA is concerned that monitoring whether group instruments comply with MAP-21 will impose a significant administrative burden on the Agency, potentially to the detriment of safety oversight, without providing a commensurate benefit for motor carriers and shippers, the intended beneficiaries of the surety bonds and trust funds. The benefit to these beneficiaries from group instruments likely would be unchanged, as the same total level of financial protection would still be required.

Further, because FMCSA requires that a trust fund or surety bond cover each broker or freight forwarder for $75,000, the FMC surety bond requirement, with its $3 million cap, does not provide an adequate model for the Agency to ensure levels of financial security as contemplated by the statute. In addition, the Agency has been unable to locate any definition for group trust funds. Therefore, with no adequate model for group surety bonds or trusts funds, the Agency is not currently inclined to accept group sureties or trust funds. Before the Agency considers the matter of group surety or trust arrangements further for purposes of developing a notice of proposed rulemaking (NPRM) in this docket, we specifically seek comment on the definition of “group surety bond” or “group trust fund” and how the Agency could administer such a group surety or trust option given its limited resources.

As noted above, Congress issued a clear mandate in MAP-21 that broker/freight forwarder trust funds must consist of “assets readily available to pay claims without resort to personal guarantees or collection of pledged accounts receivable.” 49 U.S.C. 13906(b)(1)(C), (c)(1)(D). The Agency is committed to adopting a definition of “assets readily available” that implements the will of Congress and is reasonable for the Agency to administer given its resource constraints.

Stakeholders provided numerous comments on the definition of “assets readily available” at the roundtable discussion and in associated written comments. Avalon Risk Management Insurance Agency LLC (Avalon), an underwriter of BMC-84 bonds, suggested in its pre-roundtable comments that cash or certain irrevocable letters of credit issued by Federal Deposit Insurance Corporation (FDIC)-insured banks would satisfy the standard.10 The Surety & Fidelity Association of America (SFAA), also in pre-roundtable comments, looked to other federal law or regulation for a standard.11 In particular, SFAA cited Federal Acquisition Regulation (FAR) 28.204, which, according to SFAA, requires that financial security be provided in the form of United States government bonds or notes, a certified or cashier's check, an irrevocable letter of credit, or other options that are easily convertible into cash. SFAA's post-roundtable comment also recommended that $75,000 of broker assets need to be in trust funds.12 In post-roundtable comments, JW Surety Bonds, a company that issues BMC-84 surety bonds, argued for full funding of the trust with non-volatile liquid assets, including cash or an irrevocable letter of credit from an FDIC-insured bank.13

While FMCSA has heard from multiple representatives of the BMC-84 industry on an appropriate definition of “assets readily available,” it has heard little from the BMC-85 industry. We received only one comment, from the Chief Executive Officer of Pacific Financial Association, Inc. (Pacific Financial), the largest filer of BMC-85s with FMCSA. At the roundtable, Pacific Financial indicated that Congress clearly did not limit the term to cash only. It also suggested that if a trust purchased a bond to cover a $75,000 guarantee, such an arrangement could be sufficient.14 Pacific Financial also filed supplemental materials and pointed to their own “internal letter of credit” as a viable alternative.

After a careful analysis and with specific regard for Pacific Financial's comments, the Agency is currently considering proposing a definition of “assets readily available” to include cash or FMCSA-approved letters of credit.15 FMCSA is considering accepting letters of credit from FDIC-approved banks, but is also open to other options.

The Agency solicits suggestions from the BMC-85 industry and others about how the Agency could accept letters of credit and other instruments that could meet the “assets readily available” standard without requiring significant oversight or evaluation that would divert scarce safety resources. The Agency also specifically seeks comment from the surety bond industry on that industry's capacity to meet the increased market demand if FMCSA were to adopt a cash-only standard for BMC-85 trust funds, which could potentially drive a significant segment of the broker/forwarder industry into surety bond coverage. Additionally, FMCSA seeks comment from the surety bond industry on the cost to brokers and freight forwarders of BMC-84 surety bonds.

MAP-21 section 32918 provides that “[FMCSA] shall immediately suspend the registration of a broker . . . if the available financial security of that person falls below [$75,000].” 49 U.S.C. 13906(b)(5); see also 49 U.S.C. 13906(c)(6) (substantively identical language for freight forwarders). Accordingly, to effectively implement these provisions, FMCSA first needs to determine when the “available financial security” of a broker/freight forwarder is below $75,000. At the roundtable discussion, the Owner-Operator Independent Drivers Association (OOIDA) indicated that as soon as a surety provides notice to a broker in connection with a claim and the broker does not respond to the notice, the broker's operating authority registration should be suspended.16 According to the Roanoke Insurance Group (Roanoke), a series of claims should trigger quicker suspension of the broker's operating authority.17 Roanoke also indicated that quicker suspension should occur where the broker does not respond to communications about the claim.18 In post-meeting comments, Liberty National Financial Corporation said a broker's failure to respond to a surety contact about a claim in 24 hours would be a reasonable trigger for suspension of the broker's authority.19

The Agency is considering an approach where it would “immediately suspend” the authority of a broker or freight forwarder in one of two situations. First, it would suspend when it receives notice from the surety or trust fund provider that a drawdown/payout on the bond/trust has occurred, such that the available financial security is less than $75,000. The second situation would be where: (1) A surety/trust fund provider gives reasonable notice of a claim to the broker/freight forwarder, (2) the broker/freight forwarder does not respond, and (3) the surety/trust fund provider determines that the claim is valid and provides notice of these events to FMCSA. In this situation there often may be reason to conclude that, had the unpaid claim actually been paid, the remaining available financial security would have fallen below $75,000. FMCSA seeks comment on the appropriate cushion time for brokers or freight forwarders to respond to claims made to the guarantors, valid or otherwise. Such a grace period would seem to give firms adequate time to adjudicate claims and settlements internally, as well as price in the costs associated with any claims relating to contract noncompliance.

Suspending broker/freight forwarder operating authority whenever a claim is filed against a broker/freight forwarder or its bond/trust would raise due process concerns, as the Agency would be prohibiting the broker/freight forwarder from lawfully operating, without affording the company a chance to respond. In continuing to develop information to inform an NPRM, the Agency will consider how it can “immediately suspend” broker/freight forwarder operating authority registration in a manner that is consistent with constitutional due process requirements, e.g., by providing an appropriate opportunity for post-deprivation review. FMCSA specifically invites comments responsive to this issue, including documented incidence of actual nonpayment that occurred after problem brokers or freight forwarder were not “immediately” suspended.

Section 32918 requires sureties or trust fund providers to commence action to cancel broker or freight forwarder surety bonds or trust funds in the event of broker/freight forwarder “financial failure” or “insolvency.” 49 U.S.C. 13906(b)(6), (c)(7). Accordingly, to effectively implement this provision, the Agency needs to determine what “financial failure” or “insolvency” means. FMCSA has received public comments on these terms.

In response to the 2014 financial responsibility ANPRM, Avalon indicated “financial failure or insolvency” should mean more than just “bankruptcy or a total disappearance of the principal, but also include a clear pattern of unresolved claims in a sufficient volume to constitute a constructive financial failure.” 20 Avalon reiterated those statements in its pre-roundtable discussion comments and added that “security providers should be allowed to respond in cases where there are three or more claims aggregating in excess of $25,000 which have remained unresolved for at least 30 days.” 21 SFAA, in its post-roundtable discussion letter, says a definition similar to Avalon's position is inadequate, as claims may not need to be paid.22 At the May 20, 2016, roundtable discussion, TIA said perhaps three or more claims aggregating to a certain amount could constitute a financial failure of the broker.23 The claims would have to remain unresolved for a certain amount of days. Avalon stated at the roundtable that financial failure could be established if “X” number of claims accrue in “Y” number of days.24

The Agency is considering a definition of “financial failure” or “insolvency” that would apply at a pre-bankruptcy stage. In this regard, a Bankruptcy Court case in the District of Delaware found that 49 U.S.C. 13906(b)(6) did not apply to a broker's bond in a bankruptcy case.25 Consistent with this view, “financial failure or insolvency” under MAP-21 section 32918 would be established where the broker or freight forwarder has claims against its bond/trust, is not responding to notifications from the trust or surety provider within 14 days, and is not in bankruptcy proceedings. FMCSA has suggested these criteria for “financial failure or insolvency” as commenters have suggested that unresolved claims are consistent with a broker's “financial failure or insolvency.” Moreover, through interaction with stakeholders, FMCSA has learned that a broker's failure to respond to notices about claims from a surety or trust often indicates that the broker is out of business. At the same time, giving a broker or freight forwarder 14 days to respond to the surety or trust fund provider before a determination of “financial failure” is made would give the broker or freight forwarder an opportunity to respond if their nonresponse was based on a lack of communication or other short term issue, as opposed to a financial failure. In suggesting a definition of “financial failure or insolvency” that applies outside of bankruptcy, FMCSA is also adopting the holding from the referenced AWI Delaware case. Moreover, given that Section 13906(b)(6) and (c)(7)'s “financial failure or insolvency” provisions require action by the surety or trust fund provider against the broker or freight forwarder's surety bond or trust fund, applying these provisions in bankruptcy could run afoul of the automatic stay provisions of bankruptcy law.

Additionally, section 32918 requires that in the event of “financial failure” or “insolvency,” surety providers must “publicly advertise” for claims for 60 days beginning on the date FMCSA publishes the surety's notice to cancel the surety bond/trust. 49 U.S.C. 13906(b)(6)(B), (c)(7)(B). The Agency is considering a definition of “publicly advertise” that could be satisfied through FMCSA's posting of the cancellation notice on its website. The Agency is investigating whether it can flag such “financial failure” cancellations with a special code, so that potential claimants reviewing a broker or freight forwarder's records on the FMCSA website will know that a 60-day period to make a claim has begun to run. The Agency seeks comments on how “financial failure or insolvency” and “publicly advertise” should be defined.

Under 49 U.S.C. 13906(b)(7), (c)(8), FMCSA has been granted expanded enforcement authority over surety providers. FMCSA has new civil penalty authority to suspend non-compliant surety providers from providing broker or freight forwarder financial responsibility for three years, and further authority to sue non-compliant surety providers in Federal court. FMCSA anticipates that it will revise its regulations to incorporate these new civil penalty provisions. It also intends to modify 49 CFR 387.317 (brokers) and 387.415 (freight forwarders) to incorporate the new surety suspension authority. The Agency expects to establish a procedure for such suspensions where it will issue an order to show cause against a non-compliant surety provider, weigh evidence submitted by the provider, and make a final decision. The Agency seeks input on the development of these surety suspension procedures.

FMCSA has broad authority under MAP-21 to determine who is eligible to provide trust fund services on behalf of brokers or freight forwarders. Under 49 U.S.C. 13906(b)(1)(A), a broker must file a surety bond or trust fund from a provider “determined by the Secretary to be adequate to ensure financial responsibility.” See also 49 U.S.C. 13906(c)(1)(A) for freight forwarders. Under current regulations at 49 CFR 387.307, a “financial institution” may file trust funds. In addition to other types of entities, “loan or finance” companies are considered financial institutions pursuant to 49 CFR 387.307(c)(7).

Commenters have addressed the suitability of the “loan or finance” company category of “financial institution.” Avalon, in pre-roundtable discussion comments, indicated “loan and finance” companies are “far less regulated if at all.” 26 It also indicated that “FMCSA's refusal to deal with the regulatory gaps is an abrogation of its responsibility to state regulators who do nothing and don't care.” 27 Avalon proposed deleting the “loan or finance company” and the “person subject to supervision by any State or Federal bank supervisory authority” categories from the regulation. (49 CFR 387.307(c)(7) and (8)). Avalon asserted that “these entities are not sufficiently regulated by the states to safeguard the public interest and the FMCSA has neither the staff nor the inclination to regulate them.” 28 JW Surety, in pre-roundtable discussion comments, stated that BMC-85 providers are “operating unregulated by any government agency.” 29 In post-roundtable comments, it agreed with Avalon that § 387.307(c)(7) and (8) should be eliminated.30 SFAA, in its post-roundtable comments, indicated that FMCSA could require that BMC-85 providers be licensed as trust companies by a State regulator.31 JW Surety, in post-meeting comments, argued that BMC-85 providers should be licensed trust companies or FDIC-insured banks.32

FMCSA is considering amending the definition of “loan or finance company” to ensure that BMC-85 providers' ability to pay claims out of trust funds is adequately monitored. FMCSA is considering defining “loan or finance company” to include only companies regulated by entities that require certain minimum solvency standards. FMCSA intends to reach out to appropriate State regulators and professional associations as part of the rule development process.

Given the Agency's primary safety focus, and consistent with its motor carrier financial responsibility regulations at 49 CFR 387.315, FMCSA must rely on other agencies to be the primary regulators of those who file financial responsibility instruments with FMCSA. In the case of BMC-84 surety providers, State insurance regulators and the United States Department of Treasury provide such regulatory oversight. The Agency is concerned, however, that 49 CFR 387.307(c)(7) currently allows entities that are not adequately regulated to administer trust funds. For example, the California Department of Business Oversight, which regulates several BMC-85 providers, provides a California Finance Lender license for a person engaged in the business of making consumer or commercial loans. Similarly, the Florida Office of Financial Regulation, which regulates a large BMC-85 provider, provides a Consumer Finance Company license for entities that solicit, make, and collect small loans. BMC-85 providers serve as trustees, not lenders. Accordingly, being regulated as a lender may not provide sufficient oversight for BMC-85 providers.

Moreover, given that BMC-85 providers administer trusts on behalf of brokers or freight forwarders, the Agency is considering whether to require BMC-85 providers to be licensed as trust providers. We expressly invite comments in that regard to inform an NPRM.

Surety bond providers file BMC-84 surety bonds with FMCSA as evidence of financial responsibility on behalf of brokers and freight forwarders. Trust fund providers similarly file BMC-85 trust funds with FMCSA. The Agency anticipates the need for revisions to the BMC-84 and BMC-85 forms if rulemaking is proposed. FMCSA invites comments to identify recommended changes to the forms. Changes to the BMC-84/85 will be proposed in any NPRM and, as measures effecting an Agency information collection, will be approved through the Office of Management and Budget in accordance with the Paperwork Reduction Act.

As part of its mission, FMCSA has jurisdiction over the transportation of household goods (HHG) and the arranging of HHG transportation.33 HHG transportation is significantly different than general property transportation. This is reflected in FMCSA regulations, such as 49 CFR part 375 (Transportation of Household Goods in Interstate Commerce; Consumer Protection Regulations) and 49 CFR part 371 subpart B (Special Rules for Household Goods Brokers), which treat HHG transportation differently than other types of property transportation. Given those differences, FMCSA seeks information on whether HHG brokers and freight forwarders should be regulated differently than general property brokers and freight forwarders in a rulemaking on broker/freight forwarder financial responsibility. FMCSA notes that we have received complaints about HHG brokers,34 and we solicit comments to help determine whether there is a unique market structure that might suggest need for additional fraud protections.

FMCSA is also seeking information on the payment flows among HHG shippers, brokers and motor carriers. The Agency is aware of arrangements where HHG shippers pay HHG brokers a deposit and then pay the remainder of the transportation charges directly to the HHG motor carrier. Under these arrangements, the Agency believes no monies pass directly between the broker and motor carrier. FMCSA seeks information on the prevailing payment models in the HHG broker industry in this ANPRM.

Under E.O. 12866, “Regulatory Planning and Review” (issued September 30, 1993, published October 4 at 58 FR 51735), as supplemented by E.O. 13563 and DOT policies and procedures, if a regulatory action is determined to be “significant,” it is subject to Office of Management and Budget (OMB) review. E.O. 12866 defines “significant regulatory action” as one likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities.

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another Agency.

(3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof.

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the E.O.

The Department has determined this ANPRM is a “significant regulatory action” under E.O. 12866, and significant under DOT regulatory policies and procedures due to significant public interest in the legal and policy issues addressed. Therefore, this document has been reviewed by OMB.

E.O. 13771 (82 FR 9339, February 3, 2017), Reducing Regulation and Controlling Regulatory Costs, requires that for “every one new [E.O. 13771 regulatory action] issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.” Implementation guidance for E.O. 13771 issued by the Office of Management and Budget (OMB) (Memorandum M-17-21, April 5, 2017) defines two different types of E.O. 13771 actions: An E.O. 13771 deregulatory action, and an E.O. 13771 regulatory action.

An E.O. 13771 deregulatory action is defined as “an action that has been finalized and has total costs less than zero.”

An E.O. 13771 regulatory action is defined as:

(i) A significant action as defined in Section 3(f) of E.O. 12866 that has been finalized, and that imposes total costs greater than zero; or

(ii) a significant guidance document (e.g., significant interpretive guidance) reviewed by OIRA under the procedures of E.O. 12866 that has been finalized and that imposes total costs greater than zero.

The Agency action, in this case a rulemaking, must meet both the significance and the total cost criteria to be considered an E.O. 13771 regulatory action. As the Department has determined this ANPRM is a “significant regulatory action” under E.O. 12866, and significant under DOT regulatory policies and procedures due to significant public interest in the legal and policy issues addressed, it meets the significance criterion for being an E.O. 13771 regulatory action; however, the requirements of E.O. 13771 do not apply to pre-notice of proposed rulemakings such as ANPRMs.

FMCSA specifically seeks comment on how the Agency should analyze various aspects of a possible NPRM in this proceeding and how the Agency could limit possible burdens on entities.

FMCSA has not yet determined whether an Initial Regulatory Flexibility Analysis (IRFA) will be required for any of the eight enumerated alternatives listed above. However, if an IRFA is required, FMCSA is considering holding one or more Small Business Regulatory Panels. If you are a small business who would like to be included in such a panel, please submit a comment indicating as such. The Agency also seeks comment on the small business impacts of the Agency's suggested courses of action in this ANPRM.

The Agency specifically seeks comments and data from the public in response to this ANPRM. We request that commenters address their comments specifically to the enumerated list of issues below, and that commenters number their comments to correspond to each issue. FMCSA anticipates some of the information and data sought may include CBI, and these comments should be filed in accordance with the requirements of 49 CFR 389.9 Treatment of confidential business information and the instructions above under the subheading Confidential Business Information under the headings ADDRESSES and Public Participation and Request for Comments.

1. FMCSA specifically seeks comment on the definition of “group surety bond” or “group trust fund” and how the Agency could administer such a group surety or trust option given its limited resources.

2. The Agency solicits suggestions from the trust fund industry and others about instruments the Agency could accept that would meet the “assets readily available” standard without requiring significant FMCSA oversight or evaluation that would divert scarce safety oversight resources.

3. The Agency specifically seeks comment from the surety bond industry on that industry's capacity to meet the increased market demand if FMCSA were to adopt a cash-only standard for BMC-85 trust funds, which could potentially drive a significant segment of the broker/forwarder industry into surety bond coverage.

4. FMCSA seeks comment and data from the surety bond industry on the cost to brokers and freight forwarders of BMC-84 surety bonds.

5. The Agency will consider how it could “immediately suspend” broker/freight forwarder operating authority registration in a manner that is consistent with constitutional due process requirements, e.g., by providing an appropriate opportunity for post-deprivation review. FMCSA invites comments responsive to this issue, including documented incidence of actual nonpayment that occurred after problem brokers or freight forwarder were not “immediately” suspended.

6. FMCSA seeks comment on the appropriate cushion time for brokers or freight forwarders to respond to claims made to the guarantors, valid or otherwise. Such a grace period would seem to give firms adequate time to adjudicate claims and settlements internally, as well as price in the costs associated with any claims relating to contract noncompliance.

7. The Agency seeks comments on the how “financial failure or insolvency” and “publicly advertise” should be defined under MAP-21 Section 32918.

8. The Agency seeks input on the development of surety suspension procedures authorized pursuant to 49 U.S.C. 13906(b)(7) and (c)(8).

9. The Agency requests comments regarding whether FMCSA should require BMC-85 trust fund providers to be licensed as trust providers and how 49 CFR 387.307(c)(7) (loan or finance company) could be amended to ensure that adequate monitoring of BMC-85 providers' ability to pay claims is taking place.

10. The Agency anticipates the need for revisions to the BMC-84 and BMC-85 forms if rulemaking is proposed. FMCSA requests comments to identify suggested changes to the forms.

11. FMCSA seeks information on whether HHG brokers and freight forwarders should be regulated differently than general property brokers and freight forwarders in a rulemaking on broker/freight forwarder financial responsibility.

12. FMCSA solicits comments to help determine whether there is a unique market structure in the HHG broker market that might suggest the need for additional fraud protections for shippers utilizing HHG brokers.

13. FMCSA seeks information on the prevailing payment models and payment flows among HHG shippers, motor carriers and brokers.

14. While noting the MAP-21 requirements, FMCSA is seeking comment on whether the market is capable of addressing these issues. For example, if a broker/freight forwarder has a history of noncompliance with contracts, would surety/trust firms be less likely to back them or charge a higher premium/trust management fee? Is there a market failure that is preventing these transactions from taking place efficiently?

15. FMCSA specifically seeks comment on how the Agency should analyze various requirements for a possible NPRM to meet the requirements of E.O. 12866 and 13771, and how the Agency could limit possible burdens on regulated entities.

16. FMCSA requests comments on any other aspects of implementing section 32918 that may be necessary and how these areas could be implemented in a way that would not divert scarce safety oversight resources.

17. FMCSA requests comment on the small business impacts of its suggested courses of action in this ANPRM.

If you submit a comment, please include the docket number for this ANPRM (Docket No. FMCSA-2018-0248), indicate the specific section of this document to which each section applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online or by fax, mail, or hand delivery, but please use only one of these means. FMCSA recommends that you include your name and a mailing address, an email address, or a phone number in the body of your document so that FMCSA can contact you if there are questions regarding your submission.

To submit your comment online, go to http://www.regulations.gov, put the docket number, FMCSA-2018-0248, in the keyword box, and click “Search.” When the new screen appears, click on the “Comment Now!” button and type your comment into the text box on the following screen. Choose whether you are submitting your comment as an individual or on behalf of a third party and then submit.

If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 81/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the facility, please enclose a stamped, self-addressed postcard or envelope.

FMCSA will consider all comments and material received during the comment period for the ANPRM. Late comments will be considered to the extent practicable.

Confidential Business Information (CBI) is commercial or financial information that is customarily not made available to the public by the submitter. Under the Freedom of Information Act, CBI is eligible for protection from public disclosure. If you have CBI that is relevant or responsive to the ANPRM and associated listening sessions, it is important that you clearly designate the submitted comments as CBI. Accordingly, please mark each page of your submission as “confidential” or “CBI.” Submissions designated as CBI and meeting the definition noted above will not be placed in the public docket for the ANPRM and associated listening sessions. Submissions containing CBI should be sent to Mr. Brian Dahlin, Chief, Regulatory Evaluation Division, 1200 New Jersey Avenue SE, Washington, DC 20590, or via email at [email protected]. Any commentary that FMCSA receives which is not specifically designated as CBI will be placed in the public docket for this rulemaking.

FMCSA will consider all comments and material received during the comment period for the ANPRM.

To view comments, as well as any documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov. Insert the docket number, FMCSA-2018-0248, in the keyword box, and click “Search.” Next, click the “Open Docket Folder” button and choose the document to review. If you do not have access to the internet, you may view the docket online by visiting the Docket Management Facility in Room W12-140 on the ground floor of the DOT West Building, 1200 New Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 5 p.m., e.t., Monday through Friday, except Federal holidays.

In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, including any personal information the commenter provides, to www.regulations.gov, as described in the system of records notice (DOT/ALL-14 FDMS), which can be reviewed at www.dot.gov/privacy.

On August 23, 2018 (83 FR 42631), FMCSA published an ANPRM concerning potential changes to its hours-of-service rules. The ANPRM indicated the Agency is considering changes in four areas of the HOS rules: the short-haul HOS limit [49 CFR 395.1(e)(1)(ii)(A)]; the HOS exception for adverse driving conditions [§ 395.1(b)(1)]; the 30-minute rest break provision [§ 395.3(a)(3)(ii)]; and the sleeper berth rule to allow drivers to split their required time in the sleeper berth [§ 395.1(g)(1)(i)(A) and (ii)(A)]. In addition, the Agency requested public comment on petitions for rulemaking from the Owner-Operator Independent Drivers Association (OOIDA) and TruckerNation.org (TruckerNation). The ANPRM provides an opportunity for additional discussion of each of these topics. The listening sessions will provide interested persons an opportunity to share their views on these topics with representatives of the Agency. The Agency encourages ELD vendors to participate to address potential implementation issues should changes to the HOS rules be made.

The listening sessions are open to the public. Speakers' remarks will be limited to 2 minutes each. The public may submit material to the FMCSA staff at each session for inclusion in the public docket, FMCSA-2018-0248. The sessions will be webcast live in their entirety, providing the opportunity for remote participation via the internet. For information on participating in the live webcasts, please go to www.fmcsa.dot.gov.

In preparing their comments, meeting participants should consider the questions posed in the ANPRM about the current HOS requirements. Answers to these questions should be based upon the experience of the participants and any data or information they can share with FMCSA.

The snapper-grouper fishery in the South Atlantic region is managed under the FMP and includes golden tilefish, along with other snapper-grouper species. The FMP was prepared by the Council and is implemented by NMFS through regulations at 50 CFR part 622 under authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act).

The Magnuson-Stevens Act requires that NMFS and regional fishery management councils prevent overfishing and achieve, on a continuing basis, the OY from federally managed fish stocks. These mandates are intended to ensure that fishery resources are managed for the greatest overall benefit to the nation, particularly with respect to providing food production and recreational opportunities, and protecting marine ecosystems.

Golden tilefish are harvested by both commercial and recreational fishermen throughout the South Atlantic, although the majority of landings are attributed to the bottom longline component of the commercial sector. Using data through 2010, the golden tilefish stock was assessed in 2011 through the Southeast Data, Assessment, and Review (SEDAR) stock assessment process (SEDAR 25). SEDAR 25 results indicated that the golden tilefish stock was not subject to overfishing, and it was not overfished. Based upon the results of SEDAR 25, Amendment 18B to the FMP and its implementing final rule allocated the total ACL among the sectors and commercial gear components (i.e., bottom longline and hook-and-line), and specified the ACLs based upon the determined allocation percentages, among other actions (78 FR 23858; April 23, 2013). For golden tilefish, 97 percent of the combined (commercial and recreational sectors together) ACL is allocated to the commercial sector, with 25 percent of the commercial ACL available for harvest by the hook-and-line component and 75 percent of the commercial ACL available for the longline component. The recreational sector is allocated 3 percent of the combined ACL.

In April 2016, an update to SEDAR 25 was completed for golden tilefish using data through 2014 (SEDAR 25 Update 2016). The SEDAR 25 Update 2016 indicated that golden tilefish is undergoing overfishing but is not overfished. In May 2016, the Council's Scientific and Statistical Committee (SSC) reviewed the SEDAR 25 Update 2016 and indicated that the SEDAR 25 Update 2016 was based on the best scientific information available. The SSC provided an ABC recommendation to the Council at that time.

During the Council's review of the SEDAR 25 Update 2016 in June 2016, the Council stated their concerns over the large differences between SEDAR 25 and the SEDAR 25 Update 2016 in biological benchmarks such as the maximum sustainable yield calculations, social and economic consequences of the substantial reduction of the ABC (60 percent), and the unusually high buffer (34 percent) estimated between the ABC and the overfishing limit. Based on the Council's concerns over the differences between SEDAR 25 and the SEDAR 25 Update 2016, the NMFS Southeast Fisheries Science Center revised the SEDAR 25 Update 2016 to include a newly developed model. The SSC reviewed the revised assessment at their October 2017 meeting and did not recommend basing stock status and fishing level recommendations on the revised assessment, but rather on the SEDAR 25 Update 2016.

In a letter dated January 4, 2017, NMFS notified the Council of the updated golden tilefish stock status determination that the stock is undergoing overfishing but is not overfished. As mandated by the Magnuson-Stevens Act, NMFS and the Council must prepare and implement a plan amendment and regulations to end overfishing of golden tilefish within 2 years of such stock status notification. Therefore, the Council began development of a regulatory amendment to end overfishing of golden tilefish. However, the initial acceptable biological catch (ABC) recommendation from the Council's SSC was not available until late October 2017, which provided insufficient time for the Council and NMFS to develop and implement management measures to end overfishing of golden tilefish in time for the start of the 2018 fishing year on January 1, 2018. Consequently, in a letter to NMFS dated June 27, 2017, the Council requested that NMFS implement interim measures to immediately reduce overfishing of golden tilefish while long-term measures could be developed. A temporary rule, published in the Federal Register on January 2, 2018 (83 FR 65), reduced the combined ACL to 323,000 lb (146,510 kg), gutted weight. This catch level was based on a projected yield at 75 percent of the yield produced by the fishing mortality rate at maximum sustainable yield, which was 362,000 lb (164,654 kg) whole weight, converted to gutted weight using a conversion factor of 1.12. On June 19, 2018 (83 FR 28387), the temporary rule was extended for an additional 186 days, through January 3, 2019. The measures in Regulatory Amendment 28, as described in this proposed rule, would replace the current interim measures outlined in the temporary rule and end overfishing of golden tilefish in the South Atlantic. It is necessary to ensure that this rule becomes effective before or by the temporary rule's expiration date, January 4, 2019. Failure to implement Regulatory Amendment 28 by the expiration of the temporary rule may risk overfishing of golden tilefish because ACLs will change back to pre-temporary rule levels and become much higher. This increase in ACLs may cause confusion among fishers and for law enforcement, especially when the ACLs will then lower again once this proposed rule is effective.

As noted above, the Council's SSC reviewed the SEDAR 25 Update 2016 assessment in May 2016 and provided fishing level recommendations based on a P* (probability of overfishing) value of 30 percent derived from the Council's ABC control rule. However, at the Council's March 2018 meeting, the Council determined that they are willing to accept a risk of overfishing larger than P* = 30 percent. The Council determined that they were willing to accept a risk of overfishing at the ACL level previously implemented through the temporary rule. The ACL implemented through the temporary rule was equal to the yield at a fishing mortality rate (F) equal to 75 percent of the fishing mortality rate at the maximum sustainable yield (FMSY) when the population is at equilibrium. This new ABC value represented a level closer to a P* value of 40 percent. At their May 2018 meeting, the SSC reviewed the Council's request to revise the ABC recommendation and agreed with setting the ABC equal to the value at F = 75 percent FMSY when the population is at equilibrium. Therefore, the SSC's revised ABC recommendation was 362,000 lb (164,200 kg), whole weight. Although it is different than the conversion factor applied for the temporary rule, an updated conversion factor of 1.059, which was used in the SEDAR 25 Update 2016 assessment and is considered the best scientific information available, results in an ABC of 342,000 lb (155,129 kg), gutted weight. This revised ABC recommendation forms the basis for the actions in Regulatory Amendment 28 and this proposed rule, which is intended to end overfishing of golden tilefish in the South Atlantic.

This proposed rule would revise the combined ACL for golden tilefish to be 342,000 lb (155,129 kg), gutted weight. The combined ACL is equal to the SSC's final ABC recommendation of the yield at F = 75 percent FMSY. This proposed rule would also specify the commercial and recreational sector ACLs and component commercial quotas using the existing sector allocations of 97 percent commercial and 3 percent recreational, as well as allocating 25 percent of the commercial ACL to the hook-and-line component and 75 percent of the commercial ACL to the longline component. Therefore, the commercial ACL (equivalent to the commercial quota) would be 331,740 lb (150,475 kg), gutted weight. The commercial ACL for the hook-and-line component would be 82,935 lb (37,619 kg), gutted weight, and the commercial ACL for the longline component would be 248,805 lb (112,856 kg), gutted weight. The recreational ACL would be 2,316 fish. The ACL values in this proposed rule would remain in effect in future years unless changed by the South Atlantic Fishery Management Council.

The current accountability measures (AMs) for golden tilefish require that a sector or commercial gear component close for the remainder of the fishing year if its respective ACL is reached or projected to be reached. The reductions in the sector and commercial gear-component ACLs could result in earlier in-season closures, particularly for the commercial sector as a result of an ACL being reached or projected to be reached during a fishing year. These closures would likely result in short-term adverse socio-economic effects. However, the reduction in the ACLs in this proposed rule is expected to end overfishing of golden tilefish and will likely minimize future adverse socio-economic effects. Adhering to sustainable harvest through an ACL based on information from the most recent stock assessment (SEDAR 25 2016 Update) is expected to be more beneficial to fishermen and fishing communities in the long term because catch limits would be based on the current conditions, even if the updated stock assessment information indicates that reduced ACLs are appropriate to sustain the stock. The reduction in the ACLs in this proposed rule would also provide biological benefits (such as protections against recruitment failure) to the golden tilefish stock by reducing the current levels of fishing mortality. The revised ACL values in Regulatory Amendment 28 and this proposed rule are based on the best scientific information available.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the Assistant Administrator has determined that this proposed rule is consistent with Regulatory Amendment 28, the FMP, the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.

This proposed rule has been determined to be not significant for purposes of Executive Order (E.O.) 12866. This rule is not an E.O. 13771 regulatory action because this rule is not significant under E.O. 12866.

NMFS prepared an IRFA for this proposed rule, as required by section 603 of the Regulatory Flexibility Act (RFA), 5 U.S.C. 603. The IRFA describes the economic impact that this proposed rule, if implemented, would have on small entities. A description of the proposed rule, why it is being considered, and the objectives of, and legal basis for, this proposed rule are contained at the beginning of this section in the preamble and in the SUMMARY section of the preamble. A copy of the full analysis is available from the NMFS (see ADDRESSES). A summary of the IRFA follows.

The Magnuson-Stevens Act provides the statutory basis for this proposed rule. No duplicative, overlapping, or conflicting Federal rules have been identified. In addition, no new reporting, record-keeping, or other compliance requirements are introduced by this proposed rule. Accordingly, this proposed rule does not implicate the Paperwork Reduction Act.

This proposed rule, if implemented, would be expected to directly affect federally permitted commercial fishermen fishing for golden tilefish in the South Atlantic. Recreational anglers fishing for golden tilefish would also be directly affected by this proposed rule, but anglers are not considered business entities under the RFA. For-hire vessels would also be affected by this rule, but only in an indirect way. Thus, only the effects on federally permitted snapper-grouper commercial fishing vessels will be discussed. For RFA purposes only, the NMFS has established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily engaged in commercial fishing (NAICS code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide.

From 2012 through 2016, an average of 23 longline vessels per year landed golden tilefish from the South Atlantic. The golden tilefish longline endorsement system started in 2013. Endorsed vessels, combined, averaged 255 trips per year in the South Atlantic on which golden tilefish were landed, and 182 other trips that were either in the South Atlantic but no golden tilefish were caught or took place in other areas (Gulf or Mid-Atlantic) that caught any species including golden tilefish. The average annual total dockside revenue (2016 dollars) for these vessels combined was approximately $1.56 million from golden tilefish, approximately $0.10 million from other species co-harvested with golden tilefish (on the same trips), and approximately $0.43 million from other trips by these vessels on trips in the South Atlantic on which no golden tilefish were harvested or on trips which occurred in other areas. Total average annual revenue from all species harvested by longline vessels landing golden tilefish in the South Atlantic was approximately $2.10 million, or approximately $92,000 per vessel. Longline vessels generated approximately 74 percent of their total revenues from golden tilefish. For the same period, an average of 82 vessels per year landed golden tilefish using other gear types (mostly hook-and-line) in the South Atlantic. These vessels, combined, averaged 483 trips per year in the South Atlantic on which golden tilefish were landed and 2,862 trips taken in the South Atlantic on which golden tilefish were not harvested or trips that took place in other areas and caught any species including golden tilefish. The average annual total dockside revenue (2016 dollars) for these 82 vessels was approximately $0.36 million from golden tilefish, approximately $0.66 million from other species co-harvested with golden tilefish (on the same trips in the South Atlantic), and approximately $4.13 million from the other trips taken by these vessels. The total average annual revenue from all species harvested by these 82 vessels was approximately $5.16 million, or approximately $62,000 per vessel. Approximately 7 percent of these vessels' total revenues came from golden tilefish.

Based on the foregoing revenue information, all commercial vessels using longlines or hook-and-line affected by the proposed rule may be assumed to be small entities. Because all entities expected to be directly affected by this proposed rule are assumed to be small entities, NMFS has determined that this proposed rule would affect a substantial number of small entities. However, since all affected entities are small entities, the issue of disproportionate effects on small versus large entities does not arise in the present case.

The proposed rule would reduce the combined stock ACL, and consequently the specific ACLs for the commercial and recreational sectors as well as the longline and hook-and-line component ACLs for the commercial sector. The longline and hook-and-line components of the commercial sector would be expected to lose approximately $592,000 and $217,000, respectively, in annual ex-vessel revenues. This would very likely translate to profit reductions for both the longline and hook-and-line components, particularly for longline vessels as they are more dependent on golden tilefish. As noted above, golden tilefish account for about 74 percent of longline vessel revenues and 7 percent of hook-and-line vessel revenues. There is a good possibility ACLs may be changed in the future if the proposed rule were successful in addressing the overfishing condition for the South Atlantic golden tilefish. Economic benefits would ensue if the ACLs are subsequently increased.

The following discussion analyzes the alternatives that were considered by the Council, including those that were not selected as preferred by the Council. Unlike the preferred alternative, most of the other alternatives would provide for varying ACLs over 6 years, at least. For this reason, a 6-year period is considered for comparing alternatives. Over a 6-year period, the preferred alternative would be expected to reduce revenues by approximately $3.02 million for the longline segment and $1.11 million for the hook-and-line segment of the commercial sector, using a 7 percent discount rate.

Ten alternatives, including the preferred alternative as described above, were considered for reducing the South Atlantic golden tilefish ACLs. The first alternative, the no action alternative, would maintain the current economic benefits to all participants in the South Atlantic golden tilefish component of the snapper-grouper fishery. This alternative, however, would not address the need to curtail continued overfishing of the stock, thereby increasing the likelihood that more stringent measures would need to be implemented in the near future.

With one exception, all the other alternatives would result in larger revenue losses to the longline and hook-and-line vessels than the preferred alternative. Alternatives that would result in larger revenue losses than the preferred alternative would provide for lower ACLs over a 6-year period. Total losses over 6 years from these alternatives would range from $3.17 million to $4.29 million for longline vessels and from $1.16 million to $1.83 million for hook-and-line vessels. The alternative with lower attendant revenue losses than the preferred alternative would be expected to reduce total ex-vessel revenues by approximately $2.65 million for longline vessels and $0.97 million for hook-and-line vessels over 6 years. Relative to the preferred alternative, this alternative would result in larger ex-vessel revenue losses initially but lower revenue losses in subsequent years, because the ACLs in subsequent years would be greater than those of the preferred alternative. Both alternatives would be expected to result in early harvest closure, and in the first fishing year, harvest closure under the preferred alternative would occur at a later date than that of the other alternative. The reverse may be expected for the subsequent years. The Council considered the preferred alternative as affording the best means to end overfishing of golden tilefish in the South Atlantic, because it is based on the best scientific information available.

For the reasons set out in the preamble, 50 CFR part 622 is proposed to be amended as follows: