Federal Register Vol. 83, No.222,

This action, pursuant to 5 U.S.C. 553, proposes to amend regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing Agreement and Order No. 932, as amended (7 CFR part 932), regulating the handling of olives grown in California. Part 932 (referred to as the “Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The California Olive Committee (Committee) locally administers the Order and is comprised of producers and handlers of olives operating within the area of production.

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

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This proposed rule is not intended to have retroactive effect.

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

On May 17, 2018 (83 FR 22831), the Agricultural Marketing Service published a final rule amending 7 CFR part 900, the general regulations for federal fruit, vegetable, and specialty crop marketing agreements and orders, to authorize the use of electronic means of communication for meetings and voting.

During a meeting on June 13, 2018, the Committee unanimously recommended adoption of modern communication methods to conduct Committee meetings, as outlined in the Federal Register volume referenced above. On August 17, 2018, the Committee unanimously approved the recommended procedures for the use of communication technology. This proposed rule would establish those procedures in a new section § 932.136, Use of communication technology in Subpart B—Administrative Requirements.

The Order currently states that the Committee may only meet in assembled, in-person, meetings and that voting may only be conducted at meetings or via mail or telegraph. Such limitations present logistical problems for many Committee members since membership is widely distributed across California. Some members travel over 400 miles to attend a Committee meeting, thus resulting in lost work hours for the members and increased costs for the Committee.

Allowing the Committee to conduct meetings via electronic means of communication would likely result in increased member participation and productivity at a reduced cost, as well as greater potential for meeting quorum and voting requirements.

The Committee recommended that audio or audiovisual technology (AVT) that facilitates open communication and effectively assembles Committee members be used to conduct meetings by AVT or partial in-person meetings (meaning some members not present participate in an in-person meeting via technology). These meetings would be subject to the same quorum and voting requirements currently in effect for in-person meetings under § 932.36. These requirements define a quorum as a majority of the 16-member Committee, of which at least half are producer members and half are handler members. Voting requirements state that a passing recommendation must receive a majority vote, with at least half of the voting members representing producers and half representing handlers. For recommendations regarding grade and size, a minimum of ten votes representing five producer and five handler members are necessary for approval. The requirements further state that issues to be voted on shall be explained accurately and fully, and that all votes cast will be confirmed through a roll call.

Regarding casting votes electronically or by email, the Committee proposed that such votes be subject to the same requirements currently in effect for mail voting in § 932.36. These requirements state that advanced notice, as well as an accurate, full and identical description of the issues to be voted on, be given to all members. For a recommendation to pass, at least 14 affirmative votes representing seven producer and seven handler members are required.

The Committee recommended these changes to provide an opportunity to conduct meetings more efficiently and cost-effectively; use of audio and or audiovisual communication technology would result in time and cost savings to the Committee and its members by allowing for meetings to be conducted with all or a portion of its membership attending by audio and or AVT.

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

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

There are approximately 1,100 producers of olives in the production area and two handlers subject to regulation under the Order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,500,000 (13 CFR 121.201).

Based on National Agricultural Statistics Service (NASS) information, the average price to producers for the 2017 crop year was $974.00 per ton, and total assessable volume for the 2017 crop year was 83,799 tons. Based on production, price paid to producers, and the total number of California olive producers, the average annual producer revenue is less than $750,000 ($974.00 times 83,799 tons equals $81,620,226, divided by 1,100 producers equals an average annual producer revenue of $74,200). Based on Committee data, both handlers may be classified as large entities under the SBA's definitions because their annual receipts are greater than $7,500,000.

This proposed rule would not impose additional costs on handlers or producers of any size. Committee members are expected to see a reduction in their travel expenses and time lost from work in order to attend Committee meetings in person. Thus, this proposed rule would reduce the cost burden on both handlers and producers.

The Committee considered the alternative of making no changes to the regulations. However, it was determined that by taking no action, the Committee would be unnecessarily limiting the participation of some members due to time constraints and travel considerations. Therefore, the Committee determined that recommending this change was in the best interest of the Committee, its members, and the industry.

Like all Committee meetings, the June 13, 2018, meeting was public and was widely publicized throughout the production area. All entities, both large and small, were able to express their views on this issue and participate in Committee deliberations. Following the meeting, ballots along with the proposed procedures were sent to all Committee members on July 31, 2018, and the mail vote concluded on August 17, 2018. The proposal received unanimous support.

Interested persons are invited to submit comments on this proposed rule, including the regulatory and information collection impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0178 Vegetable Crops. No changes in those requirements would be necessary as a result of this action. Should any changes become necessary, they would be submitted to OMB for approval.

This proposed rule would impose no additional reporting or recordkeeping requirements on either small or large California olive handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

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

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

A 30-day comment period is provided to allow interested persons to respond to this proposed rule. All written comments timely received will be considered before a final determination is made on this matter.

For the reasons set forth in the preamble, 7 CFR part 932 is proposed to be amended as follows:

On September 28, 2018, SBA published a notice of proposed rulemaking at 83 FR 49001 to solicit comments on the Express loan program, affiliation standards, and other miscellaneous amendments to SBA business loan programs. This proposed rulemaking, which is identified by RIN 3245-AG74, is also available at https://www.regulations.gov/searchResults?rpp=25&po=0&s=SBA-2018-0009&fp=true&ns=true.

SBA received a formal request from several trade associations that represent participants in SBA's business loan programs to extend the comment period on this proposed rulemaking for an additional 60 days. After considering the request, SBA decided to extend the comment period an additional 15 business days until December 18, 2018. This extension will give commenters additional time to consider the proposed rulemaking and submit comments.

I. Background

The Economic Growth, Regulatory Relief, and Consumer Protection Act (“the Act”) was signed into law on May 24, 2018. Public Law 115-174. The Act, among other things, amends section 605A of the FCRA, 15 U.S.C. 1681c-1 to add a section 605A(k). Section 605A(k)(2) requires that nationwide consumer reporting agencies provide free electronic credit monitoring services to active duty military consumers.

Section 605A(k)(3) of the FCRA requires the Commission to issue a regulation clarifying the meaning of certain terms used in section 605A(k)(2), including “electronic credit monitoring service” and “material additions or modifications to the file of a consumer.” In addition, section 605A(k)(3) requires that the Commission's regulation clarify what constitutes appropriate proof that an individual is an active duty military consumer.

The proposed rule applies to nationwide consumer reporting agencies, as defined in section 603(p) of the Fair Credit Reporting Act, 15 U.S.C. 1681a(p). The proposed rule requires the nationwide consumer reporting agencies to provide a free electronic credit monitoring service that notifies a consumer of material additions or modifications to the consumer's file when the consumer provides (1) contact information, (2) appropriate proof that the consumer is an active duty military consumer, and (3) appropriate proof of identity. The proposed rule specifies that the nationwide consumer reporting agency must provide notification to the consumer within 24 hours of the material addition or modification. The proposed rule also requires that the notices to consumers include a hyperlink to a summary of the consumer's rights under the Fair Credit Reporting Act, as prescribed by the Bureau of Consumer Financial Protection under 15 U.S.C. 1681g(c).

The proposed rule defines certain key terms. Specifically, the proposed rule defines “electronic credit monitoring service” as a service through which nationwide consumer reporting agencies provide, at a minimum, electronic notification of material additions or modifications to a consumer's file. Electronic notification may include notification by website, mobile application, email, or text message. In addition, the proposed rule defines “material additions or modifications” as significant changes to a consumer's file, including: (1) New accounts opened in the consumer's name; (2) inquiries or requests for a consumer report; (3) changes to a consumer's name, address, or phone number; (4) changes to credit account limits; and (5) negative information, which is separately defined to include information concerning a customer's delinquencies, late payments, insolvency, or any form of default. The term “material additions or modifications” excludes requests for prescreened lists and requests to review a consumer's account, as discussed further below.

The proposed rule also specifies what constitutes appropriate proof that the consumer is an active duty military consumer. Under the proposed rule, appropriate proof includes a copy of the consumer's active duty orders; a certification of active duty status issued by the Department of Defense; verification obtained through a method or service approved by the Department of Defense; or a certification of active duty status approved by the nationwide consumer reporting agency.

Further, the proposed rule restricts nationwide consumer reporting agencies' ability to use and disclose the information they collect from consumers in order to provide the required electronic credit monitoring service. The nationwide consumer reporting agencies may use and disclose the information they collect from consumers only for the following: (1) To provide the free electronic credit monitoring service requested by the consumer; (2) to process a transaction requested by the consumer at the same time as a request for the free electronic credit monitoring service; (3) to comply with applicable legal requirements; or (4) to update information already maintained by the nationwide consumer reporting agency for the purpose of providing consumer reports.

Additionally, the proposed rule contains some limitations on communications surrounding enrollment in an electronic credit monitoring service. First, the proposed rule prohibits any advertising or marketing to a consumer who has indicated an interest in obtaining the free electronic credit monitoring service for active duty military consumers until after the consumer has enrolled in the service. Second, the proposed rule does not allow any communications or instructions that interfere with, detract from, contradict, or otherwise undermine the purpose of the proposed rule. Prohibited communications include materials that represent, expressly or by implication, that an active duty military consumer must purchase a paid product or service in order to receive the service required under § 609.3(a). They also include materials that falsely represent, expressly or by implication, that a product or service offered ancillary to the free electronic credit monitoring service, such as identity theft insurance, is free. The proposed rule also prohibits any advertising or marketing for a free service, without clearly and prominently disclosing that consumers must cancel the service to avoid being charged, if such is the case.

Finally, the proposed rule prohibits asking or requiring an active duty military consumer to agree to terms or conditions in connection with obtaining a free electronic credit monitoring service.

Proposed § 609.1 sets forth the scope of the Commission's rule and generally tracks the statutory language in section 605A(k)(2) of the Fair Credit Reporting Act. 15 U.S.C. 1681c-1(k)(2). It implements the requirement that nationwide consumer reporting agencies, as defined in section 603(p) of the Fair Credit Reporting Act, 15 U.S.C. 1681a(p), provide a free electronic credit monitoring service to active duty military consumers that, at a minimum, notifies them of any material additions or modifications to their files.

Proposed § 609.2 contains definitions for the following terms: “active duty military consumer,” “appropriate proof of identity,” “consumer,” “consumer report,” “contact information,” “credit,” “electronic credit monitoring service,” “electronic notification,” “file,” “firm offer of credit,” “free,” “material additions or modifications,” “nationwide consumer reporting agency,” and “negative information.”

Proposed paragraphs (a), (c), (d), (f), (i), (j), (m), and (n) incorporate the FCRA's statutory definitions of “active duty military consumer,” “consumer,” “consumer report,” “credit,” “file,” “firm offer of credit,” “nationwide consumer reporting agency,” and “negative information.” Each of these terms is used in the proposed rule.

Proposed paragraph (b) defines “appropriate proof of identity” as having the same meaning as set forth in 12 CFR 1022.123. Although the statute requires only that consumer reporting agencies obtain contact information and appropriate proof of active duty military status before providing electronic credit monitoring to military consumers, the proposed rule adds language that would permit the nationwide consumer reporting agencies to request appropriate proof of identity before providing a military consumer with the statutorily required credit monitoring service.

The Commission believes that, before providing sensitive consumer report information to a military consumer in connection with credit monitoring, a consumer reporting agency should be able to verify the consumer's identity. Consumer report information is very sensitive and it is imperative that consumers only receive credit monitoring with respect to their own credit file. For example, under section 610 of the FCRA, consumer reporting agencies must obtain “proper identification” from a consumer before providing the consumer with a disclosure of his or her credit file. More generally, consumer reporting agencies are required to establish reasonable procedures designed to limit the furnishing of consumer reports to legitimate persons with legitimate purposes for obtaining the report. See 15 U.S.C. 1681e.

The proposed rule defines “appropriate proof of identity” by cross-referencing 12 CFR 1022.123. This existing definition was established to provide guidance on what information consumers should be required to provide to constitute proof of identity for purposes of FCRA sections 605A (obtaining a fraud alert), 605B (requesting that information resulting from identity theft be blocked from one's consumer report), and 609(a)(1) (requesting a file disclosure from a consumer reporting agency). This definition is risk-based, meaning that a consumer reporting agency's policy with respect to appropriate proof of identity should be commensurate with the risk of harm to the consumer resulting from misidentification, and should not unreasonably restrict a consumer's access to statutorily required services.

Because consumer reporting agencies already are required to implement procedures for obtaining appropriate proof of identity under 12 CFR 1022.123, the Commission believes it would be efficient to permit consumer reporting agencies to comply with the proposed rule by using the same requirements, already in place.

The Commission is soliciting comments on whether the rule should cross-reference 12 CFR 1022.123, stay silent on the definition, or develop a different approach.

Proposed paragraph (e) contains a definition of “contact information.” The statute allows nationwide consumer reporting agencies to condition provision of the free electronic credit monitoring service to those consumers that provide both appropriate proof that they are active duty military consumers and contact information. The Commission believes that clarifying the term “contact information” is beneficial to the nationwide consumer reporting agencies and consumers. Nationwide consumer reporting agencies need a minimal amount of information from a consumer in order to provide the free credit monitoring service. Accordingly, the proposed rule defines “contact information” as information about a consumer, such as a consumer's first and last name and email address, that is reasonably necessary to collect in order to provide the electronic credit monitoring service.

Proposed paragraph (g) defines “electronic credit monitoring service” as a service through which nationwide consumer reporting agencies provide electronic notifications of material additions or modifications to a consumer's file. Section 605A(k)(3) of the FCRA specifically requires the Commission to define this term. The Commission believes that this definition and the accompanying definitions of “material addition or modification” and “electronic notification” provide the detail necessary for nationwide consumer reporting agencies to provide the credit monitoring required by the statute.

Proposed paragraph (h) defines “electronic notification” as a notice provided to the consumer via a website; mobile application; email; or text message. The Commission wants to give the nationwide consumer reporting agencies and consumers the flexibility to communicate in a manner that is most convenient for them. Currently, the nationwide consumer reporting agencies typically send customers of their commercial credit monitoring services an email alerting them that changes have been made to their files. Customers then log in to the consumer reporting agency's website to see the specific changes that have occurred. Other commercial credit monitoring services provide a mobile application through which they notify customers of changes to their consumer reports. In addition to these methods, the Commission believes some consumers would find the option of receiving notifications via text message convenient. However, the Commission notes, that any nationwide consumer reporting agency electing to provide consumers the option of receiving notifications via text message must comply with Telephone Consumer Protection Act, 47 U.S.C. 227, and all other applicable laws and requirements. The Commission welcomes comment on this proposed definition of electronic notification.

Proposed paragraph (k) defines “free” as being provided at no cost to the consumer. This definition comes from Merriam-Webster's Dictionary. The Commission seeks comment on whether a definition of “free” is necessary, and if so, whether it should include any additional requirements.

Proposed paragraph (l) defines “material additions or modifications” as significant changes to a consumer's file, including: (1) New accounts opened in the consumer's name; (2) inquiries or requests for a consumer report (with the exceptions noted below); (3) changes to a consumer's name, address, or phone number; (4) changes to credit account limits; and (5) negative information.

The changes set forth in (1)-(5) above are material because they can indicate that a consumer is the victim of identity theft or other fraud. The sooner a consumer is alerted to these changes, the sooner the consumer can begin to mitigate harm. Notifications of these changes are included in many of the credit monitoring products available commercially today.

The definition also includes any other “significant changes to a consumer's file.” The enumerated list is not exhaustive, and nationwide consumer reporting agencies may elect to provide notification of other significant changes to a consumer's file. There may be other information that is useful to particular types of consumers or other significant changes that the Commission cannot contemplate today. Therefore, the Commission believes that the nationwide consumer reporting agencies should have discretion to include additional significant changes to a consumer's file within their free electronic credit monitoring service.

At the same time, the Commission proposes that the definition of “material additions or modifications” specifically exclude (1) inquiries for a prescreened list obtained for the purpose of making a firm offer of credit or insurance as described in 15 U.S.C. 1681b(c)(1)(B), and (2) inquiries for the purpose of reviewing an account of the consumer (“account review”). As to inquiries for prescreened lists, while most credit inquiries signal that a consumer is affirmatively seeking credit and may affect their credit scores, inquiries for prescreened lists are made without consumers' knowledge or specific consent and do not affect their credit scores. Consumers may opt out of prescreening. The Commission does not believe that there would be any benefit to active duty military consumers if they received notification every time an inquiry for a prescreened list is made. In fact, including inquiries for prescreened lists in the proposed rule's notification requirement could result in over-notification to the consumer, which could be confusing and make it difficult for consumers to determine when an inquiry indicates that they are potentially the victim of identity theft or other fraud.

Similarly, inquiries made for purposes of account review, such as when a credit card issuer reviews a customer's credit file in order to determine whether to change the annual percentage rate (“APR”) on a credit card, also do not indicate that a consumer is shopping for credit. These account review inquiries may not result in any changes to the consumer's credit account. In cases where account review does result in a change to the consumer's credit account, such as by increasing the APR on a credit card, the creditor must send the consumer a risk-based pricing notice. See 12 CFR 1022.70-1022.75. The risk-based pricing notice contains information about the account review and provides consumers with additional information and gives them a right to obtain a free copy of their consumer report. The Commission believes that requiring notification of account review inquiries could result in over-notification and be confusing to consumers. For those consumers for whom account review results in changes to their credit accounts, the risk-based pricing notice is more informative and valuable than a notification that simply indicates that a creditor has reviewed their credit files.

Proposed § 609.3 establishes the basic rules surrounding the provision of free electronic credit monitoring to active duty military consumers. Paragraph (a) states the general requirement that nationwide consumer reporting agencies must provide a free electronic credit monitoring service to active duty military consumers.

Proposed § 609.3(b) allows nationwide consumer reporting agencies to condition the provision of the free electronic credit monitoring service upon the consumer providing appropriate proof of identity, contact information, and appropriate proof that the consumer is an active duty military consumer. The Act itself specifically states that nationwide consumer reporting agencies need only provide the free electronic credit monitoring to consumers that provide contact information and appropriate proof of active duty military status.

The Commission also proposes to include the condition that consumers provide the nationwide consumer reporting agencies with appropriate proof of identity. Consumer report information is very sensitive and it is imperative that consumers only receive credit monitoring of their own file. The Commission is proposing to define “appropriate proof of identity” by cross-referencing 12 CFR 1022.123, as explained in further detail above.

Proposed paragraph (c) fulfills the statutory requirement that the Commission determine what constitutes appropriate proof of active duty military status. The proposed rule allows active duty military status to be verified through: (1) A copy of the consumer's active duty military orders; (2) a copy of a certification of active duty status issued by the Department of Defense; (3) a method or service approved by the Department of Defense; or (4) a certification of active duty status approved by the nationwide consumer reporting agency.

The first two methods require consumers to provide nationwide consumer reporting agencies with documents verifying their active duty status. The third method—one approved by the Department of Defense—anticipates future developments in this area. The Commission understands from the Department of Defense that there is not currently an automated method by which nationwide consumer reporting agencies may obtain notice of a consumer's active duty military status from the Department of Defense for the purpose of fulfilling their obligations under this proposed rule. If such a method does become available, however, this language makes sure it would suffice as “appropriate proof of active duty military status” under the proposed rule. The Commission defers to the Department of Defense on what methods it may determine are appropriate to prove active duty status.

The fourth method would allow any nationwide consumer reporting agency to develop its own method for determining proof of active duty military status. The Commission believes that it may be burdensome for consumers and the nationwide consumer reporting agencies to have a system that requires documents to be uploaded in order to confirm active duty status. In an effort to provide nationwide consumer reporting agencies the flexibility to design a less burdensome method of proof, the proposed rule allows them to approve other certifications of status. For example, the proposed rule would allow the nationwide consumer reporting agencies to accept consumers' self-certification of active duty military status, e.g., by allowing consumers to check a box certifying active duty military status.

The Commission welcomes comment on the efficacy of these methods, and whether there are other methods of determining active duty military status that it should add to the definition.

Proposed § 609.3(d) limits nationwide consumer reporting agencies' use and disclosure of information they collect from consumers as a result of a consumer's request to obtain the free electronic credit monitoring service. Specifically, the proposed rule allows nationwide consumer reporting agencies to use and disclose information collected from consumers only: (1) To provide the free electronic credit monitoring service requested by the consumer; (2) to process a transaction requested by the consumer at the same time as a request for the free electronic credit monitoring service; (3) to comply with applicable legal requirements; or (4) to update information already maintained by the nationwide consumer reporting agency for the purpose of providing consumer reports. Under (4), if a nationwide consumer reporting agency updates information it maintains for consumer reporting purposes, the updated information is subject to the same restrictions that apply to the original, pre-updated data. These restrictions on use and disclosure are identical to the requirements placed on the nationwide consumer reporting agencies' collection of personally identifiable information from consumers using the centralized source found in 12 CFR 1022.136(f). Restricting “secondary” use and disclosure of information collected from active duty military consumers seeking to obtain the free electronic credit monitoring service ensures that these consumers will not be subjected to unintended consequences, such as unwanted marketing. Additionally, the Commission does not believe that it would be appropriate to make an active duty military consumer's access to the free electronic credit monitoring service contingent on the consumer's willingness to allow a nationwide consumer reporting agency to use the consumer's information for unrelated, secondary uses.

The proposed rule does allow information collected from consumers as part of the free electronic credit monitoring enrollment process to be used to process transaction requests made by consumers at the same time. This provision allows consumers to avoid having to reenter information in order to obtain products and services separate from the free electronic credit monitoring. For example, a consumer would not have to reenter information if, after enrolling in the free electronic credit monitoring service, the consumer decided to also obtain identity theft insurance. The proposed rule also permits nationwide consumer reporting agencies to use and disclose information in order to comply with all applicable legal requirements. Finally, the proposed rule permits nationwide consumer reporting agencies to use the information collected to update information they already maintain for consumer reporting purposes, but does not permit them to add additional information that they do not already collect from other sources. The Commission seeks comments on whether these restrictions are appropriate and whether any modifications to the proposed restrictions are necessary.

Proposed § 609.3(e) places limitations on the types of communications that may surround enrollment in the electronic credit monitoring service. Section 609.3(e)(1) restricts any advertising or marketing for products or services, or any communications or instructions that advertise or market any products and services to a consumer that has indicated an interest in signing up for the free electronic credit monitoring service until after the consumer has enrolled in the service. This restriction is similar to the restriction on advertising on the annual credit report website found in 12 CFR 1022.136(g). The goal of including a similar requirement is to ensure that the Act's purpose of providing active duty military consumers with a free electronic credit monitoring service is not thwarted by confusing advertisements or communications that dissuade active duty military consumers from enrolling in the free service. The proposed requirement is not intended to ban advertising on all web pages of the nationwide consumer reporting agencies. Instead, it seeks to limit advertising directed to those consumers who have indicated that they want to enroll in the free credit monitoring for active duty military consumers. Thus, for example, the proposed requirement would apply only to the pages on a nationwide consumer reporting agency's website or app dedicated to providing active duty military consumers with their rights under this regulation. The Commission appreciates that this restriction on advertising may increase costs to the nationwide consumer reporting agencies by, among other things, requiring them to create separate enrollment processes for active duty military consumers. The Commission requests comment on whether this restriction is consistent with the authority granted under the Act and necessary to ensure that active duty military consumers are able to enroll easily in the free electronic credit monitoring service.

Section 609.3(e)(2) of the proposed rule specifies that any communications, instructions, or permitted advertising or marketing may not interfere with, detract from, contradict, or otherwise undermine the purpose of providing a free electronic credit monitoring service to active duty military consumers. The proposed rule provides examples of conduct that would interfere with, detract from, contradict, or undermine the purpose of the rule. For example, a nationwide consumer reporting agency would be prohibited from providing materials that represent, expressly or by implication, that in order to obtain the free credit monitoring service, active duty military consumers must also purchase identity theft insurance. This limitation on communications is identical to 12 CFR 1022.136(g)'s requirements for the centralized source for free annual file disclosures.

Sections 609.3(e)(1) and (2) are complementary and are designed to ensure that active duty military consumers are not confused or deceived by communications related to a nationwide consumer reporting agency's products and services. Using the example of the identity theft insurance product described above, section 609.3(e)(1) would prohibit any advertising of such a product from the time the consumer indicates an interest in obtaining free credit monitoring for active duty military until after that consumer has enrolled in the service. Section 609.3(e)(2) applies to any advertising before the consumer indicates such an interest, or after the consumer has enrolled in the service. It also applies to non-advertising communications or instructions relating to the free electronic credit monitoring service.

The Commission recognizes that if done appropriately, access to some identity theft services—such as identity theft insurance—may be beneficial and convenient for consumers. The Commission wants to ensure, however, that these additional services are not offered in a way that is confusing to active duty military consumers or dissuades them from enrolling in the free electronic credit monitoring service that they are entitled to under the Act. The Commission solicits comment on whether this restriction is consistent with the authority granted under the Act and necessary to ensure that active duty military consumers can easily obtain the free credit monitoring service.

Proposed § 609.3(f) prohibits asking or requiring an active duty military consumer to agree to terms or conditions in connection with obtaining a free electronic credit monitoring service. This restriction is similar to the restriction for the annual credit report website found in 12 CFR 1022.136(h). The Commission believes that an active duty military consumer's right to obtain a free electronic credit monitoring service should be unfettered and without any restrictions or conditions, apart from providing appropriate proof of identity, contact information, and appropriate proof that the consumer is an active duty military consumer. The Commission solicits comment on whether this restriction is consistent with authority granted under the Act and necessary to ensure that active duty military consumers can easily obtain the free credit monitoring service.

Proposed § 609.4 requires that the notices required under § 609.3(a) be provided within 24 hours of any material additions or modifications to a consumer's file. Advertisements for commercial credit monitoring services that are currently on the market suggest that consumers can be notified of changes to their files as soon as those changes are detected. Therefore, the Commission believes that 24 hours provides ample time for the nationwide consumer reporting agencies to give an electronic notification to affected consumers.

Proposed § 609.5 states that the electronic notifications shall include a hyperlink to a summary of the consumer's rights under the Fair Credit Reporting Act, as prescribed by the Bureau of Consumer Financial Protection under 15 U.S.C. 1681g(c). The Commission believes that it will be useful for consumers to be able to easily access information about their rights to, for example, obtain consumer reports and dispute information on their reports. Including a link to the summary with each electronic notification will ensure that consumers can find that information when it may be most useful to them. The Commission welcomes comment on this proposed requirement.

Proposed § 609.6 states that the provisions of the proposed rule are separate and severable from one another, so that if any provision is stayed or determined to be invalid, it is the Commission's intention that the remaining provisions shall continue in effect.

The Commission seeks comment on various aspects of the proposed rule. Without limiting the scope of issues on which it seeks comment, the FTC is particularly interested in receiving comments on the questions that follow. In responding to these questions, please include detailed factual supporting information if possible.

1. Does the definition of “electronic credit monitoring service” adequately describe the service that the proposed rule should cover? If not, how should the definition be modified?

2. Does the definition of “material additions or modifications” adequately cover the changes to a consumer's file that should require notification? If not, what other elements should be added to the definition? Should changes to credit account limits remain in the definition? What benefits to consumers would notifications of account limit changes provide?

3. The proposed rule does not require notice to be given if an inquiry was made for a prescreened list obtained for the purpose of making a firm offer of credit or insurance as described in 15 U.S.C. 1681b(c)(1)(B) or for the purpose of account review. Are these exceptions appropriate? Are there other exceptions that should be added to the proposed rule?

4. The proposed rule requires notice to be given if an inquiry is made for the purpose of collection of an account of the consumer. Do nationwide consumer reporting agencies have the ability to differentiate between inquiries made for the purposes of account review and collection?

5. Is the definition of “electronic notification” adequate? Are there other methods of notification that should be included in the definition?

6. Is the definition of “appropriate proof of identity” necessary? Is the current definition, referencing the requirements of 12 CFR 1022.123 appropriate? Is there a better approach to determining what constitutes “appropriate proof of identity?” What procedures are consumer reporting agencies currently employing to comply with 12 CFR 1022.123? Do consumer reporting agencies currently require customers of commercial credit monitoring services to provide appropriate proof of identity? If so, what proof of identity is being required?

1. The proposed rule states that “appropriate proof of active duty military status” can be verified through: (1) A copy of the consumer's active duty orders; (2) a copy of a certification of active duty status issued by the Department of Defense; (3) a method or service approved by the Department of Defense; or (4) a certification of active duty status approved by the nationwide consumer reporting agency. Are these methods adequate? Are there other methods of verifying active duty status that should be included? What is the most efficient method for providing nationwide consumer reporting agencies with proof of active duty military status? Is it burdensome for consumers to provide appropriate proof? Is there a way to minimize the burden?

2. Proposed § 609.3(d) restricts secondary uses and disclosures of information collected from a consumer requesting to obtain the service required under § 609.3(a). Is this limitation necessary to ensure that consumers seeking to obtain the free electronic credit monitoring service are not forced to provide personal information for unrelated, secondary purposes?

3. Proposed § 609.3(d) allows nationwide consumer reporting agencies to use and disclose information collected from consumers requesting to obtain the service required under § 609.3(a) only: (1) To provide the free electronic credit monitoring service requested by the consumer; (2) to process a transaction requested by the consumer at the same time as a request for the free electronic credit monitoring service; (3) to comply with specific legal requirements; or (4) to update information already maintained by the nationwide consumer reporting agency for the purpose of providing consumer reports, provided that the nationwide consumer reporting agency uses and discloses the updated information subject to the same restrictions that would apply, under any applicable provision of law or regulation, to the information updated or replaced. Are these approved uses appropriate? Are there additional uses that should be permitted?

4. Proposed § 609.3(e)(1) bans marketing until after a consumer who has indicated an interest in obtaining the service required under § 609.3(a) has enrolled in the free electronic credit monitoring service. Is this limitation necessary to ensure that active duty military consumers are able easily to obtain their free electronic credit monitoring service? Does this limitation impose undue burdens on nationwide consumer reporting agencies? If so, is there a way to minimize these burdens?

5. Proposed § 609.3(e)(2) prohibits any communications, instructions, or permitted advertising or marketing from interfering with, detracting from, contradicting, or otherwise undermining the purpose of providing a free electronic credit monitoring service to active duty military consumers. Is this prohibition necessary?

6. Section 609.3(e)(3) provides the following examples of prohibited conduct: (1) Any representation that an active duty military consumer must purchase a paid product or service in order to obtain the free electronic credit monitoring service required by § 609.3(a); (2) a false representation that a product or service ancillary to receipt of the free electronic credit monitoring service, such as identity theft insurance, is free; or (3) the offering of an ongoing service without a clear and prominent disclosure that the consumer must cancel the service to avoid being charged. Are there more examples of prohibited conduct that should be included in the proposed rule? Should “clearly and prominently” be defined?

7. Proposed § 609.3(f) prohibits asking or requiring an active duty military consumer to agree to terms or conditions in connection with obtaining a free electronic credit monitoring service. Is this prohibition necessary to ensure that active duty military consumers are able easily to obtain their free electronic credit monitoring service? Do consumer reporting agencies currently require customers of commercial credit monitoring services to agree to terms or conditions? If so, does this prohibition impose undue burdens on nationwide consumer reporting agencies? If so, is there a way to minimize these burdens?

1. The proposed rule also requires that these notices be provided within 24 hours of any material additions or modifications to a consumer's file. Is this time requirement appropriate?

1. The proposed rule requires that the electronic notifications include a link to the summary of the consumer's rights under the Fair Credit Reporting Act. Will requiring this link provide useful information to consumers or is there different information that would be more useful? Is there a different method of providing this information that would be more effective?

You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before January 7, 2019. Write “Military Credit Monitoring Rulemaking, Matter No. R811007” on the comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public FTC website, at https://www.ftc.gov/policy/public-comments.

Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at https://ftcpublic.commentworks.com/ftc/militarycreditmonitoringnprm by following the instructions on the web-based form. If this Notice appears at https://www.regulations.gov, you also may file a comment through that website.

If you file your comment on paper, write “Military Credit Monitoring Rulemaking, Matter No. R811007” on your comment and on the envelope, and mail your comment to the following address: Federal Trade Commission, Office of the Secretary, 600 Pennsylvania Avenue NW, Suite CC-5610 (Annex B), Washington, DC 20580; or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Constitution Center, 400 7th Street SW, 5th Floor, Suite 5610, Washington, DC 20024. If possible, please submit your paper comment to the Commission by courier or overnight service.

Because your comment will be placed on the publicly accessible FTC website at https://www.ftc.gov, you are solely responsible for making sure that your comment does not include any sensitive or confidential information. In particular, your comment should not include any sensitive personal information, such as your or anyone else's Social Security number; date of birth; driver's license number or other state identification number, or foreign country equivalent; passport number; financial account number; or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, such as medical records or other individually identifiable health information. In addition, your comment should not include any “trade secret or any commercial or financial information which . . . is privileged or confidential”—as provided by section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2)—including in particular, competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.

Comments containing material for which confidential treatment is requested must be filed in paper form, must be clearly labeled “Confidential,” and must comply with FTC Rule 4.9(c). In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c). Your comment will be kept confidential only if the General Counsel grants your request in accordance with the law and the public interest. Once your comment has been posted on the public FTC website—as legally required by FTC Rule 4.9(b)—we cannot redact or remove your comment from the FTC website, unless you submit a confidentiality request that meets the requirements for such treatment under FTC Rule 4.9(c), and the General Counsel grants that request.

Visit the FTC website to read this Notice and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before January 7, 2019. For information on the Commission's privacy policy, including routine uses permitted by the Privacy Act, see https://www.ftc.gov/site-information/privacy-policy.

Written communications and summaries or transcripts of oral communications respecting the merits of this proceeding, from any outside party to any Commissioner or Commissioner's advisor, will be placed on the public record.1

The Paperwork Reduction Act (“PRA”), 44 U.S.C. chapter 35, requires federal agencies to seek and obtain OMB approval before undertaking a collection of information directed to ten or more persons.2 Under the PRA, the Commission may not conduct, or sponsor, and, notwithstanding any other provision of law, a person is not required to respond to an information collection, unless the information displays a valid control number assigned by OMB.

As the proposed notification requirements fall upon the three nationwide consumer reporting agencies, it does not meet the PRA threshold count of ten or more persons to constitute a “collection of information.” Further, the proof of identity the proposed rule would require of those for whom the rulemaking is designed to benefit, consumers on active duty military status, falls within OMB's general exception for disclosures that require persons to provide or display only facts necessary to identify themselves.3

The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, requires an agency to either provide an Initial Regulatory Flexibility Analysis with a proposed rule, or certify that the proposed rule will not have a significant impact on a substantial number of small entities.4 The Commission does not expect the proposed Rule will have a significant economic impact on small entities. The proposed Rule applies to nationwide consumer reporting agencies. The Commission has not identified any nationwide consumer reporting agencies that are small entities.5 This document serves as notice to the Small Business Administration of the agency's certification of no effect. Nonetheless, the Commission has determined that it is appropriate to publish an Initial Regulatory Flexibility Analysis in order to inquire into the impact of the proposed Rule on small entities. The Commission invites comment on the burden on any small entities and has prepared the following analysis.

The Economic Growth, Regulatory Relief, and Consumer Protection Act, Public Law 115-174, directs the Commission to promulgate regulations to implement section 302(d)(1) of the Act, which shall at a minimum: (1) Define “electronic credit monitoring service” and “material additions or modifications to the file of a consumer,” and (2) establish what constitutes appropriate proof that a consumer is an active duty military consumer. In this action, the Commission proposes, and seeks comment on, a rule that would fulfill the statutory mandate. The Act requires that the Commission promulgate this rule not later than one year after the date of enactment, or May 24, 2019.

The objectives of the proposed Rule are discussed above. The legal basis for the proposed rule is section 302(d) of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

The proposed rule will apply only to nationwide consumer reporting agencies. The Commission has not identified any nationwide consumer reporting agencies that are small entities.

Under the proposed rule, nationwide consumer reporting agencies will have to provide free electronic credit monitoring services to active duty military consumers. There are no reporting or recordkeeping requirements, or types of professional skills necessary for preparation of any such report or record, under the proposed rule. In any event, as noted earlier, the proposed rule applies only to nationwide consumer reporting agencies, and they are not small entities.

The Commission has not identified any other federal statutes, rules, or policies that would duplicate, overlap, or conflict with the proposed rule. The proposed definitions and requirements of the proposed rule have been designed to work in conjunction with the existing definitions and requirements found in the Fair Credit Reporting Act, 15 U.S.C. 1681 et seq., and Regulation V, 12 CFR part 1022. The Commission invites comment and information on that issue.

The Commission has not identified any particular alternative methods of compliance as necessary to reduce burdens on small entities, because the Commission does not believe any nationwide consumer reporting agencies subject to the proposed rule are small entities, as noted earlier.

For the reasons stated in the preamble, the Federal Trade Commission proposes to amend chapter I, title 16, Code of Federal Regulations, as follows:

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

Under section 109 of the CAA, we are required to establish NAAQS that are protective of human health (primary NAAQS) and public welfare (secondary NAAQS). In 1997, we established new primary and secondary 8-hour ozone NAAQS of 0.08 parts per million (July 18, 1997, 62 FR 38856).1 Ground level ozone is formed when nitrogen oxides (NOX) and volatile organic compounds (VOCs) react in the presence of sunlight.

Section 110(a)(1) of the CAA requires states to submit, within three years after promulgation of a new or revised standard, SIPs meeting the applicable “infrastructure” elements of sections 110(a)(2). One of these applicable infrastructure elements, CAA section 110(a)(2)(D)(i), requires SIPs to contain “good neighbor” provisions to prohibit certain adverse air quality effects on neighboring states due to interstate transport of pollution. There are four sub-elements within CAA section 110(a)(2)(D)(i). The first two sub-elements are to prohibit emissions to any other state which would (1) significantly contribute to nonattainment or (2) interfere with maintenance of the new or revised NAAQS. The State of Oklahoma provided a May 1, 2007 SIP submittal to address these two sub-elements. The portion of the submittal addressing sub-element 1 (prohibit significant contribution to nonattainment in other states) was approved on December 29, 2011 (76 FR 81838). This action addresses the second sub-element of that submittal (prohibit interference with maintenance in other states).

The EPA has addressed the interstate transport requirements of CAA section 110(a)(2)(D)(i)(I) with respect to the 1997 8-hour ozone NAAQS in several past regulatory actions. Most relevant to this action, EPA promulgated the Clean Air Interstate Rule (CAIR) in 2005 to address the requirements of the good neighbor provision for the 1997 (fine particulate) (PM2.5) and 1997 ozone NAAQS (70 FR 25162, May 12, 2005). In the CAIR rulemaking, we did not analyze the contributions to downwind ozone nonattainment for Oklahoma and 5 other states along the western border of the CAIR modeling domain (70 FR 25162, 25246). CAIR was remanded to the EPA by the D.C. Circuit in North Carolina v. EPA, 531 F.3d 896 (D.C. Cir. 2008), modified on reh'g, 550 F.3d 1176. The court determined that CAIR was “fundamentally flawed” and ordered EPA to “redo its analysis from the ground up.” 531 F.3d at 929.

In 2011, we promulgated the Cross-State Air Pollution Rule (CSAPR) to address the remand of CAIR.2 CSAPR addressed the state and federal obligations under CAA section 110(a)(2)(D)(i)(I) to prohibit air pollution contributing significantly to nonattainment in, or interfering with maintenance by, any other state with regard to the 1997 8-hour ozone NAAQS and the 1997 annual PM2.5 NAAQS, as well as the 2006 24-hour PM2.5 NAAQS. To address the transport obligation under CAA section 110(a)(2)(D)(i)(I) with regard to the 1997 8-hour ozone NAAQS, CSAPR established Federal Implementation Plan (FIP) requirements for affected electric generating units (EGUs) in 20 states.3 The air quality modeling conducted for CSAPR projected that emissions from Oklahoma would impact a receptor (or monitor) located in Allegan County, Michigan (monitor ID 260050003), which would have difficulty maintaining the 19978-hour ozone NAAQS (76 FR 48208, 48213, August 8, 2011). Thus, we issued a CSAPR supplemental rule that promulgated similar FIP requirements for Oklahoma and four other states (76 FR 80760, December 27, 2011).

The CSAPR set emissions budgets which were to be implemented in two phases, with phase 1 to be implemented beginning with the 2012 ozone season and phase 2 to be implemented beginning with the 2014 ozone season. However, the CSAPR budgets were stayed by the D.C. Circuit in December 2011 pending further litigation. The D.C. Circuit issued a decision in EME Homer City Generation, L.P. v. EPA, 696 F.3d 7 (D.C. Cir. 2012) (EME Homer City I), vacating CSAPR, but in April 2014, the Supreme Court issued an opinion reversing the D.C. Circuit and remanding the case for further proceedings. EPA v. EME Homer City Generation, L.P., 134 S. Ct. 1584, 1600-01 (2014). After the Supreme Court issued its decision, the D.C. Circuit granted our motion to lift the stay and toll the compliance timeframes by three years.4 Thus, phase 1 of CSAPR was implemented beginning in 2015 and phase 2 was set to be implemented beginning in 2017(81 FR 13275).

On July 28, 2015, the D.C. Circuit issued its opinion on CSAPR regarding the remaining legal issues raised by the petitioners on remand from the Supreme Court, EME Homer City Generation, L.P. v. EPA, 795 F.3d 118 (EME Homer City II). This decision largely upheld our approach to addressing interstate transport in CSAPR, leaving the rule in place and affirming the EPA's interpretation of various statutory provisions and the EPA's technical decisions. The decision also remanded CSAPR without vacatur for reconsideration of the EPA's emission budgets for certain states.5 The court declared the CSAPR phase 2 ozone season emission budgets of 11 states invalid, holding that those budgets over-control with respect to the downwind air quality problems to which those states were “linked” for the 1997 ozone NAAQS, id. at 129-30, 138.6 For 10 of these states, the court found the budgets were invalid because modeling conducted as part of the CSAPR rulemaking showed that downwind air quality problems to which the states were linked in 2012 would be resolved in 2014, id. We addressed the remand of the ozone-season emissions budgets in the CSAPR Update.7 In doing so, EPA relieved all 11 states of the obligation to comply with the remanded phase 2 ozone season emission budgets, which would have gone into effect in 2017, 40 CFR 52.38(b)(2)(ii).

Various petitioners also filed legal challenges in the D.C. Circuit to the 2011 supplemental rule that promulgated a FIP for four states including Oklahoma.8 Considering the court's decision in EME Homer City II, we examined the record supporting this supplemental rule and determined that, like the 10 states with remanded budgets, our modeling demonstrated that air quality problems at the downwind air quality problems to which four of the states added to CSAPR in the supplemental rule, including Oklahoma, were linked in 2012 would resolve by 2014 without further transport regulation (81 FR 74525). Accordingly, we removed the FIP requirements associated with the 1997 ozone NAAQS and sources in each of the four states are no longer subject to the phase 2 ozone season budget calculated to address that standard. 40 CFR 52.38(b)(2)(ii) (relieving sources in these four states, including Oklahoma, of the obligation to comply with the CSAPR phase 2 ozone season emission budgets after 2016).9

As noted above, relevant to this proposed action, Oklahoma made a May 1, 2007 SIP submittal to address CAA requirements to prohibit emissions which will significantly contribute to nonattainment or interfere with maintenance of the 1997 ozone NAAQS in other states. Oklahoma provided additional information pertaining to the requirements in a supplemental December 5, 2007 letter. The submittals document the State's assessments that Oklahoma emissions will not contribute significantly to nonattainment or interfere with maintenance of the 1997 ozone NAAQS in other states.

Consistent with EPA guidance at the time and EPA's approach in the Clean Air Interstate Rule (CAIR), the State's May 1, 2007 submittal focused primarily on whether emissions from Oklahoma sources significantly contribute to nonattainment of the 1997 ozone NAAQS in other states.10 The State did not evaluate whether Oklahoma emissions interfere with maintenance of these NAAQS in other states separately from significant contribution to nonattainment in other states. Like our CAIR approach, the SIP submittal presumed that if Oklahoma sources were not significantly contributing to violations of the NAAQS in other states, then no further specific evaluation was necessary for purposes of the interfere with maintenance sub-element of section 110(a)(2)(D). However, CAIR was remanded to EPA, in part because the court found that EPA had not correctly addressed whether emissions from sources in a state interfere with maintenance of the standards in other states. See North Carolina, 531 F.3d at 910-11. Therefore, we evaluated the May 1, 2007, Oklahoma submittal in light of the decision of the court.

Because EPA's 2011 CSAPR modeling projected that Oklahoma would be linked to a downwind maintenance receptor with respect to the 1997 ozone NAAQS, but not to a nonattainment receptor, EPA proposed to approve the portion of the SIP submittal asserting that Oklahoma emissions do not contribute significantly to nonattainment of the 1997 8-hour ozone NAAQS in other states (76 FR 64065, October 17, 2011).11 EPA finalized approval of this portion of the SIP submittal on December 29, 2011 (76 FR 81838).

Because EPA's CSAPR modeling projected that Oklahoma would be linked to a downwind maintenance receptor with respect to the 1997 ozone NAAQS, we proposed to disapprove, or in the alternative, approve, the portion of the May 7, 2007 SIP submittal asserting that Oklahoma does not interfere with maintenance of the 1997 8-hour ozone NAAQS in other states (76 FR 64065, October 17, 2011). We proposed to finalize our approval or disapproval action based on the final action for Oklahoma in the then-proposed supplemental CSAPR rule.12 We are now withdrawing the October 17, 2011 proposal with respect to the “interfere with maintenance” clause of the good neighbor provision and instead proposing to approve this portion of the SIP submittal based on the rationale described below.

More recent information provides support for our proposed approval of the conclusion in the SIP submittals that the State will not interfere with maintenance of the 1997 ozone NAAQS in any other state. As discussed above, air quality modeling conducted for the 2011 CSAPR rulemaking projected that emissions from Oklahoma would be linked to a maintenance receptor in Allegan County, Michigan, in 2012. In CSAPR, we used air quality projections for the year 2012, which was also the intended start year for implementation of the CSAPR Phase 1 EGU emission budgets, to identify receptors projected to have air quality problems. The CSAPR final rule record also contained air quality projections for 2014, which was the intended start year for implementation of the CSAPR Phase 2 EGU emission budgets. The 2014 modeling results projected that the Allegan County receptor would have a maximum 8-hour ozone “design value” of 83.6 part per billion (ppb) before considering the emissions reductions anticipated from implementation of CSAPR.13 This value is below the value of 85 ppb that we used to determine whether a particular ozone receptor should be identified as having air quality problems that may trigger transport obligations in upwind states with regard to the 1997 ozone NAAQS (76 FR 48208, 48236). The 2014 modeling results show that the Allegan County, Michigan monitor to which Oklahoma was linked in the 2012 modeling was projected to no longer have air quality problems sufficient to trigger transport obligations with regard to the 1997 8-hour ozone NAAQS. Thus, Oklahoma would no longer interfere with maintenance of the 1997 ozone NAAQS at the Allegan County receptor in 2014.

As discussed above, in light of the remand of 10 other states' CSAPR phase 2 ozone season budgets by the D.C. Circuit in EME Homer City II, we also evaluated the validity of the emissions budget promulgated for Oklahoma in the supplemental CSAPR rule, and determined that Oklahoma's emissions would no longer contribute significantly to nonattainment in, or interfere with maintenance by, any other state with respect to the 1997 ozone NAAQS at either receptor or in any other state. (81 FR 74524-25). This conclusion is based on EPA's most recent modeling analysis.

We are proposing to approve the portion of a May 1, 2007 Oklahoma SIP submittal pertaining to the interfere with maintenance requirement of CAA section 110(a)(2)(D)(i)(I) with respect to the 1997 ozone NAAQS. We propose to find that the state's conclusion that Oklahoma emissions do not interfere with maintenance of the 1997 ozone NAAQS in another state is consistent with our conclusion regarding this good neighbor obligation.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely proposes to approve state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

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

On August 8, 2018 (83 FR 39009), EPA proposed approval to a SIP revision submitted by the Maryland Department of Environment (MDE) for COMAR 26.11.32—Control of Emissions of Volatile Organic Compounds from Consumer Products. The amendment is part of Maryland's strategy to achieve and maintain the 8-hour ozone national ambient air quality standards (NAAQS) throughout the State.

EPA is reopening the comment period due to a comment noting that the California Air Resources Board (CARB) and the Ozone Transport Commission (OTC) model rules referenced in the NPR were not in the docket on www.regulations.gov. EPA has now put these documents into the docket identified by Docket ID No. EPA-R03-OAR-2018-0153 at www.regulations.gov.

Section 302 of the Magnuson-Stevens Act (16 U.S.C. 1852) includes provisions for the establishment and administration of the regional fishery management councils (Councils). Section 302(j) (16 U.S.C. 1852(j)) sets forth the statutory requirements for the disclosure of financial interests, and the circumstances under which a Council member is prohibited, or recused, from voting on a matter before a Council. These requirements apply to “affected individuals.” The Magnuson-Stevens Act defines “affected individual” at section 302(j)(1)(A) as individuals who are nominated by the Governor of a State for appointment as a voting member of a Council under section 302(b)(2), and voting members of a Council appointed under section 302(b)(2), or (b)(5) if the individual is not subject to disclosure and recusal requirements under the laws of an Indian tribal government. An affected individual is required to disclose any financial interest in any harvesting, processing, lobbying, advocacy, or marketing activity that is being, or will be, undertaken within a fishery over which the Council concerned has jurisdiction or with respect to an individual or organization with a financial interest in such activity (16 U.S.C. 1852(j)(2)). See also 50 CFR 600.235(a) (further defining “financial interest in harvesting, processing, lobbying, advocacy, or marketing activity”). Disclosure is required for the above types of financial interests held by that individual; the individual's spouse, minor child or partner; or any organization in which the individual is serving as an officer, director, trustee, partner or employee (16 U.S.C. 1852(j)(2)).

Regulations implementing the provisions at section 302(j) appear at 50 CFR 600.235. NMFS also has issued policy and procedural directives (see ADDRESSES) to provide additional guidance on the disclosure of financial interests and recusal.

Pursuant to section 305(d) of the Magnuson-Stevens Act (16 U.S.C. 1855(d)), this proposed rule would modify the regulations at 50 CFR 600.235 to provide guidance to (1) ensure consistency and transparency in the calculation of an affected individual's financial interests; (2) determine whether a close causal link exists between a Council decision and a benefit to an affected individual's financial interest; and (3) establish regional procedures for preparing and issuing recusal determinations. This proposed rule also makes several minor modifications to the regulations governing financial disclosure. The remainder of this preamble provides detailed information on the background and application of the recusal regulations, the issues that have arisen given the lack of regulations addressing certain aspects of recusal, and a detailed description of the regulatory changes being proposed to determine when a voting recusal is required and the process for issuing recusal determinations.

In 1986, the Magnuson-Stevens Act, originally called the Fishery Conservation and Management Act, was amended by Public Law 99-659 to require voting members and Executive Directors of each Council to disclose any financial interest they held in harvesting, processing, or marketing of fishery resources under the jurisdiction of their respective Council. With passage of the Sustainable Fisheries Act in 1996 (Pub. L. 104-297), Congress amended the Magnuson-Stevens Act to include provisions that prohibit an affected individual from voting on Council decisions that would have a significant and predictable effect on the individual's disclosed financial interests. Section 302(j)(7) of the Magnuson-Stevens Act (16 U.S.C. 1852(j)(7)) includes a substantive threshold that requires a voting recusal when met, and procedural provisions that apply if an affected individual is prohibited from voting on a Council decision. The substantive threshold requires a voting recusal when a Council decision would have a “significant and predictable effect” on an affected individual's disclosed financial interests. Section 302(j)(7)(A) states that a council decision is considered to have a “significant and predictable effect” on a financial interest if there is “a close causal link between the Council decision and an expected and substantially disproportionate benefit to the financial interests of the affected individual relative to the financial interests of other participants in the same gear type or sector of the fishery.” The procedural provisions (1) identify a designated official as the person making determinations on whether a Council decision would have a significant and predictable effect on an affected individual's financial interest (recusal determination), (2) allow a Council member to request the Secretary of Commerce's (Secretary's) review of a recusal determination, (3) permit an affected individual who is recused from voting to state how he or she would have voted, and (4) state that any reversal of a recusal determination may not be cause for the invalidation or reconsideration of the Council decision. Section 302(j)(7)(F) requires NMFS to promulgate regulations implementing the provisions of section 302(j)(7).

In August 1997, NMFS published a proposed rule to implement the new voting restriction and procedural provisions at section 302(j)(7) (62 FR 42474; August 7, 1997). Most relevant to this proposed rulemaking, NMFS proposed regulations that implemented the Magnuson-Stevens Act's substantive threshold for recusal and defined the phrase “expected and substantially disproportionate benefit”. This definition established a 10 percent interest threshold in either the total harvest, marketing or processing, or ownership of vessels as an indicator of whether an affected individual's interest in the fishery was significant enough to constitute an expected and substantially disproportionate benefit for purposes of recusal determinations. In the proposed rule preamble, NMFS explained that it interpreted the statutory term “benefit” to include both positive and negative impacts on the affected individual's financial interests, noting that, “Avoiding a negative is as advantageous as gaining a positive.” NMFS also explained that the choice of a particular percentage as “indicative of a `significant' interest” was a difficult one. NMFS stated that it was considering “a tiered approach, with different percentage indicators for different-sized sectors of the fishing industry,” but that it had been unable to develop a workable model and invited suggestions from the public on dealing with the issue.

The proposed regulations also defined the term “designated official” as “an attorney designated by the NOAA General Counsel” and included a process for the issuance and review of recusal determinations. The proposed regulations did not define the term “Council decision,” provide any formula for calculating harvesting, processing, and marketing activity of an affected individual's financial interests relative to the 10 percent thresholds, or provide any regulatory guidance on how to determine the existence of “close causal link.”

NMFS received a number of comments on the proposed rule and published a final rule implementing the voting recusal provisions in November 1998 (63 FR 64182; November 19, 1998). In response to one comment, NMFS added a regulatory definition for the term “Council decision.” Several comments addressed the proposed definition of “expected and substantially disproportionate benefit.” In response to one comment, NMFS explained that the agency had focused on the comparative aspect of the defined term and emphasized that, “The disqualifying effect is not that the Council action will have a significant impact on the member's financial interest; the action must have a disproportionate impact as compared with that of other participants in the fishery sector.” Additionally, some commenters said the 10 percent thresholds were too high for any fishery; other commenters said the 10 percent thresholds were too low for small fisheries. NMFS maintained the 10 percent thresholds, and responded “While NMFS has no quantitative data on which to base the selection of 10 percent as the disqualifying industry share, qualitative information available from existing disclosure forms and other sources indicates that this value would accomplish the Congressional intent of disqualifying from voting only those current Council members whose financial interests would be disproportionately affected by Council actions, in comparison with the financial interests of other participants in the fishery sector.” NMFS received no comments on, and made no changes in the final rule to address, the calculation of harvesting, processing and marketing activity relative to the 10 percent thresholds or regulatory guidance on determining the existence of “close causal link.” The recusal regulations, located at 50 CFR 600.235, became effective on February 17, 1999.

No changes were made to the statutory or regulatory provisions governing financial disclosure and recusal until January 2007, when the Magnuson-Stevens Act was reauthorized (Pub. L. 109-479). The Magnuson-Stevens Reauthorization Act amended section 302(j) to include advocacy and lobbying as types of activities that must be disclosed by affected individuals and to require members of each Council's Scientific and Statistical Committee to disclose their financial interests. NMFS modified the regulations governing disclosure of financial interests and recusal to address these changes in 2010 (75 FR 59143, September 27, 2010). No further amendments to section 302(j) have occurred since the Magnuson-Stevens Reauthorization Act and NMFS has made no modifications to the financial disclosure and recusal regulations since 2010.

Since the effective date of the recusal regulations in February 1999, designated officials within the regional offices of the NOAA Office of General Counsel have followed and applied the recusal regulations and have prepared and issued recusal determinations when requested and as necessary for affected individuals within each of the Councils. However, because the regulations lack guidance on several key aspects of reaching a recusal determination, and provide little guidance on the procedures to be followed when preparing and issuing a recusal determination, designated officials have developed practice principles and interpretations over time to fill in these regulatory gaps and to address new factual circumstances that have arisen. The following describes the current practice, principles, and interpretations that have been used in preparing and issuing recusal determinations, which are being either modified or supplemented through this rulemaking.

Without a regulatory formula for calculating harvesting, processing or marketing activity (i.e., covered activity) and vessel ownership relative to the 10 percent thresholds, designated officials have applied a “full attribution” principle. Under the full attribution principle, all covered activity of, and all vessels owned by, a financial interest that is wholly or partially owned by an affected individual are fully attributed to the affected individual. Percentage of ownership has not been a relevant factor under the full attribution principle; the determining factor has been that there is some percentage of ownership in the financial interest. The full attribution principle has also been applied to employment; and to all covered activity of, including all vessels owned by, a financial interest that employs an affected individual. The full attribution principle also extends to financial interests that are wholly or partially owned by an affected individual's financial interests.

A slightly different attribution principle has been applied for financial interests that wholly or partially own an affected individual's financial interests. A designated official will apply the full attribution principle when a financial interest owns fifty percent or more of an affected individual's financial interest. However, if a financial interest owns less than fifty percent of an affected individual's financial interest, then the designated official has not attributed to an affected individual any covered activity of, or vessels owned by, the financial interest.

Finally, designated officials have followed certain guidelines in applying attribution principles when the financial interest is an association or organization, or when a spouse, partner, or minor child holds the financial interest. For associations and organizations, designated officials have applied the full attribution principle when the affected individual's association or organization receives from NMFS an allocation of harvesting or processing privileges, owns vessels, or is directly engaged in a covered activity. However, if the association or organization, as an entity separate from its members, does not own any vessels and is not directly engaged in any covered activity, designated officials have not attributed to the affected individual the covered activity of, or vessel ownership by, the members of the association or organization. For spouses, partners, and minor children, application of the attribution principle depends on whether there is ownership of, or employment with, the financial interest. Designated officials apply the full attribution principle and attribute to an affected individual all covered activity of, and vessels owned by, a financial interest that is wholly or partially owned by a spouse, partner, or minor child. Similarly, designated officials have applied the full attribution principle and attributed to an affected individual all covered activity of, and vessels owned by, a financial interest that employs a spouse, partner or minor child when the spouse's, partner's, or minor child's compensation is influenced by, or fluctuates with, the financial performance of the company. Conversely, designated officials have not attributed to an affected individual any covered activity of, or vessels owned by, a financial interest that employs a spouse, partner or minor child when the spouse's, partner's, or minor child's compensation is not influenced by, or fluctuates with, the financial performance of the company.

Since implementation of the recusal regulations in 1999, designated officials have understood that the Magnuson-Stevens Act and the regulations require a voting recusal when there is a close causal link between the Council decision and an expected and substantially disproportionate benefit to an affected individual's financial interest in the fishery or sector of the fishery affected by the Council decision relative to other participants and using the most recent fishing year for which information is available. However, without any regulatory guidance concerning the close causal link requirement, the issue has sometimes been subsumed in the determination of whether there is an expected and substantially disproportionate benefit.

Regulations at 50 CFR 600.235(f) set forth two paths for initiating a recusal determination. First, an affected individual may request a recusal determination by notifying the designated official either within a reasonable time before the Council meeting at which the Council decision will be made or during a Council meeting before a Council vote on the decision. Second, a designated official may initiate a recusal determination. The designated official may initiate based on his or her knowledge of the fishery and the financial interests disclosed by an affected individual or based on written and signed information received either within a reasonable time before a Council meeting or, if the issue could not have been anticipated before the meeting, during a Council meeting before a Council vote on the decision. Regulations at § 600.235(f) also state that the recusal determination will be based upon a review of the information contained in the affected individual's financial interest form and any other reliable and probative information provided in writing and that all information considered will be made part of the public record for the decision.

While the regulations at § 600.235(f) provide some structure for the initiation, development, and issuance of a recusal determination, they are silent on other important procedural aspects of preparing and issuing a recusal determination. For example, the regulations do not address: (1) The process by which the designated official will make the affected individual, the Council, and the public aware of recusal determinations, (2) how and when designated officials are identified, or (3) the timing of issuing a recusal determination relative to the start of a Council meeting and the request for review process. Without additional regulatory guidance concerning the procedure for preparing and issuing recusal determinations, regional practices have developed to address these gaps.

Several recent determinations resulting in voting recusals have raised concerns among the Regional Fishery Management Councils. In April 2015, the NOAA General Counsel received a request for review (i.e., appeal) of a recusal determination issued in March 2015 that concluded that a voting recusal was required for an affected individual on the North Pacific Council. The appeal challenged the use of the full attribution approach and argued that the regulations and common business practices support using a proportional share, or partial attribution, approach to calculating financial interests. Under such an approach, an affected individual would be attributed with covered activity and vessel ownership commensurate with the affected individual's percentage of ownership in the company. The appeal noted that the language of the regulations refers to the interests of the affected individual and explained that if an affected individual owns five percent of a fishing company, then the affected individual only receives five percent of the company distributions because the affected individual does not have a financial interest in more than five percent of the company. According to the appeal, to attribute all activity of a partially-owned company unreasonably credits the affected individual with more of the financial interest than is actually owned. The appeal also argued that in an employment situation, the affected individual should only be attributed with a proportional share of the harvesting and processing activity of companies that are partially-owned subsidiary companies of the affected individual's employer.

After reviewing the appeal, the NOAA General Counsel upheld the use of the full attribution approach, concluding that (1) the term “interest” as used in the recusal regulations is broad and not limited solely to direct financial benefit from harvest; (2) that the full attribution approach is more consistent with the purpose of the Magnuson-Stevens Act and the regulations; and (3) while past practice is not necessarily binding, consistency and predictability are important for all stakeholders in the fisheries management process.

After receiving another recusal determination in May 2015 that used the full attribution approach, the North Pacific Council submitted a letter to NMFS in August 2015, asking NMFS to consider changes to the way in which covered activity is calculated. Specifically, the North Pacific Council asked NMFS to consider using a proportional share approach similar to the approach described in the appeal. Under the approach, the designated official would attribute to the affected individual the percentage of the company's covered activity that is commensurate with the affected individual's ownership percentage. The North Pacific Council argued that use of the full attribution approach is an “unfair and illogical interpretation of the recusal regulations, and results in unintended recusals of Council members.” The North Pacific Council also stated that it had general concerns with the lack of transparency and predictability of the recusal process and asked that NMFS provide more clarity and predictability to the process of issuing recusal determinations.

While NMFS was considering the North Pacific Council's requests, another determination requiring a voting recusal of an affected individual of the North Pacific Council was issued in March 2017. The recusal determination applied the full attribution approach and determined that a voting recusal was required because the action before the North Pacific Council was a Council decision and the affected individual's financial interests harvested more than ten percent of the total harvest in the affected fishery during the previous fishing year. However, the Council decision was a fishery management plan amendment that required no implementing regulations. The North Pacific Council argued that because the action had no real possibility of affecting the affected individual's financial interests, there was no close causal link between the Council decision and the expected and substantially disproportionate benefit to the affected individual's financial interests and no voting recusal should have been required. Around this same time, the Western Pacific Council raised similar concerns with regard to “close causal link” between a benefit and a Council decision, and what constituted an “expected and substantially disproportionate benefit” regarding an affected individual's financial interest, especially when the affected individual is an employee of a fishing company versus an owner of a fishing company.

NMFS discussed these concerns with the Council Coordination Committee and decided to initiate this rulemaking to address the concerns. NMFS tasked a recusal working group, comprised of experts in both NMFS and the NOAA Office of General Counsel, to consider whether the agency should take any action regarding how the recusal provisions should be applied in such circumstances in the future. The group considered the attribution principles for recusal determinations and sought solutions to clarify the application of the close causal link requirement in the Magnuson-Stevens Act. The group also discussed ways in which to improve the transparency of regional procedures employed in preparing and issuing recusal determinations.

NMFS proposes to make the following changes to the financial disclosure and recusal regulations at § 600.235.

NMFS proposes regulations that explain the steps to be followed in determining whether an affected individual is required to be recused from voting. Regulations at 50 CFR 600.235(c)(3) would be modified to clarify the multi-part test that is used in making this determination. First, the designated official would need to determine if the action being taken by a Council is a “Council decision” and whether an affected individual (i.e., member, spouse, partner, minor child) had an interest in the fishery affected by the Council decision. If the action before the Council is not a “Council decision” or no affected individuals have any financial interests in the fishery affected by the decision, the designated official's inquiry would end. But if the answer to these factors is yes, the designated official would then need to examine the next two factors: Whether there is an expected and substantially disproportionate benefit to the affected individual's financial interests and whether there is a close causal link between the Council decision and the expected and substantially disproportionate benefit. Under the proposed rule, a designated official would be able to decide the order in which these factors are examined. If the answer to either of these factors is no, then the designated official's inquiry would end and a voting recusal would not be required. But if the answer to both of these factors is yes, then a voting recusal would be required.

NMFS proposes to make minor adjustments to the current regulatory definition of “expected and substantially disproportionate benefit.” One of these changes would be to remove the ten percent recusal thresholds from the definition of “expected and substantially disproportionate benefit” and use them to define the term “significant financial interest.”

NMFS also proposes to add § 600.235(c)(5) to provide guidance on determining whether an expected and substantially disproportionate benefit exists. This proposed regulation clarifies that an expected and substantially disproportionate benefit will be determined to exist if an affected individual has a significant financial interest in the fishery that is likely to be positively or negatively impacted by the Council decision. An affected individual's significant financial interest in a fishery indicates that the affected individual will experience an expected and substantially disproportionate impact, either positive or negative, relative to the financial interests of other participants in the fishery. The magnitude of the positive or negative impact is not determinative of whether there is an expected and substantially disproportionate benefit. NMFS also proposes regulatory guidance on how to calculate an affected individual's financial interests in order to determine whether the affected individual has a significant financial interest, which is described later in the preamble.

NMFS proposes to create a definition of close causal link to better guide the application of the requirement for causation between a Council decision and an expected and substantially disproportionate benefit to the financial interests of an affected individual. The proposed definition would state that a close causal link means that “a Council decision would reasonably be expected to directly impact or affect the financial interests of an affected individual.”

NMFS also proposes regulatory guidance on determining whether a close causal link exists. Due to the nature of Council decisions, NMFS concluded that it generally is likely that a close causal link between a benefit and a Council decision exists for all Council decisions, especially those with implementing regulations, as regulations typically impact the public directly in some way. However, NMFS also recognizes that there may be instances where no impact would occur or where the chain of causation is attenuated. Therefore, NMFS proposes exceptions under which a designated official may determine that a close causal link does not exist. One proposed exception would be for a Council decision affecting a fishery or sector of a fishery in which an affected individual has a financial interest but the chain of causation between the Council decision and the affected individual's financial interest is attenuated or is contingent on the occurrence of events that are speculative or that are independent and unrelated to the Council decision. The other proposed exception would be for a Council decision affecting a fishery or sector of a fishery in which an affected individual has a financial interest but there is no real, as opposed to speculative, possibility that the Council decision will affect the affected individual's financial interest. This proposed language provides guidance on how to determine an element of causation in those instances where a Council decision is not reasonably expected to directly impact or affect the financial interest of an affected individual.

In response to the requests for increased transparency and predictability, NMFS proposes to amend the regulations to provide guidance on the attribution principles to be applied when calculating whether an affected individual has a significant financial interest in a fishery. The proposed attribution principles address (1) direct ownership and employment, (2) indirect ownership, (3) parent ownership, (4) financial interests in associations and organizations, and (5) financial interests of a spouse, partner, or minor child. The proposed attribution principles for parent ownership, associations and organizations, and financial interests of a spouse, partner, or minor child represent the approach NMFS has been following and would continue to follow if this proposed rule is finalized. However, NMFS proposes to adopt a partial attribution approach when calculating direct and indirect ownership.

NMFS recognizes a distinction between two different types of partial interest: (1) Direct ownership, and (2) indirect ownership (i.e., a subsidiary relationship). A direct ownership interest exists where a council member (or the member's employer) directly owns some interest—whether full ownership or some share—in a particular company. An indirect or subsidiary ownership interest exists where a company in which the council member (or the member's employer) has a direct interest owns a share of another company. NMFS believes the direct and indirect ownership situations should be distinguished because an individual has a direct interest in, and more control over, a company that he or she owns, even if the interest represents a partial interest in the company. On the other hand, an individual's indirect ownership interest in a subsidiary company is more attenuated. Note also that in some cases employees are treated differently than owners because an employee cannot be “partially” employed by a company.

An affected individual would be considered to have a direct ownership interest when the affected individual wholly or partially owns, or is employed by, a business, vessel, or other entity (i.e., company) reported on the individual's financial interest form. For direct ownership, NMFS proposes that a designated official fully attribute to an affected individual all covered activity and vessel ownership of a company when the affected individual is employed by, or owns 50 percent or more of, the company. If the affected individual owns less than 50 percent of the company, NMFS proposes that a designated official attribute covered activity and vessel ownership commensurate with the affected individual's percentage of ownership.

In the case of direct ownership, NMFS determined that affected individuals owning 50 percent or more of a company should continue to be attributed with 100 percent of the covered activity and vessel ownership of that company because an individual has a direct interest in, and more control over, a company that he or she owns, even if the interest represents less than a 100 percent interest in the company. NMFS believes that when a Council member owns a controlling interest in a company, the member can also control a company's response to any particular council decision and the potential for a conflict of interest is heightened. Additionally, NMFS determined that an employee of a company should continue to be attributed with 100 percent of the covered activity and vessel ownership of that company because an employee cannot be “partially” employed and thus the employee's interest is always fully attributed to a company through the nature of their employment. However, NMFS determined that a partial attribution approach for less than 50 percent direct ownership would more closely align the owner's actual ownership interest in a company and better reflect the ability to control the company's activities. Therefore NMFS proposes to only attribute the proportional level of interest to the owner.

In the case of indirect (or subsidiary) ownership, an affected individual would be considered to have an indirect ownership interest when the affected individual's company or employer wholly or partially owns a company that must be reported on the individual's financial interest form. For subsidiary ownership, NMFS proposes to apply a partial attribution approach and attribute to the affected individual the harvesting, processing, and marketing activity of, and vessels owned by, a company that is owned by an affected individual's company or employer commensurate with the member's percentage ownership in the directly owned company, and the directly owned company's ownership in the indirectly owned company. For example, if Jones owns 25 percent of Acme, and Acme owns 50 percent of Zenith, then Jones should be attributed 12.5 percent of Zenith's activity in an affected fishery. NMFS determined that this partial attribution approach better captures the attenuated nature of indirect ownership and reflects that an affected individual has less control or a more partial interest in the activities of a company indirectly owned by the affected individual's directly owned company or employer. In any of these cases, the burden would be on the Council member to provide reliable information concerning partial ownership interests. In the absence of such information, a 100 percent interest would be assumed.

NMFS recognizes that the proposed revisions to the direct and indirect attribution principles may not address every situation in which an affected individual's interest may seem attenuated. However, under the proposed multi-part test for determining whether recusal is required, a designated official must specifically determine whether there is a close causal link between a council decision and an expected and substantially disproportionate benefit to an affected individual's financial interests. The proposed guidance on close causal link will further address situations where an affected individual's interest is attenuated from a Council decision.

In order to increase transparency and to add clarity to the process for development and issuance of recusal determinations, NMFS intends to require that each NMFS Regional Office, in conjunction with NOAA Office of General Counsel, will publish and make available to the public a Regional Recusal Determination Procedure Handbook, which explains the process and procedure typically followed by the region in preparing and issuing recusal determinations. The handbook would include: A statement that the Regional Recusal Determination Procedure Handbook is intended as guidance to describe the recusal determination process and procedure typically followed within the region; identification of the Council(s) to which the Regional Recusal Determination Procedure Handbook applies; a description of the process for identifying the fishery or sector of the fishery affected by the action before the Council; a description of the process for preparing and issuing a recusal determination relative to the timing of a Council decision; a description of the process by which the Council, Council members, and the public will be made aware of recusal determinations; and a description of the process for identifying the designated official(s) who will prepare recusal determinations and attend Council meetings.

In addition to the proposed changes described above, NMFS proposes to make several minor changes to section 600.235 to provide additional clarity to the financial disclosure regulations and guidance concerning the length of time Regional Administrators and NMFS Regional Offices must retain financial disclosure forms submitted by Council and Scientific and Statistical Committee (SSC) members. First, NMFS proposes to amend the heading for section 600.235 to include reference to recusal. The current heading for section 600.235 only refers to financial disclosure but this section has included the recusal regulations since 1998. The addition of “recusal” to the heading would provide clarity as to the subject of the regulations at section 600.235.

Second, the proposed rule would modify regulations at 600.235(h) to change “financial disclosure report” to “Financial Interest Form” to provide the accurate title of the financial disclosure form when it is referenced in the regulations. The proposed modifications would provide clarity and consistency in the financial disclosure regulations by including an accurate reference to the financial disclosure form.

Third, the proposed rule would add a new paragraph 600.235(b)(5), which would require a Regional Administrator to retain a Council member's financial disclosure forms for 20 years from the date the form is signed by the Council member, or in accordance with the records retention schedule published by the National Archives and Records Administration (NARA), and as implemented by NOAA, if the schedule requires retention of such forms for longer than 20 years. Currently, the financial disclosure regulations do not provide Regional Administrators or NMFS Regional Offices with any guidance on the length of time a Council member's financial disclosure forms should be retained by NMFS. NMFS has determined that financial disclosure forms submitted by Council members are important documents worthy of retention for 20 years after their submission, or for as long as required by NARA. The proposed change would ensure that a Council member's financial disclosure forms are available for public inspection and agency examination for a sufficient period of time during and following the Council member's tenure on a regional fishery management council.

Finally, the proposed rule would make minor clarifying changes through proposed § 600.235(b)(8) by changing the phrase “shall maintain on file” to “must retain.”

The NMFS Assistant Administrator has determined that the proposed rule is consistent with the Magnuson-Stevens Act, and other applicable law, subject to further consideration after public comment.

This proposed action is significant for the purposes of Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. This rule regulates only those Council members who have voting privileges and are appointed to their position by the Secretary of Commerce.

This proposed rule would modify regulations at 50 CFR 600.235 to provide guidance to: (1) Ensure consistency and transparency in the calculation of an affected individual's financial interests; (2) determine whether a close causal link exists between a Council decision and a benefit to an affected individual's financial interest; and (3) establish regional procedures for preparing and issuing recusal determinations. NMFS invites public comment on whether the changes proposed are sufficient and effective in distinguishing the calculation of direct ownership, indirect ownership and employment interests; whether the proposed language appropriately defines when a close causal link exists between a Council decision and a benefit; and whether the establishment of regional procedures provides consistency and transparency in the preparation and issuance of recusal determinations. Specifically, NMFS invites public comment on whether partial attribution should extend to cases where the affected individual is an employee, a member of an association or organization, a spouse, partner, or minor child of a council member, or in cases of parent ownership; on whether there are additional circumstances that merit an exception from the standard that a close causal link exists for all Council decision that require implementing regulations and that affect a fishery or sector of a fishery in which an affect individual has a financial interest; whether partial attribution appropriately reflects the attenuated nature of indirect ownership. NMFS also invites comment on whether a 50 percent ownership threshold captures the nature of direct ownership, including whether an interest of less than 50 percent might in some cases be controlling, but also notes that any subjective control test would likely require council members to submit additional financial information and would require NMFS to develop a process and expertise to analyze control. In accordance with 50 CFR 600.235, Council members may be required to recuse themselves from voting on a Council decision that would have a significant and predictable effect on a disclosed financial interest. This proposed rule would have no effect on any small entities, as defined under the Regulatory Flexibility Act, 5 U.S.C. 601. As a result, an initial regulatory flexibility analysis is not required and none has been prepared.

For reasons set out in the preamble, NMFS proposes to amend 50 CFR part 600 as follows:

The additions and revisions to read as follows: