Federal Register Vol. 83, No.72,

Background

On October 10, 2016, Garmin applied for a supplemental type certificate (STC) to install a GFC 600H AP/SCAS in Airbus Helicopters Model AS350B2 and AS350B3 helicopters. The Model AS350B2 and AS350B3 helicopters are 14 CFR part 27 normal category, single turbine engine, conventional helicopters designed for civil operation. These helicopter models are capable of carrying up to five passengers with one pilot and have a maximum gross weight of up to 5,220 pounds, depending on the model configuration. The major design features include a 3-blade, fully articulated main rotor, an anti-torque tail rotor system, a skid landing gear, and a visual flight rule basic avionics configuration.

Garmin proposes to modify these model helicopters by installing a SCAS with autopilot functions in 2 or 3 axes, depending on the number of servos installed. The possible failure conditions for this system, and their effect on the continued safe flight and landing of the helicopter, are more severe than those envisioned by the present rules. The present 14 CFR 27.1309(b) and (c) regulations do not adequately address the safety requirements for systems whose failures could result in “catastrophic” or “hazardous/severe-major” failure conditions, or for complex systems whose failures could result in “major” failure conditions. When these rules were promulgated, it was not envisioned that a normal category rotorcraft would use systems that are complex or whose failure could result in “catastrophic” or “hazardous/severe-major” effects on the rotorcraft. This is particularly true with the application of new technology, new application of standard technology, or other applications not envisioned by the rule that affect safety. The Garmin AP/SCAS controls rotorcraft flight control surfaces. Possible failure modes exhibited by this system could result in a catastrophic event.

Under 14 CFR 21.101 and 21.115, Garmin must show that the Airbus Helicopters Model AS350B2 and AS350B3 helicopters, as changed, continue to meet the applicable provisions of the regulations incorporated by reference in Type Certificate No. H9EU or the applicable regulations in effect on the date of application for the change. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The regulations incorporated by reference in Type Certificate No. H9EU are as follows:

14 CFR 21.29 and part 27 effective February 1, 1965, plus Amendments 27-1 through 27-10.

For aircraft incorporating mod. OP3369 (2370 kg/5225 lb mass extension), the following 14 CFR part 27 Amendments 27-1 through 27-40 are replacing the same requirement from the certification basis above: §§ 27.1; 27.21; 27.25; 27.27; 27.33; 27.45; 27.51; 27.65; 27.71; 27.73; 27.75; 27.79; 27.141; 27.143; 27.173; 27.175; 27.177; 27.241; 27.301; 27.303; 27.305; 27.307; 27.309; 27.321; 27.337; 27.339; 27.341; 27.351; 27.471; 27.473; 27.501; 27.505; 27.521; 27.547; 27.549; 27.563(b); 27.571; 27.602; 27.661; 27.663; 27.695; 27.723; 27.725; 27.727; 27.737; 27.751; 27.753; 27.801(b)(d); 27.927(c); 27.1041; 27.1043; 27.1045; 27.1301; 27.1501; 27.1519; 27.1529; 27.1581; 27.1583; 27.1585; 27.1587; 27.1589.

For AS350B3 aircraft incorporating mod. OP-4605 (installation of a fuel system improving crashworthiness), 14 CFR 27.561(c) at Amendment 27-32 replaces the same requirement from the certification basis above for the following elements of the fuel tank lower structure affected by this modification: cradles, longitudinal beams, X-stops and rods.

Additionally, Garmin must comply with the equivalent level of safety findings, exemptions, and special conditions prescribed by the Administrator as part of the certification basis.

The Administrator has determined the applicable airworthiness regulations (that is, 14 CFR part 27), as they pertain to this STC, do not contain adequate or appropriate safety standards for the Airbus Helicopters Model AS350B2 and AS350B3 helicopters because of a novel or unusual design feature. Therefore, we propose to prescribe these special conditions under § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for an STC to change any other model included on the same type certificate to incorporate the same or similar novel or unusual design feature, the special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, Garmin must show that the Airbus Helicopters Model AS350B2 and AS350B3 helicopters, as changed, comply with the noise certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38 and they become part of the type certification basis under § 21.101.

The Airbus Helicopters Model AS350B2 and AS350B3 helicopter incorporates the following novel or unusual design features: A GFC 600H AP/SCAS. This GFC 600H AP/SCAS performs non-critical control functions. The GFC 600H AP/SCAS is a two or three axis system with the following novel functions: Limit cueing, level mode, and hover assist.

These special conditions clarify the requirement to perform a proper failure analysis and also recognizes that the severity of failures can vary. Current industry standards and practices recognize five failure condition categories: Catastrophic, Hazardous, Major, Minor, and No-Safety Effect. These special conditions address the safety requirement for systems whose failures could result in catastrophic or hazardous/severe-major failure conditions and for complex systems whose failures could result in major failure conditions.

To comply with the provisions of the special conditions, we require that Garmin provide the FAA with a systems safety assessment (SSA) for the final GFC 600H AP/SCAS installation configuration that adequately address the safety objectives established by a functional hazard assessment (FHA) and a preliminary system safety assessment (PSSA), including the fault tree analysis (FTA). This ensures that all failure conditions and their resulting effects are adequately addressed for the installed GFC 600H AP/SCAS. The SSA process, FHA, PSSA, and FTA are all parts of the overall safety assessment process discussed in FAA Advisory Circular 27-1B, Certification of Normal Category Rotorcraft, and Society of Automotive Engineers document Aerospace Recommended Practice 4761, Guidelines and Methods for Conducting the Safety Assessment Process on Civil Airborne Systems and Equipment.

These special conditions require that the GFC 600H AP/SCAS installed on Airbus Helicopters Model AS350B2 and Model AS350B3 helicopters meet the requirements to adequately address the failure effects identified by the FHA, and subsequently verified by the SSA, within the defined design integrity requirements.

No comments were received in response to the Notice of proposed special conditions No. 27-043-SC (82 FR 57685, December 7, 2017). The closing date for comments was January 22, 2018. Accordingly, the special conditions are adopted as proposed.

As discussed above, these special conditions are applicable to Airbus Helicopters Model AS350B2 and AS350B3 helicopters. Should Garmin apply at a later date for an STC to modify any other model included on Type Certificate Number H9EU to incorporate the same novel or unusual design feature, these special conditions would apply to that model as well.

This action affects only certain novel or unusual design features on two model helicopters. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Airbus Helicopters Model AS350B2 and AS350B3 helicopters modified by Garmin International, Inc. (Garmin).

Instead of the requirements of 14 CFR 27.1309(b) and (c), the following must be met for certification of the Garmin Flight Control 600H autopilot with stability and control augmentation system:

(a) The equipment and systems must be designed and installed so that any equipment and system does not adversely affect the safety of the rotorcraft or its occupants.

(b) The rotorcraft systems and associated components considered separately and in relation to other systems, must be designed and installed so that:

(1) The occurrence of any catastrophic failure condition is extremely improbable;

(2) The occurrence of any hazardous failure condition is extremely remote; and

(3) The occurrence of any major failure condition is remote.

(c) Information concerning an unsafe system operating condition must be provided in a timely manner to the crew to enable them to take appropriate corrective action. An appropriate alert must be provided if immediate pilot awareness and immediate or subsequent corrective action is required. Systems and controls, including indications and annunciations, must be designed to minimize crew errors which could create additional hazards.

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

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

The interest assumptions are intended to reflect current conditions in the financial and annuity markets. Assumptions under the benefit payments regulation are updated monthly. This final rule updates the benefit payments interest assumptions for May 2018.1

The May 2018 interest assumptions under the benefit payments regulation will be 1.00 percent for the period during which a benefit is in pay status and 4.00 percent during any years preceding the benefit's placement in pay status. In comparison with the interest assumptions in effect for April 2018, these assumptions are unchanged.

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

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

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

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

In consideration of the foregoing, 29 CFR part 4022 is amended as follows:

On October 3, 1988, the Coast Guard published a final rule creating a permanent security zone at Port Canaveral Harbor, Cape Canaveral, Florida, entitled, “Security Zone; Port Canaveral Harbor, Cape Canaveral, FL” (53 FR 38718) to safeguard the waterfront and military assets along the U.S. Navy's Poseidon Wharf inside the southeast portion of Port Canaveral Harbor's Middle Basin. This waterfront area is located on Cape Canaveral Air Force Station (CCAFS), a U.S. Air Force military installation. Additionally, the northern and northeast portion of the Middle Basin's waterfront is located almost entirely on CCAFS property, and within this area are piers utilized by the U.S. Air Force and U.S. Army. CCAFS routinely conducts operations critical to national security.

The U.S. Navy requested an amendment to the current regulation in 33 CFR 165.705(b) to expand the geographical boundaries to include the northern and northeastern portion of the Middle Basin of Port Canaveral Harbor in order to ensure the safety and security of military assets and infrastructure along the entire CCAFS waterfront. In response, on October 3, 2017, the Coast Guard published a notice of proposed rulemaking (NPRM) entitled, “Security Zones; Port Canaveral Harbor, Cape Canaveral Air Force Station, FL” (82 FR 46007). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to revising the security zone. During the comment period that ended November 3, 2017, we received 3 comments.

The Coast Guard is issuing this rule under authority 33 U.S.C. 1231. The COTP Jacksonville has determined it is necessary to expand the security zone in the Middle Basin of Port Canaveral Harbor to ensure the security of military assets and waterfront facilities from destruction, loss, or injury from sabotage or other subversive acts, accidents or other causes of a similar nature.

As noted above, we received 3 comments on our NPRM published October 3, 2017. One comment was in support of the rule. The other two comments provided recommendations and feedback to the rule. One comment provided a recommendation to conduct a safety study to ensure that the likelihood for a collision has not increased. The Coast Guard does not intend to conduct a safety study for the revised security zone, as there have been no safety concerns raised during discussions within the port community; including the Canaveral Pilots Association, the Canaveral Port Authority, U.S. Navy, and Brevard County Sheriff's Office. The other comment inquired about the inclusion of the U.S. Army Corps of Engineers (USACE) to revise the restricted area outlined in 33 CFR 334.530 to match the Coast Guard's expanded security zone. The Coast Guard intends to make a recommendation to USACE to revise the restricted area in 33 CFR 334.530. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.

This rule expands the geographical boundaries of the current regulated area in 33 CFR 165.705(b) to include the navigable waters of the Port Canaveral Harbor's Middle Basin. This revision redesignates § 165.705(b) to new § 165.705(a)(2).

The rule also made the following amendments: (1) Changed the title of the existing regulation in 33 CFR 165.705 from “Port Canaveral Harbor, Cape Canaveral, Florida” to “Security Zones: Port Canaveral Harbor, Cape Canaveral Air Force Station, FL;” (2) added a new paragraph (c) and changed the title to “Regulations;” (3) redesignated existing paragraph (d) as new paragraph (c)(1) with minor non-substantive changes; (4) redesignated existing paragraph (c) as new paragraph (c)(2) with minor non-substantive changes; (5) and added a new paragraph (c)(3). Lastly, we added a new paragraph (b), entitled “Definitions” to define the term “designated representative.”

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

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

This regulatory action determination is based on the fact that although persons and vessels may not enter, transit through, anchor in, or remain within the security zone without authorization from the COTP Jacksonville or a designated representative, they may operate in the navigable water adjacent to the security zone and the Federal channel.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

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

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

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

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order13132.

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

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves expanding the geographical boundaries of a permanent security zone that prohibit entry within certain navigable waters of the Port of Canaveral Harbor's Middle Basin. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES.

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

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

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

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it would be impracticable. On March 21, 2018, the Coast Guard was notified of the need for bridge demolition operations on the Cumberland River. This safety zone must be established by April 11, 2018 and we lack sufficient time to provide a reasonable comment period and then consider those comments before issuing this rule. The NPRM process would delay the establishment of the safety zone until after the dates of the bridge demolition and compromise public safety.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register. Delaying the effective date of this rule would be impracticable and contrary to public interest because immediate action is needed to ensure safety of persons and vessels during the bridge demolition.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port Sector Ohio Valley (COTP) has determined that potential hazards associated with bridge demolition beginning on April 11, 2018 will be a safety concern for anyone within a one-half mile radius of the bridge. The purpose of this rule is to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone while the bridge is being demolished.

This rule establishes a safety zone from 6 a.m. on April 11, 2018 through 6 a.m. on April 14, 2018. The safety zone will cover all navigable waters of the Cumberland River between miles 62.6 and 63.6. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters while the bridge is being demolished. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. They may be contacted via VHF-FM marine channel 16 or by telephone at 270-217-0959. If permission is granted, all persons and vessels shall comply with the instructions of the COTP or a designated representative. The COTP or a designated representative will inform the public through Broadcast Notices to Mariners (BNMs) via VHF-FM marine channel 16 about the enforcement period for the safety zone, as well as any changes in the dates and times of enforcement.

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

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

This regulatory action determination is based on the size, location, and duration of the zone. This rule establishes a temporary safety zone, limiting access to a one-mile section of the Cumberland River, miles 62.6 to 63.6, during bridge demolition and clean-up operations occurring over a 3-day period.

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

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

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

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

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

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

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

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

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting three days that will prohibit entry within one-mile stretch of the Cumberland River. It is categorically excluded from further review under paragraph L 60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES.

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

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

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

The Coast Guard received notification of the following fireworks displays that require safety zones:

(1) On November 7, 2017, the New Orleans Tourism and Marketing Corporation notified the Coast Guard that it would be conducting a fireworks display from 7:45 p.m. through 8:45 p.m. on May 25, 2018. The fireworks will be launched from a barge on the Lower Mississippi River at approximate mile marker (MM) 95.9 above Head of Passes (AHP), New Orleans, LA.

(2) On March 14, 2018, the NOLA 2018 Foundation notified the Coast Guard that it would be conducting a fireworks display from 8 p.m. through 8:20 p.m. on May 6, 2018. The fireworks will be launched from a barge on the Lower Mississippi River at approximate MM 95.4 AHP, New Orleans, LA.

In response to these notifications, on January 17, 2018, the Coast Guard published a notice of proposed rulemaking (NPRM) titled Safety Zone; Lower Mississippi River, New Orleans, LA (83 FR 2394). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to this fireworks display. During the comment period that ended March 19, 2018, we received no comments.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port Sector New Orleans (COTP) has determined that potential hazards associated with the fireworks to be used in the May 6, 2018 and May 25, 2018 displays present a hazard to anyone within a one-mile stretch of the launch barges. The purpose of this rule is to ensure safety of persons and vessels on the navigable waters in the safety zone before, during, and after the scheduled events.

As noted above, we received no comments on our NPRM published January 17, 2018.

The changes in the regulatory text from the proposed rule in the NPRM include minor editorial changes where we refer to the time of enforcement as the enforcement period, rather than the effective period.

This rule establishes two temporary safety zones on the following dates and locations:

1. Bayou Country Music Fest: A safety zone from 7:45 p.m. through 8:45 p.m. on May 25, 2018. The safety zone will cover all navigable waters of the Lower Mississippi River between mile marker (MM) 95.4 and MM 96.4 AHP.

2. NOLA Tricentennial 2018 Jazz and Heritage Fest: A safety zone from 8 p.m. through 9 p.m. on May 6, 2018. This safety zone will encompass all navigable waters of the Lower Mississippi River between MMs 95 and 96 AHP.

Both safety zones encompass a one mile stretch of river with a duration lasting no more than one hour. The duration of the zones is intended to ensure the safety of persons and vessels on these navigable waters before, during, and after the scheduled fireworks displays.

No vessel or person is permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. A designated representative is a commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to units under the operational control of USCG Sector New Orleans. They may be contacted on VHF-FM Channel 16 or 67. Persons and vessels permitted to enter these safety zones must transit at their slowest safe speed and comply with all lawful directions issued by the COTP or the designated representative. The COTP or a designated representative will inform the public through Broadcast Notices to Mariners of any changes in the planned schedule.

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

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

This regulatory action determination is based on these zones lasting one hour and encompassing a one-mile stretch of the Lower Mississippi River. In addition, vessel traffic seeking to transit the areas can seek permission to enter from the COTP or his designated representative.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received no comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

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

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

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

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

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

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

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

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

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

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

These rule revisions are promulgated under the University and Small Business Patent Procedures Act of 1980, Public Law 96-517 (as amended), codified at title 35 of the United States Code (U.S.C.) 200 et seq., commonly known as the “Bayh-Dole Act” or simply “Bayh-Dole,” which governs rights in inventions made with Federal assistance. The Bayh-Dole Act obligates nonprofit organizations and small business firms (“contractors”), and large businesses, as directed by Executive Order 12591 and to the extent permitted by law, to disclose each “subject invention” (that is, each invention conceived or first actually reduced to practice in the performance of work under a funding agreement, 35 U.S.C. 201(e)) within a reasonable time after the invention becomes known to the contractor, 35 U.S.C. 202(c)(1), and permits contractors to elect, within a reasonable time after disclosure, to retain title to a subject invention, 35 U.S.C. 202(a). Under certain defined “exceptional” circumstances, Bayh-Dole permits the Government to restrict or eliminate the contractor's right to elect to retain title, 35 U.S.C. 202(a), 202(b).

The Secretary of Commerce has delegated to the Director of NIST the authority to promulgate implementing regulations. Regulations implementing 35 U.S.C. 202 through 204 are codified at 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms under Government Grants, Contracts, and Co-operative Agreements,” and apply to all Federal agencies, 37 CFR 401.1(b). These regulations govern all “subject inventions,” as defined in 37 CFR 401.2(d), even if the Federal government is not the sole source of funding for either the conception or the reduction to practice, 37 CFR 401.1(a). Regulations implementing 35 U.S.C. 208, specifying the terms and conditions upon which federally owned inventions, other than inventions owned by the Tennessee Valley Authority, may be licensed on a nonexclusive, partially exclusive, or exclusive basis, are codified at 37 CFR part 404, “Licensing of Government Owned Inventions.”

Bayh-Dole and its implementing regulations require Federal funding agencies to employ certain “standard clauses” in funding agreements awarded to contractors, except under certain specified conditions, 37 CFR 401.3. Through these standard clauses, set forth at 37 CFR 401.14(a), contractors are obligated to take certain actions to properly manage subject inventions. These actions include, but are not limited to, disclosing each subject invention to the Federal agency within two months after the contractor's inventor discloses it in writing to contractor personnel responsible for patent matters, paragraph (c)(1) of the clause; electing in writing whether or not to retain title to any subject invention by notifying the Federal agency within two years of disclosure to the Federal agency, paragraph (c)(2) of the clause; filing an initial patent application on a subject invention as to which the contractor elects to retain title within one year after election, paragraph (c)(3) of the clause; executing and promptly delivering to the Federal agency all instruments necessary to establish or confirm the rights the Government has throughout the world in those subject inventions to which the contractor elects to retain title, paragraph (f)(1) of the clause; requiring, by written agreement, the contractor's employees to disclose promptly in writing each subject invention made under contract, paragraph (f)(2) of the clause; notifying the Federal agency of any decision not to continue the prosecution of a patent application, paragraph (f)(3) of the clause; and including in the specification of any U.S. patent applications and any patent issuing thereon covering a subject invention, a statement that the invention was made with Government support under the grant or contract awarded by the Federal agency, and that the Government has certain rights in the invention, paragraph (f)(4) of the clause.

In addition, a contractor is obligated to include the requirements of the standard clauses in any subcontracts under the contractor's award, paragraph (g) of the clause; to submit periodic reports as requested on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the contractor or its licensees or assignees, paragraph (h) of the clause; and to agree that neither the contractor nor any assignee will grant to any person the exclusive right to use or sell any subject inventions in the United States unless such person agrees that any products embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States, paragraph (i) of the clause, subject to waiver.

Bayh-Dole and its implementing regulations also specify certain conditions applicable to licenses granted by Federal agencies in any federally owned invention. The implementing regulations include 37 CFR 404.5, which sets forth restrictions and conditions applicable to all Federal agency licenses, 37 CFR 404.6, which addresses requirements pertaining to nonexclusive licenses, and 37 CFR 404.7, which addresses requirements pertaining to exclusive and partially exclusive licenses.

This rulemaking reduces regulatory burdens on large and small businesses, universities, non-profit organizations, and other recipients of federal funding in several ways. The rule provides greater clarity to large businesses by codifying the applicability of Bayh-Dole as directed in Executive Order 12591 which has been in effect since 1987, and provides greater clarity to all federal funding recipients by updating regulatory provisions to align with provisions of the Leahy-Smith America Invents Act in terms of definitions, required time frames, and use of royalty funds, which will reduce compliance burdens on recipients of federal funding. The rule also clarifies electronic reporting processes, simplifying the burden of the statutorily required reporting process. Finally, the rule provides for automatic extensions of the requirement to file non-provisional patent applications, and removes the requirement for a business, university, or other collaborator to submit a separate license application for a federal invention being used under a cooperative research and development agreement.

Pursuant to authority delegated to it by the Secretary of Commerce, NIST is revising parts 401 and 404 of title 37 of the Code of Federal Regulations (CFR) which address rights to inventions made under Government grants, contracts, and co-operative agreements, and licensing of government owned inventions. The rule shall apply to all new funding agreements as defined in 37 CFR 401.2(a) that are executed after the effective date of the rule. The rule shall not apply to a funding agreement in effect on or before the effective date of the rule, provided that if such existing funding agreement is thereafter amended, the funding agency may, in its discretion, make the amended funding agreement subject to the rule prospectively.

NIST received 17 comment submissions during the public comment period for the notice of proposed rulemaking published November 7, 2016, 81 FR 78090. NIST thanks the public for its careful review and submissions. The comments received and NIST's responses are summarized below.

1. One comment requested clarification about the revised definition of statutory period in §§ 401.2(o) and 401.14(a)(7). NIST has revised the definition to clarify that the statutory period refers to the one-year period in 35 U.S.C. 102(b)(1) as amended by the Leahy-Smith America Invents Act.

2. Several comments suggested a revision to § 401.3(a)(1) permitting foreign collaborators to receive standard Bayh-Dole rights. NIST declines to revise this provision of the regulations. NIST notes that the language of § 401.3(a)(1) closely tracks that of 35 U.S.C. 202(a)(i). Both the statute and the regulation accord a funding agency discretion in crafting the terms and conditions of a funding agreement “when the contractor is not located in the United States or does not have a place of business located in the United States or is subject to the control of a foreign government.”

3. Several comments noted the removal of the appeals process in § 401.3(a)(5). This was not NIST's intent. Accordingly, NIST has added reference to § 401.3(a)(5) in § 401.3(b), requiring an agency exercising that exception to use the standard clause at § 401.14 with only such modifications as are necessary to address the exceptional circumstances or concerns which led to the use of the exception. In addition, the first sentence of § 401.4(a) of the final rule makes clear that each of the exceptions at § 401.3(a)(1) through (6) of the final rule is subject to a contractor right to an administrative review.

4. Several comments objected to the addition of the exception, recited in § 401.3(a)(6), which authorizes a funding agency to use alternative provisions if the contract provides for services and the contractor is not a nonprofit organization and does not promote the commercialization and public availability of subject inventions. This exception is intended to address the scenario in which a services contractor, whose business model by design does not promote the commercialization or public availability of subject inventions, can, by simply neglecting to waive title for as long as two years, delay (at best) efforts to achieve commercialization or public availability. In reciting the § 401.3(a)(6) exception, the final rule also provides that it is subject to an administrative review right.

5. Several comments objected to provisions in § 401.5 allowing Federal agencies to request additional invention reporting. NIST notes that the alternative reporting set forth in § 401.5(f)(1) through (3) is neither new language nor obligatory upon funding agencies. The suggestion of several commenters, that this is new language, is incorrect.

6. Several comments objected to the proposed revisions to §§ 401.7 and 401.14(k) (by reference to § 401.7), regarding the small business preference requirement of 35 U.S.C. 202(c)(7)(D). The proposed revision to § 401.7(b) provides that small business firms that believe a nonprofit organization is not according appropriate preference to small business firms may report their concerns in the first instance to the funding agency, rather than to the Secretary of Commerce as previously provided. It is believed that this change will in many instances facilitate resolution of concerns, given the funding agency's familiarity with the subject matter and purpose of its award. Where a small business firm is dissatisfied with the funding agency response, or receives none within 90 days, the proposed revision provides that it may thereafter report its concerns, together with any response from the funding agency, to the Secretary of Commerce. NIST declines to remove these proposed changes.

7. One comment suggested revisions to §§ 401.7 and 401.14(k) to address licensing to what were characterized by the commenter as “non-practicing entities.” NIST declines to make the suggested revisions, and notes that under § 401.14(k)(4), a nonprofit contractor must give a licensing preference to a small business firm with a marketing plan for the invention which is as likely to bring the invention to practical application as the plans of other firms, however those other firms might be characterized. At the same time, § 401.14(k)(4) does not prescribe the type of license (exclusive, non-exclusive, or partially exclusive) to be granted, the result of which is that a nonprofit contractor is accorded the flexibility, through its licensing policies, procedures and practices, to promote the practical application and public availability of subject inventions, while according to small business firms the preference required under 35 U.S.C. 202(7)(D).

8. Comments generally supported revisions to § 401.10 on the management of subject inventions when there is a Federal employee who is a co-inventor of the subject invention, and NIST appreciates the suggestions for additional clarification. NIST has required consultation with the contractor in § 401.10(a)(2), but declines the suggestion that it should restrict the scope of the required consultation. In addition, NIST has clarified that paragraphs (ii) through (vi) of § 401.10(a)(3) all apply only after a contractor has elected not to retain title, and has added a paragraph (c) to clarify that the regulation will not supersede inter-institutional agreements for the management of jointly-owned subject inventions. As appropriate, NIST has also revised § 401.10(a)(3) to recite “title” rather than “rights” for consistency and clarity.

9. Several comments pertained to priority of patent applications and prosecution or abandonment of an initial patent application filed by the Government per § 401.10(a)(2). Priority of applications is an individual determination made by the U.S. Patent and Trademark Office and is outside the scope of this rulemaking. With regard to prosecution or abandonment of an initial patent application filed by the Government on a jointly-owned subject invention, NIST notes that it is within the discretion of the funding agency to determine, in consultation with the contractor as required by this paragraph, the appropriate course of action for a particular subject invention, which could include abandoning an initial patent application or transferring the prosecution of an initial patent application to the contractor under an inter-institutional or other appropriate agreement. In all cases, NIST observes that actions taken by a funding agency should not operate to preclude a contractor from electing title to a subject invention.

10. One comment requested clarification as to whether the “team exception” of post-AIA 35 U.S.C. 102(b)(2)(C) may be invoked for filings on joint subject inventions. That provision of the patent statute provides that subject matter disclosed 1 year or less before the effective filing date of a claimed invention shall not be prior art to the claimed invention under 35 U.S.C. 102(a)(2), where that subject matter and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person. The present rulemaking is not intended to affect the prosecution strategy of a sole or joint applicant for patent. At the same time, NIST notes that prior art determinations, including the applicability of the “team exception,” are made by the U.S. Patent and Trademark Office, and so are outside the scope of this rulemaking.

11. One comment noted that § 401.14 does not contain a definition of the term contractor. NIST has made this addition in § 401.14(a)(8) to recite the revised definition found in § 401.2(b).

12. A number of comments objected to the proposed revision to § 401.14(c)(2), providing that a Federal agency may shorten the two-year period for election of title by a contractor if “necessary to protect the Government's interests.” NIST has removed this revision from the final rulemaking.

13. A number of comments objected to the proposed revision to § 401.14(d)(1), which would remove the 60-day time limit within which a Federal agency must make written request to a contractor to convey title, after learning of the failure of the contractor to disclose an invention or elect title within the specified times. While NIST appreciates the concerns of commenters, the proposed revision will be maintained in the final rule. A contractor's failure to timely disclose or elect title to a subject invention, both as required by its funding agreement, can work to deny the Federal government any rights in the funded invention, through no fault of the funding agency.

14. A number of comments urged clarification of proposed revisions relating to the increased use by contractors of provisional applications under the Leahy-Smith America Invents Act and the Government's ability to request conveyance of rights in abandoned provisional applications. NIST acknowledges the increased use of provisional applications, and that a contractor may reasonably decide, as a matter of prosecution strategy, not to convert a provisional application under appropriate circumstances, without abandoning the subject invention itself or foreclosing the contractor's ability to file one or more additional applications directed to that invention. NIST has revised § 401.14(d)(3) to make clear that this section applies to abandoned non-provisional applications, and has made an analogous revision to § 401.14(f)(3). NIST expects that a contractor making a strategic decision such as described above will communicate its decision, and its intent not to abandon the subject invention itself, to the funding agency.

15. A number of comments objected to the proposed revision in § 401.14(f)(3) to extend the required notification period for decisions not to continue patent prosecution from 30 days before the expiration of the response period to 120 days. NIST aims to balance the needs of contractors to have sufficient time to respond to actions, and the needs of Federal agencies to receive information in sufficient time to evaluate whether to request conveyance and assume prosecution of an application. NIST appreciates comments reflecting appreciation of these competing needs. NIST has shortened the notification period from the proposed 120 days to 60 days in the final rule.

16. One comment requested clarification of references to Patent Trial and Appeals Board proceedings in § 401.14(f)(3). NIST has revised this paragraph to clarify that the list of decisions requiring the contractor to notify the Federal agency pertain to a subject invention.

17. Several comments requested revisions to the Government support clause in § 401.14(f)(4) to allow flexibility in the statement required by the contractor rather than the precise language recited. NIST declines to do so, and notes that, apart from the requirement to identify the contract and the funding agency, the language of the statement required by the rule tracks almost verbatim that of 35 U.S.C. 202(c)(6). NIST will not invite departure from these two clear, concise sentences, which notify readers of the Federal government's rights in a subject invention.

18. Several comments suggested revision to § 401.14(i) to permit automatic waivers from the requirement for substantial U.S. manufacture. NIST declines to make such a change, noting that § 401.14(i) tracks very closely the language of 35 U.S.C. 204, which itself makes clear that waivers from the requirement may be granted by the funding agency “in individual cases,” upon a showing.

19. Several comments were directed towards electronic filing and the Interagency Edison (iEdison) system, and noted the proposed changes in §§ 401.16 and 401.17. While NIST strongly supports the use of iEdison by funding agencies, it cannot mandate or compel agency use. Accordingly, revisions to § 401.16, which provides that written notices may be electronically delivered to the agency or the contractor through an electronic database, do not mandate the use of iEdison or any other system. NIST also notes comments directed to compliance and training, and is pleased to note that it is collaborating with the National Institutes of Health to develop a series of iEdison training modules expected to be available to agencies and contractors after publication of this final rule.

20. A number of comments noted specific challenges and error messages relating to the iEdison reporting system. NIST is pleased to note that it is working with the National Institutes of Health to evaluate the iEdison messaging system and identify opportunities for updates and improvements. Contractors and agencies are encouraged to contact the National Institutes of Health to report specific errors in the system so these can be flagged for evaluation.

21. One comment concerned the publication process for patent applications, which NIST notes is unrelated to this rulemaking.

22. Several comments were submitted regarding the management and licensing of federally owned inventions with regard to transparency and availability to the public. NIST notes that 35 U.S.C. 209 and 37 CFR 404.7 direct agencies in the criteria to be applied and the public notification processes to be followed in exercising the authority to grant exclusive and partially exclusive licenses to federally owned inventions, and provide for administrative appeals from agency licensing decisions, which appeals are also subject to review by the United States Court of Federal Claims.

23. One comment stated that the notice of proposed rulemaking was not as widely publicized as other regulation changes, and suggested that more time should be provided “if few comments are received.” NIST published its notice of proposed rulemaking in the Federal Register, in which it announced a public meeting/webinar, which took place during the 30-day period set in the Federal Register notice of proposed rulemaking for public comment. In addition to the Federal Register, NIST utilized multiple communications media to publicize the notice of proposed rulemaking, the public meeting, and the request for comments. NIST was pleased to receive 17 comments through Regulations.gov, which NIST has taken into account in this final rule.

1. Revise the scope in § 401.1(e) to include the alternate provisions in § 401.3(a)(5) and (6) in the list of deviations that do not require the Secretary's approval.

2. Revise the proposed definition of the term initial patent application in § 401.2(n) to include Patent Cooperative Treaty applications and applications for Plant Variety Protection certificates, when applicable.

3. Revise the proposed definition of the term statutory period in § 401.2(o) and in § 401.14(a)(7) to clarify that it refers to the one-year period in 35 U.S.C. 102(b) as amended by the Leahy-Smith America Invents Act.

4. Revise § 401.3(b) to include the exception at § 401.3(a)(5) in the list of exceptions where an agency must use only the modifications necessary to address the exceptional circumstances.

5. Correct formatting error to retain § 401.3(e) through (g).

6. Re-insert the small business certification requirement in § 401.3(h).

7. Revise § 401.4(a) to include the exceptions at § 401.3(a)(5) and (6) in the list of exceptions as to which a contractor has the right to an administrative review.

8. Revise § 401.5 to make technical clarifications.

9. Revise the proposed addition at § 401.10(a)(2) to require a Federal agency to consult with a contractor before submitting an initial patent application.

10. Revise the proposed additions at § 401.10(a)(3)(iv) and (vi) to clarify that they apply after a contractor has waived title to the subject invention.

11. Add a paragraph at § 401.10(c) to allow other inter-institutional agreements for the management of jointly-owned subject inventions to supersede § 401.10.

12. Revise § 401.10 to align regulatory language with statute language.

13. Revise § 401.13(c)(2) to remove the time limit under which agencies shall not disclose patent applications, and state that the prohibition on agency release does not apply to documents published by the U.S. Patent and Trademark Office.

14. Add a paragraph at § 401.14(a)(8) to define the term contractor as defined in § 401.2(b).

15. Remove the proposed revision at § 401.14(c)(2) which would allow an agency to shorten the two-year period for election of title if necessary to protect the Government's interest.

16. Revise § 401.14(c)(3) to require a contractor to file a non-provisional application 10 months after filing a provisional application.

17. Revise the proposed addition at § 401.14(c)(4) to clarify that the Federal agency employing a co-inventor may file an initial patent application, provided that the contractor retains the ability to elect title, in accordance with the revisions at § 401.10.

18. Revise § 401.14(c)(5) to state that a request to extend the 10-month deadline for filing a non-provisional application after first filing a provisional application will be automatically granted for one year unless an agency notifies the contractor within 60 days of the request.

19. Revise § 401.14(d)(3) to state that the section only applies to non-provisional applications and update the conditions under which a contractor will convey title to the Federal agency to be consistent with the Leahy-Smith America Invents Act provisions.

20. Revise the proposed revision at § 401.14(f)(3) to change the notification period to 60 days prior to the expiration of the statutory deadline and clarify that only decisions pertaining to the subject invention made under contract require the contractor to provide notification to the Federal agency.

21. Correct formatting error to retain § 401.14(f)(4) and (g)(1).

22. Revise the proposed revisions at § 401.14(k)(4) to reference § 401.7.

23. Revise § 404.7(a)(1)(i) and (b)(1)(i) to allow prospective exclusive, co-exclusive, or partially exclusive licenses to be advertised in places other than the Federal Register.

NIST has determined that the final rule is consistent with the Bayh-Dole Act of 1980 and other applicable law.

This rulemaking is a significant regulatory action under sections 3(f)(3) and 3(f)(4) of Executive Order 12866, as it raises novel policy issues. This rulemaking, however, is not an “economically significant” regulatory action under section 3(f)(1) of the Executive order, as it does not have an effect on the economy of $100 million or more in any one year, and it does not have a material adverse effect on the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.

This final rule is considered to be an E.O. 13771 deregulatory action. Details on the cost savings can be found in the rule's Estimated Cost Savings section.

This rule does not contain policies with Federalism implications as defined in Executive Order 13132.

The Regulatory Flexibility Act (RFA) requires the preparation and availability for public comment of “an initial regulatory flexibility analysis” which will “describe the impact of the rule on small entities.” (5 U.S.C. 603(a).) Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this rule would not have a significant economic impact on a substantial number of small entities. The factual basis for this determination was published in the proposed rule and is not repeated here. No comments were received regarding the certification and NIST has not received any new information that would affect its determination. As a result, a final regulatory flexibility analysis was not required and none was prepared.

Cost savings are anticipated from this rule by streamlining the licensing process for licensees that are already partnering with a Federal agency under a Cooperative Research and Development Agreement (CRADA). Federal agency collaborators include members from industry, academia, state and local governments, and individuals from the public. Costs to enter into a license with a Federal agency include the labor time on the part of the non-government collaborator to negotiate and execute the license with the Federal agency. NIST subject matter experts utilized annual technology transfer data reported by several Federal agencies to determine that the average Federal license takes approximately 5 months to execute.1 Assuming 5 hours of effort per month, approximately 25 hours of effort is invested by the non-Federal collaborator in executing a license with a Federal agency. Based on NIST database information, NIST subject matter experts estimate approximately one in five invention licenses is associated with a CRADA research plan, and Federal agencies report approximately 446 new invention licenses each year.2

For the purposes of estimating opportunity costs, NIST subject matter experts deemed it reasonable to use the average of a lawyer's mean hourly wage ($67.25) and a legal support worker's hourly wage ($31.81), as informed by the Bureau of Labor and Statistics,3 to approximate an hourly wage for the average Federal license negotiator. That rate is $49.52/hour.

Eliminating the need to negotiate a separate license document from CRADA collaborators is estimated to save Federal agency collaborators approximately $110,430 annually, as reflected in the chart below.

This rule will not significantly affect the quality of the human environment. Therefore, an environmental assessment or Environmental Impact Statement is not required to be prepared under the National Environmental Policy Act of 1969.

For the reasons stated in the preamble, the National Institute of Standards and Technology amends 37 CFR parts 401 and 404 as follows:

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

The EPA is providing notice that it is approving NMED's request to update the delegation for the implementation and enforcement of certain NSPS. The EPA is also taking direct final action to approve NMED's request updating the delegation of certain NESHAP. With this delegation, NMED has the primary responsibility to implement and enforce the delegated standards. See sections V and VI, below, for a discussion of which standards are being delegated and which are not being delegated.

Upon the EPA's finding that the procedures submitted by a State for the implementation and enforcement of standards of performance for new sources located in the State are adequate, Section 111(c)(1) of the Clean Air Act (CAA) authorizes the EPA to delegate its authority to implement and enforce such standards. The new source performance standards are codified at 40 CFR part 60.

Section 112(l) of the CAA and 40 CFR part 63, subpart E, authorize the EPA to delegate authority for the implementation and enforcement of emission standards for hazardous air pollutants to a State that satisfies the statutory and regulatory requirements in subpart E. The hazardous air pollutant standards are codified at 40 CFR parts 61 and 63.

In order to receive delegation of NSPS, a State must develop and submit to the EPA a procedure for implementing and enforcing the NSPS in the state, and their regulations and resources must be adequate for the implementation and enforcement of the NSPS. The EPA initially approved New Mexico's program for the delegation of NSPS on June 6, 1986 (51 FR 20648). The EPA reviewed the laws of the State and the rules and regulations of the New Mexico Environmental Improvement Division (now the NMED) and determined the State's procedures, regulations and resources were adequate for the implementation and enforcement of the Federal standards. The NSPS delegation was most recently updated on February 2, 2015 (80 FR 5475). This action notifies the public that the EPA is updating NMED's delegation to implement and enforce certain additional NSPS.

Section 112(l)(5) of the CAA requires the EPA to disapprove any program submitted by a State for the delegation of NESHAP standards if the EPA determines that:

(A) The authorities contained in the program are not adequate to assure compliance by the sources within the State with respect to each applicable standard, regulation, or requirement established under section 112;

(B) adequate authority does not exist, or adequate resources are not available, to implement the program;

(C) the schedule for implementing the program and assuring compliance by affected sources is not sufficiently expeditious; or

(D) the program is otherwise not in compliance with the guidance issued by the EPA under section 112(l)(2) or is not likely to satisfy, in whole or in part, the objectives of the CAA.

In carrying out its responsibilities under section 112(l), the EPA promulgated regulations at 40 CFR part 63, subpart E, setting forth criteria for the approval of submitted programs. For example, in order to obtain approval of a program to implement and enforce Federal section 112 rules as promulgated without changes (straight delegation), a State must demonstrate that it meets the criteria of 40 CFR 63.91(d). Title 40 CFR 63.91(d)(3) provides that interim or final title V program approval will satisfy the criteria of 40 CFR 63.91(d).1

The NESHAP delegation was most recently approved on February 2, 2015 (80 FR 5475).

As to the NSPS standards in 40 CFR part 60, NMED adopted the Federal standards via incorporation by reference. The NMED regulations are, therefore, at least as stringent as the EPA's rules. See 40 CFR 60.10(a). Also, in the EPA initial approval of NSPS delegation, we determined that the State developed procedures for implementing and enforcing the NSPS in the State, and that the State's regulations and resources are adequate for the implementation and enforcement of the Federal standards. See 51 FR 20648 (June 6, 1986).

As to the NESHAP standards in 40 CFR parts 61 and 63, as part of its Title V submission NMED stated that it intended to use the mechanism of incorporation by reference to adopt unchanged Federal section 112 standards into its regulations. This commitment applied to both existing and future standards as they applied to part 70 sources. The EPA's final interim approval of New Mexico's Title V operating permits program delegated the authority to implement certain NESHAP, effective December 19, 1994 (59 FR 59656). On November 26, 1996, the EPA promulgated final full approval of the State's operating permits program, effective January 27, 1997 (61 FR 60032). These interim and final title V program approvals satisfy the upfront approval criteria of 40 CFR 63.91(d). Under 40 CFR 63.91(d)(2), once a state has satisfied the up-front approval criteria, it needs only to reference the previous demonstration and reaffirm that it still meets the criteria for any subsequent submittals for delegation of the section 112 standards. NMED has affirmed that it still meets the up-front approval criteria. With respect to non-Title V sources, the EPA has previously approved delegation of NESHAP authorities to NMED after finding adequate authorities to implement and enforce the NESHAP for non-Title V sources. See 68 FR 69036 (December 11, 2003).

By letter dated January 22, 2016, the EPA received a request from NMED to update its NSPS delegation and NESHAP delegation. With certain exceptions noted in section VI below, NMED's request included NSPS in 40 CFR part 60, as amended between September 24, 2013 and September 15, 2015; NESHAP in 40 CFR part 61, as amended between January 1, 2011 and September 15, 2015; and NESHAP in 40 CFR part 63, as amended between August 30, 2013 and September 15, 2015.

By letter dated June 9, 2017, the EPA received a request from NMED to update its NSPS delegation and NESHAP delegation. With certain exceptions noted in section VI below, NMED's request included NSPS in 40 CFR part 60, as amended between September 15, 2015 and January 15, 2017; NESHAP in 40 CFR part 61, as amended between September 15, 2015 and January 15, 2017; and NESHAP in 40 CFR part 63, as amended between September 15, 2015 and January 15, 2017. This action is being taken in response to NMED's requests noted above.

All authorities not affirmatively and expressly delegated by this action are not delegated. These include the following part 60, 61 and 63 authorities listed below:

• 40 CFR part 60, subpart AAA (Standards of Performance for New Residential Wood Heaters);

• 40 CFR part 60, subpart QQQQ (Standards of Performance for New Residential Hydronic Heaters and Forced-Air Furnaces);

• 40 CFR part 61, subpart B (National Emission Standards for Radon Emissions from Underground Uranium Mines);

• 40 CFR part 61, subpart H (National Emission Standards for Emissions of Radionuclides Other Than Radon From Department of Energy Facilities);

• 40 CFR part 61, subpart I (National Emission Standards for Radionuclide Emissions from Federal Facilities Other Than Nuclear Regulatory Commission Licensees and Not Covered by Subpart H);

• 40 CFR part 61, subpart K (National Emission Standards for Radionuclide Emissions from Elemental Phosphorus Plants);

• 40 CFR part 61, subpart Q (National Emission Standards for Radon Emissions from Department of Energy facilities);

• 40 CFR part 61, subpart R (National Emission Standards for Radon Emissions from Phosphogypsum Stacks);

• 40 CFR part 61, subpart T (National Emission Standards for Radon Emissions from the Disposal of Uranium Mill Tailings);

• 40 CFR part 61, subpart W (National Emission Standards for Radon Emissions from Operating Mill Tailings); and

• 40 CFR part 63, subpart J (National Emission Standards for Polyvinyl Chloride and Copolymers Production).

In addition, the EPA regulations provide that we cannot delegate to a State any of the Category II authorities set forth in 40 CFR 63.91(g)(2). These include the following provisions: § 63.6(g), Approval of Alternative Non-Opacity Standards; § 63.6(h)(9), Approval of Alternative Opacity Standards; § 63.7(e)(2)(ii) and (f), Approval of Major Alternatives to Test Methods; § 63.8(f), Approval of Major Alternatives to Monitoring; and § 63.10(f), Approval of Major Alternatives to Recordkeeping and Reporting. Also, some part 61 and part 63 standards have certain provisions that cannot be delegated to the States. Furthermore, no authorities are delegated that require rulemaking in the Federal Register to implement, or where Federal overview is the only way to ensure national consistency in the application of the standards or requirements of CAA section 112. Finally, this action does not delegate any authority under section 112(r), the accidental release program.

All of the inquiries and requests concerning implementation and enforcement of the excluded standards in the State of New Mexico should be directed to the EPA Region 6 Office.

In addition, this delegation to NMED to implement and enforce certain NSPS and NESHAP authorities does not extend to sources or activities located in Indian country, as defined in 18 U.S.C. 1151. Under this definition, the EPA treats as reservations, trust lands validly set aside for the use of a Tribe even if the trust lands have not been formally designated as a reservation. Consistent with previous federal program approvals or delegations, the EPA will continue to implement the NSPS and NESHAP in Indian country because NMED has not submitted information to demonstrate authority over sources and activities located within the exterior boundaries of Indian reservations and other areas in Indian country.

In approving the NSPS delegation, NMED will obtain concurrence from the EPA on any matter involving the interpretation of section 111 of the CAA or 40 CFR part 60 to the extent that implementation or enforcement of these provisions have not been covered by prior EPA determinations or guidance. See 51 FR 20649 (June 6, 1986).

In approving the NESHAP delegation, NMED will obtain concurrence from the EPA on any matter involving the interpretation of section 112 of the CAA or 40 CFR parts 61 and 63 to the extent that implementation or enforcement of these provisions have not been covered by prior EPA determinations or guidance.

We retain the right, as provided by CAA section 111(c)(2), to enforce any applicable emission standard or requirement under section 111.

We retain the right, as provided by CAA section 112(l)(7) and 40 CFR 63.90(d)(2), to enforce any applicable emission standard or requirement under section 112. In addition, the EPA may enforce any federally approved State rule, requirement, or program under 40 CFR 63.90(e) and 63.91(c)(1)(i). The EPA also has the authority to make decisions under the General Provisions (subpart A) of parts 61 and 63. We are delegating to NMED some of these authorities, and retaining others, as explained in sections V and VI above. In addition, the EPA may review and disapprove State determinations and subsequently require corrections. See 40 CFR 63.91(g)(1)(ii). EPA also has the authority to review NMED's implementation and enforcement of approved rules or programs and to withdraw approval if we find inadequate implementation or enforcement. See 40 CFR 63.96.

Furthermore, we retain any authority in an individual emission standard that may not be delegated according to provisions of the standard. Also, listed in footnote 2 of the part 63 delegation table at the end of this rule are the authorities that cannot be delegated to any State or local agency which we therefore retain.

Finally, we retain the authorities stated in the original delegation agreement. See 51 FR 20648-20650 (June 6, 1986).

NMED must provide any additional compliance related information to EPA, Region 6, Office of Enforcement and Compliance Assurance, within 45 days of a request under 40 CFR 63.96(a). In receiving delegation for specific General Provisions authorities, NMED must submit to EPA Region 6, on a semi-annual basis, copies of determinations issued under these authorities. See 40 CFR 63.91(g)(1)(ii). For 40 CFR part 63 standards, these determinations include: § 63.1, Applicability Determinations; § 63.6(e), Operation and Maintenance Requirements—Responsibility for Determining Compliance; § 63.6(f), Compliance with Non-Opacity Standards—Responsibility for Determining Compliance; § 63.6(h), Compliance with Opacity and Visible Emissions Standards—Responsibility for Determining Compliance; § 63.7(c)(2)(i) and (d), Approval of Site-Specific Test Plans; § 63.7(e)(2)(i), Approval of Minor Alternatives to Test Methods; § 63.7(e)(2)(ii) and (f), Approval of Intermediate Alternatives to Test Methods; § 63.7(e)(2)(iii), Approval of Shorter Sampling Times and Volumes When Necessitated by Process Variables or Other Factors; § 63.7(e)(2)(iv) and (h)(2) and (3), Waiver of Performance Testing; § 63.8(c)(1) and (e)(1), Approval of Site-Specific Performance Evaluation (Monitoring) Test Plans; § 63.8(f), Approval of Minor Alternatives to Monitoring; § 63.8(f), Approval of Intermediate Alternatives to Monitoring; §§ 63.9 and 63.10, Approval of Adjustments to Time Periods for Submitting Reports; § 63.10(f), Approval of Minor Alternatives to Recordkeeping and Reporting; § 63.7(a)(4), Extension of Performance Test Deadline.

The EPA oversees NMED's decisions to ensure the delegated authorities are being adequately implemented and enforced. We will integrate oversight of the delegated authorities into the existing mechanisms and resources for oversight currently in place. If, during oversight, we determine that NMED made decisions that decreased the stringency of the delegated standards, then NMED shall be required to take corrective actions and the source(s) affected by the decisions will be notified. See 40 CFR 63.91(g)(1)(ii) and (b). We will initiate withdrawal of the program or rule if the corrective actions taken are insufficient. See 51 FR 20648 (June 6, 1986).

Sources located outside the boundaries of Bernalillo County and outside of Indian country should submit all of the information required pursuant to the delegated authorities in the Federal NSPS and NESHAP (40 CFR parts 60, 61 and 63) directly to the NMED at the following address: New Mexico Environment Department, 525 Camino de los Marquez, Suite I, Santa Fe, New Mexico 87505. The NMED is the primary point of contact with respect to delegated NSPS and NESHAP authorities. Sources do not need to send a copy to the EPA. The EPA Region 6 waives the requirement that notifications and reports for delegated authorities be submitted to the EPA in addition to NMED in accordance with 40 CFR 63.9(a)(4)(ii) and 63.10(a)(4)(ii).2 For those authorities not delegated, sources must continue to submit all appropriate information to the EPA.

In the future, NMED will only need to send a letter of request to update their delegation to EPA, Region 6, for those NSPS which they have adopted by reference. The EPA will amend the relevant portions of the Code of Federal Regulations showing which NSPS standards have been delegated to NMED. Also, in the future, NMED will only need to send a letter of request for approval to EPA, Region 6, for those NESHAP regulations that NMED has adopted by reference. The letter must reference the previous up-front approval demonstration and reaffirm that it still meets the up-front approval criteria. We will respond in writing to the request stating that the request for delegation is either granted or denied. A Federal Register action will be published to inform the public and affected sources of the delegation, indicate where source notifications and reports should be sent, and to amend the relevant portions of the Code of Federal Regulations showing which NESHAP standards have been delegated to NMED.

The public was provided the opportunity to comment on the proposed approval of the program and mechanism for delegation of section 112 standards, as they apply to part 70 sources, on May 19, 1994, for the proposed interim approval of NMED's Title V operating permits program; and on November 26, 1996, for the proposed final approval of NMED's Title V operating permits program. In the EPA's final full approval of New Mexico's Operating Permits Program on November 26, 1996, the EPA discussed the public comments on the delegation of the NESHAP authorities. In today's action, the public is given the opportunity to comment on the approval of NMED's request for delegation of authority to implement and enforce certain section 112 standards for all sources (both Title V and non-Title V sources) which have been adopted by reference into New Mexico's state regulations. However, the Agency views the approval of these requests as a noncontroversial action and anticipates no relevant adverse comments. Therefore, the EPA is publishing this rule without prior proposal. However, in the proposed rules section of this issue of the Federal Register, the EPA is publishing a separate document that will serve as the proposal to approve the NESHAP delegation described in this action if relevant adverse comments are received. This action will be effective June 12, 2018 without further notice unless we receive relevant adverse comment by May 14, 2018.

If we receive relevant adverse comments, we will publish a timely withdrawal in the Federal Register informing the public the rule will not take effect with respect to the updated NESHAP delegation. We will address all public comments in a subsequent final rule based on the proposed rule. We will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if we receive relevant adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of a relevant adverse comment.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and therefore is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action is not an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866. This action merely approves state law as meeting Federal requirements and imposes no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Because this rule approves pre-existing requirements under state law and does not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994).

The delegation is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.

This action also does not have Federalism implications because it does not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state request to receive delegation of certain Federal standards, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it is not economically significant.

In reviewing delegation submissions, EPA's role is to approve submissions, provided that they meet the criteria of the Clean Air Act. This action is not subject to the 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. This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 12, 2018. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

40 CFR parts 60, 61, and 63 are amended as follows:

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2017-0169 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before June 12, 2018. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2017-0169, by one of the following methods:

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

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.

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

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

In the Federal Register of September 15, 2017 (82 FR 43352) (FRL-9965-43), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 6F8538) by Makhteshim Agan of North America (MANA) (d/b/a ADAMA), 3120 Highlands Blvd., Suite 100, Raleigh, NC 27604. The petition requested that 40 CFR part 180 be amended by establishing tolerances for residues of the nematicide fluensulfone, in or on fruit, pome, crop group 11-10 at 0.3 parts per million (ppm); fruit, stone crop group 12-12 at 0.06 ppm; small fruit vine climbing subgroup 13-07D at 0.5 ppm; grape, raisin at 0.8 ppm; nut, tree, crop group 14-12 at 0.02 ppm; almond, hulls at 3.0 ppm; sugarcane at 0.03 ppm; sugarcane and molasses at 0.2 ppm, and for inadvertent residues of fluensulfone, in or on (10-month plant-back interval): Grain, cereal, crop group 15 at 0.03 ppm; forage, fodder and straw of cereal grains, crop group 16 at 2 ppm; (90-day plant-back interval): Wheat, grain at 0.06 ppm; barley, grain at 0.06 ppm; buckwheat, grain at 0.06 ppm; oat, grain at 0.06 ppm; teosinte, grain at 0.06 ppm; wheat, bran at 0.10 ppm; barley, bran at 0.10 ppm; wheat, middlings at 0.07 ppm; wheat, shorts at 0.08 ppm; wheat, germ at 0.07 ppm; wheat, straw at 4 ppm; barley, straw at 4 ppm; oat, straw at 4 ppm; wheat, forage at 4 ppm; oat, forage at 4 ppm; wheat, hay at 8 ppm; barley hay at 8 ppm; and oat, hay at 8 ppm. That document referenced a summary of the petition prepared by MANA, the registrant, which is available in the docket, http://www.regulations.gov. A comment was received on the notice of filing. EPA's response to this comment is discussed in Unit IV.C.

Based upon review of the data supporting the petition, EPA has modified the levels at which tolerances are being established in most commodities. The reasons for these changes are explained in Unit IV.D.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for fluensulfone including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with fluensulfone follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

The residue of concern for dietary assessment is the parent compound, fluensulfone. Residues of the metabolites butene sulfonic acid (BSA) and thiazole sulfonic acid (TSA) occur at levels significantly greater than fluensulfone; however, these metabolites are considered non-toxic at levels that may occur from the use of fluensulfone. Based on the available data addressing toxicity of the BSA and TSA metabolites, the Agency has determined that they are not of toxicological concern.

Exposure to fluensulfone results in effects on the hematopoietic system (decreased platelets, increased white blood cells, hematocrit, and reticulocytes), kidneys, and lungs. Body weight and clinical chemistry changes were observed across multiple studies and species. Evidence of qualitative increased susceptibility of infants and children to the effects of fluensulfone was observed in the 2-generation reproduction study in rats, wherein pup death was observed at a dose that resulted in decreased body weight in the dams. There was no evidence of either qualitative or quantitative susceptibility in developmental toxicity studies in rats or rabbits. The most sensitive endpoints for assessing safety of aggregate exposures to fluensulfone under the FFDCA are the increased pup-loss effects for acute dietary exposure; and body weight, hematological and clinical chemistry changes for chronic dietary as well as short/intermediate term dermal exposures. Decreased locomotor activity in females, and decreased spontaneous activity, decreased rearing, and impaired righting response in both sexes were observed in the acute neurotoxicity study at the lowest dose tested. No other evidence for neurotoxicity was observed in the other studies in the toxicity database, including a subchronic neurotoxicity study. The doses and endpoints chosen for risk assessment are all protective of the effects seen in the acute neurotoxicity study. A developmental neurotoxicity study is not required.

Although the mouse carcinogenicity study showed an association with alveolar/bronchiolar adenomas and carcinomas in the female, EPA has determined that quantification of risk using the chronic reference dose (RfD) will account for all chronic toxicity, including carcinogenicity, that could result from exposure to fluensulfone and its metabolites. That conclusion is based on the following considerations: (1) The tumors occurred in only one sex in one species. (2) no carcinogenic response was seen in either sex in the rat. (3) the tumors in the mouse study were observed at a dose that is almost 13 times higher than the dose chosen for risk assessment. (4) fluensulfone and its metabolites are not mutagenic.

Specific information on the studies received and the nature of the adverse effects caused by fluensulfone as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document “Fluensulfone—Aggregate Human Health Risk Assessment in Support of Section 3 Registration of New Uses (Sugarcane, Small Vine Climbing Fruits, Pome Fruits, Stone Fruits, and Tree Nuts), Rotational Crop Tolerances, and Label Amendments” on pages 37-50 in docket ID number EPA-HQ-OPP-2017-0169.

Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www.epa.gov/pesticides/factsheets/riskassess.htm. A summary of the toxicological endpoints for fluensulfone used for human risk assessment is discussed in Unit III.B. of the final rule published in the Federal Register of June 1, 2016 (81 FR 34898) (FRL-9946-07).

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to fluensulfone, EPA considered exposure under the petitioned-for tolerances as well as all existing fluensulfone tolerances in 40 CFR 180.680. EPA assessed dietary exposures from fluensulfone in food as follows:

i. Acute exposure. Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure.

Such effects were identified for fluensulfone. In estimating acute dietary exposure, EPA used 2003-2008 food consumption information from the United States Department of Agriculture (USDA) National Health and Nutrition Examination Survey, What We Eat in America, (NHANES/WWEIA). As to residue levels in food, the acute dietary risk assumed tolerance-equivalent residues and 100 percent crop treated (PCT).

ii. Chronic exposure. In conducting the chronic dietary exposure assessment EPA used 2003-2008 food consumption information from the USDA's NHANES/WWEIA. As to residue levels in food, the chronic dietary risk assumed tolerance-equivalent residues and 100 PCT.

iii. Cancer. Based on the data summarized in Unit III.A., EPA has concluded that a nonlinear RfD approach is appropriate for assessing cancer risk to fluensulfone. Cancer risk was assessed using the same exposure estimates as discussed in Unit III.C.1.ii., chronic exposure.

iv. Anticipated residue and percent crop treated (PCT) information. EPA did not use anticipated residue or PCT information in the dietary assessment for fluensulfone. Tolerance-equivalent residue levels and 100% CT were assumed for all food commodities.

2. Dietary exposure from drinking water. The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for fluensulfone in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of fluensulfone. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www2.epa.gov/pesticide-science-and-assessingpesticide-risks/about-water-exposuremodels-used-pesticide.

Based on the Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS) and Pesticide Root Zone Model Ground Water (PRZM GW) models, the estimated drinking water concentrations (EDWCs) for acute exposures are estimated to be 11.8 parts per billion (ppb) for surface water and 77.6 ppb for ground water and for chronic exposures are estimated to be 0.173 ppb for surface water and 52.5 ppb for ground water. Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For the acute dietary risk assessment, the water concentration value of 77.6 ppb was used to assess the contribution to drinking water. For the chronic dietary risk assessment, the water concentration of value 52.5 ppb was used to assess the contribution to drinking water.

3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

No residential handler exposure for fluensulfone is expected because the products are not intended for homeowner use. The product label requires that handlers wear specific clothing (e.g., long sleeve shirt/long pants) and/or personal protective equipment (PPE). The Agency has made the assumption that the product is not for homeowner use and is intended for use by professional applicators. As a result, a residential handler assessment has not been conducted.

For adult residential post-application exposure, the Agency evaluated dermal post application exposure only to outdoor turf/lawn applications (high contact activities). The Agency also evaluated residential post-application exposure for children via dermal and hand-to-mouth routes of exposure, resulting from treated outdoor turf/lawn applications (high contact activities). Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www2.epa.gov/pesticidescience-and-assessing-pesticide-risks/standard-operating-proceduresresidential-pesticide.

4. Cumulative effects from substances with a common mechanism of toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.” EPA has not found fluensulfone to share a common mechanism of toxicity with any other substances, and fluensulfone does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that fluensulfone does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at http://www2.epa.gov/pesticide-science-andassessing-pesticide-risks/cumulativeassessment-risk-pesticides.

1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. Prenatal and postnatal sensitivity. No evidence of increased quantitative or qualitative susceptibility was seen in developmental toxicity studies in rats and rabbits. Fetal effects in those studies occurred in the presence of maternal toxicity and were not considered more severe than the maternal effects. However, there was evidence of increased qualitative, but not quantitative, susceptibility of pups in the 2-generation reproduction study in rats. Maternal effects observed in that study were decreased body weight and body weight gain; at the same dose, effects in offspring were decreased pup weights, decreased spleen weight, and increased pup loss (post-natal day 1-4). Although there is evidence of increased qualitative susceptibility in the 2-generation reproduction study in rats, there are no residual uncertainties with regard to pre- and post-natal toxicity following in utero exposure to rats or rabbits and pre- and post-natal exposures to rats. Considering the overall toxicity profile, the clear NOAEL for the pup effects observed in the 2-generation reproduction study, and that the doses selected for risk assessment are protective of all effects in the toxicity database including the offspring effects, the degree of concern for the susceptibility is low.

3. Conclusion. EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced to 1x. That decision is based on the following findings:

i. The toxicity database for fluensulfone is complete.

ii. Evidence of potential neurotoxicity was only seen following acute exposure to fluensulfone and the current PODs chosen for risk assessment are protective of the effects observed. There is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity.

iii. There is no indication of quantitative susceptibility in the developmental and reproductive toxicity studies, and there are no residual uncertainties concerning pre- or post-natal toxicity. In addition, the endpoints and doses chosen for risk assessment are protective of the qualitative susceptibility observed in the 2-generation reproduction study.

iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100 PCT and tolerance equivalent-level residues. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to fluensulfone in drinking water. EPA used similarly conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by fluensulfone.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to fluensulfone will occupy 9.4% of the aPAD for all infants less than 1 year old, the population group receiving the greatest exposure.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to fluensulfone from food and water will utilize 4.1% of the cPAD for all infants less than 1 year old, the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of fluensulfone is not expected.

3. Short-term risk. Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

Fluensulfone is currently registered for uses that could result in short-term post-application residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to fluensulfone.

Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs of 5,600 adults and 2,800 for children. Because EPA's level of concern for fluensulfone is a MOE of 100 or below, these MOEs are not of concern.

4. Intermediate-term risk. Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

An intermediate-term adverse effect was identified; however, fluensulfone is not registered for any use patterns that would result in intermediate-term residential exposure. Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for fluensulfone.

5. Aggregate cancer risk for U.S. population. EPA assessed cancer risk using a non-linear approach (i.e., RfD) since it adequately accounts for all chronic toxicity, including carcinogenicity, that could result from exposure to fluensulfone. As the chronic dietary endpoint and dose are protective of potential cancer effects, fluensulfone is not expected to pose an aggregate cancer risk.

6. Determination of safety. Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to fluensulfone residues.

Adequate enforcement methodology (acetonitrile/water (1:1, v/v) extraction and analysis by reverse-phase high performance liquid chromatography mass spectrometry (HPLC-MS/MS)) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: [email protected].

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level. The Codex has not established a MRL for fluensulfone for commodities covered by this document.

One comment was submitted in response to the September 15, 2017 Notice of Filing. The commenter opposed the petition generally, alleging that there are too many toxic chemicals being used in America without citing any specific human health concerns about fluensulfone itself. The Agency recognizes that some individuals believe that pesticides should be banned on agricultural crops; however, the existing legal framework provided by section 408 of the Federal Food, Drug and Cosmetic Act (FFDCA) states that tolerances may be set when persons seeking such tolerances or exemptions have demonstrated that the pesticide meets the safety standard imposed by that statute. The comment appears to be directed at the underlying statute and not EPA's implementation of it; the citizen has made no contention that EPA has acted in violation of the statutory framework.

Most of the petitioned-for tolerance levels differ from those being established by the Agency. In its petition, the petitioner stated that the proposed tolerances were derived using the Organization for Economic Cooperation and Development (OECD) MRL calculation procedure; however, the petitioner did not provide the OECD MRL calculator's input or output tables for any of the requested tolerances. When EPA ran the OECD MRL calculation procedure on the requested new use commodities (primary crops) using residue values from the field trials, the results obtained did not agree with any of the petitioned-for tolerances, except in pome fruits group 11-10 and molasses. Therefore, EPA is establishing tolerances that differ from those requested in stone fruits group 12-12, small vine climbing fruits subgroup 13-07D, raisins, tree nuts group 14-12, almond hulls, and sugarcane based on available data and the OECD calculation procedure. In the case of tree nuts group 14-12, EPA is establishing the tolerance in tree nuts at 0.01 ppm (the LOQ) because residues in all samples of almonds and pecans were <0.01 ppm.

With respect to tolerances for inadvertent residues, the Agency is establishing a tolerance for residues in/on cereal grains (crop group 15) based on data from the representative commodities for that crop group and reflecting the labeled rotational crop plant-back restriction applicable to the crop group as a whole. Separate tolerances for inadvertent residues are being established for barley, buckwheat, oat, and wheat commodities due to a shorter plant-back restriction, specific to those crops, which results in higher residue levels. A separate tolerance was proposed for inadvertent residues in/on teosinte; however, a separate tolerance listing is not necessary since it is a member of crop group 15 and does not have a separate, shorter, plant-back restriction. A tolerance in wheat milled byproducts, the preferred term covering wheat shorts and middlings, is being established at 0.08 ppm, rather than separate tolerances in wheat shorts and wheat middlings.

Furthermore, EPA's tolerance levels are expressed to provide sufficient precision for enforcement purposes, and this may include the addition of trailing zeros (such as 0.30 ppm rather than 0.3 ppm). This is in order to avoid the situation where rounding of an observed violative residue to the level of precision of the tolerance expression would result in a residue considered non-violative (such as 0.34 ppm being rounded to 0.3 ppm). This revision has been made for pome fruits group 11-10; molasses; forage, fodder and straw of cereal grains group 16; and straw, forage, and hay of wheat, barley and oats.

Therefore, tolerances are established for residues of fluensulfone, in or on almond, hulls at 4.0 ppm; fruit, pome, group 11-10 at 0.30 ppm; fruit, small, vine climbing, subgroup 13-07D at 0.60 ppm; fruit, stone group 12-12 at 0.07 ppm; grape, raisin at 0.90 ppm; nut, tree, group 14-12 at 0.01 ppm; sugarcane, cane at 0.04 ppm; and sugarcane, molasses at 0.20 ppm. In addition, tolerances for indirect or inadvertent residues of fluensulfone are established in or on barley, bran at 0.10 ppm; barley, grain at 0.06 ppm; barley hay at 8.0 ppm; barley, straw at 4.0 ppm; buckwheat, grain at 0.06 ppm; grain, cereal, forage, fodder and straw, group 16 at 2.0 ppm; grain, cereal, group 15 at 0.03 ppm; oat, forage at 4.0 ppm; oat, grain at 0.06 ppm; oat, hay at 8.0 ppm; oat, straw at 4.0 ppm; wheat, bran at 0.10 ppm; wheat, forage at 4.0 ppm; wheat, germ at 0.07 ppm; wheat, grain at 0.06 ppm; wheat, hay at 8.0 ppm; wheat, milled byproducts at 0.08 ppm; and wheat, straw at 4.0 ppm.

This action establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001); Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997); or Executive Order 13771, entitled “Reducing Regulations and Controlling Regulatory Costs” (82 FR 9339, February 3, 2017). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), do not apply.

This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq.).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).

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

Therefore, 40 CFR chapter I is amended as follows:

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2017-0072 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before June 12, 2018. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2017-0072, by one of the following methods:

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

• Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001.

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

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

In the Federal Register of June 8, 2017 (82 FR 26641) (FRL-9961-14), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 6E8532) by IR-4, Rutgers, The State University of New Jersey, 500 College Road East, Suite 201-W, Princeton, NJ 08540. The petition requested that 40 CFR part 180 be amended by establishing tolerances for residues of the herbicide sulfentrazone in or on Chia, dry seed at 0.15 parts per million (ppm); Teff, forage at 0.50 ppm; Teff, grain at 0.15 ppm; Teff, hay at 0.30 ppm; Teff, straw at 1.5 ppm; Stalk and stem vegetable subgroup 22A at 0.15 ppm; Vegetable, brassica, head and stem, group 5-16 at 0.20 ppm; Brassica, leafy greens, subgroup 4-16B at 0.60 ppm; and Nut, tree, group 14-12 at 0.15 ppm. The petition also requested to remove the tolerances for Asparagus at 0.15 ppm; Brassica, head and stem, subgroup 5A at 0.20 ppm; Brassica, leafy greens, subgroup 5B at 0.40 ppm; Nut, tree, group 14 at 0.15 ppm; Pistachio at 0.15 ppm; and Turnip, tops at 0.60 ppm. That document referenced a summary of the petition prepared by FMC, the registrant, which is available in the docket, http://www.regulations.gov. Comments were received on the notice of filing. EPA's response to these comments is discussed in Unit IV.C.

Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for sulfentrazone including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with sulfentrazone follows.

EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

Subchronic and chronic toxicity studies in rats, mice, and dogs identified the hematopoietic system as the target of sulfentrazone. Sulfentrazone inhibits the enzyme protoporphyrinogen oxidase (PPO) in target plants, and the results of subchronic and chronic toxicity studies in mammalian systems are consistent with PPO inhibition. Disruption of heme biosynthesis was indicated by signs of anemia, and decreases in hematocrit (Hct), hemoglobin (HGB), and mean corpuscular volume (MCV) in mice, rats, and dogs at comparable dose levels from short- through long-term exposures without a significant increase in severity.

Sulfentrazone caused developmental effects when administered via the oral (rats and rabbits) and dermal (rat only) routes of exposure. Developmental effects in rats and rabbits consisted of reductions in the number of implantations in rats, and increases in early resorptions and reduction in live fetuses per litter in rats and rabbits. Surviving rat fetuses exhibited reduced/delayed skeletal ossifications, and decreased fetal body weights. Developmental effects in rats were seen in the absence of maternal toxicity. In contrast with the rat studies, developmental effects in rabbits were observed at a maternally toxic dose, where clinical signs of toxicity included hematuria (red blood cells in urine), abortions, and decreased body-weight gains. In the 2-generation reproductive toxicity study in rats, developmental effects included an increased duration of gestation, reduced prenatal viability (fetal and litter), reduced litter size, and an increased number of stillborn pups. Pup body-weight deficits, along with reduced pup and litter postnatal survival, were also observed. All of the offspring effects were reported in the presence of mild maternal toxicity (decreased body weight and body-weight gain, particularly in F1 females).

No systemic toxicity was seen via the dermal route up to the limit dose in a 28-day dermal toxicity study in adult non-pregnant rabbits. In a dermal developmental study in rats, there was an increased quantitative fetal susceptibility. While no maternal effects were observed up to the highest dose tested, fetal effects were observed at this dose, and consisted of decreased body weights, increased incidences of fetal variations, hypoplastic or wavy ribs, incompletely ossified lumbar vertebral arches, incompletely ossified ischia or pubis, and a reduced number of thoracic vertebral and rib ossification sites.

In the 26-day inhalation toxicity study, effects that were considered treatment related and adverse occurred only at the highest concentration tested. Systemic effects at this concentration consisted of significant reductions in red blood cell (RBC) parameters in both sexes. Portal-of-entry effects in this study consisted of an increased incidence of minimal nasal respiratory epithelial hyperplasia in both sexes as well as minimal laryngeal epithelial attenuation in all test material exposure groups. The effects on hematological parameters were reversible after 28 days of recovery, while the nasal injury persisted.

In an acute neurotoxicity (ACN) study in rats, effects consisted of an increased incidence of clinical signs of toxicity (staggered gait, splayed hind limbs, and abdominal gripping), changes in functional-observation battery (FOB) parameters, and decreased motor activity at a high dose level. Complete recovery was observed by day 14, and there was no evidence of neuropathology. In a rat subchronic neurotoxicity (SCN) study, clinical signs of toxicity, increased motor activity, and/or decreased body weights, body-weight gain, and food consumption were also observed with no evidence of neuropathology. A published, non-guideline developmental toxicity study in the rat did not conclusively demonstrate developmental neurotoxicity and contained several shortcomings that limit its use for regulatory purposes, including the lack of a no-observed-adverse-effect-level (NOAEL) (DeCastro VL, Destefani CR, Diniz C, Poli P., 2007, Evaluation of neurodevelopmental effects on rats exposed prenatally to sulfentrazone. Neurotoxicology 28(6):1249-59). The reported effects involving measures of physical and reflex development are likely secondary effects reflective of the poor general state of the offspring as reported in the rat two-generation reproductive toxicity study at similar dose levels but with a well-defined NOAEL.

In the 28-day rat immunotoxicity study, there were no effects on the immune system and systemic effects consisted of reduced body weight, and increased absolute and relative spleen weights at the highest dose tested. Carcinogenicity studies in rats and mice showed no evidence of increased incidence of tumor formation due to treatment with sulfentrazone, and the EPA has classified sulfentrazone as not likely to be carcinogenic to humans. The available mutagenicity studies indicate that sulfentrazone is weakly clastogenic in the in vitro mouse lymphoma assay in the absence of S9 activation. There is no evidence that sulfentrazone is mutagenic in bacterial cells or clastogenic in male or female mice in vivo.

Specific information on the studies received and the nature of the adverse effects caused by sulfentrazone as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in the document titled Sulfentrazone—Human Health Risk Assessment for a Section 3 Registration Request to Add New Uses on Chia and Teff; an Amended Use on Mint; and Crop Group Conversions for Tree Nut Group 14-12, Stalk and Stem Vegetable Subgroup 22A; Vegetable, Brassica, Head and Stem, Group 5-16; and Brassica, Leafy Greens, Subgroup 4-16B on pages 26-31 in docket ID number EPA-HQ-OPP-2017-0072.

Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which no adverse effects are observed (the NOAEL) and the lowest dose at which adverse effects of concern are identified (the LOAEL). Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a reference dose (RfD)—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/assessing-human-health-risk-pesticides.

A summary of the toxicological endpoints for sulfentrazone used for human risk assessment is discussed in Unit III.B. of the final rule published in the Federal Register of September 12, 2014 (79 FR 54620) (FRL-9915-47).

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to sulfentrazone, EPA considered exposure under the petitioned-for tolerances as well as all existing sulfentrazone tolerances in 40 CFR 180.498. EPA assessed dietary exposures from sulfentrazone in food as follows:

i. Acute exposure. Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. Such effects were identified for sulfentrazone and EPA performed separate acute risk assessments for females 13 to 49 years old and for the general population, including infants and children, based on different endpoints and acute population-adjusted doses (aPADs). In estimating acute dietary exposures, EPA used the Dietary Exposure Evaluation Model, Food Consumption Intake Database (DEEM-FCID, ver. 3.16), which incorporates consumption data from United States Department of Agriculture (USDA) National Health and Nutrition Examination Survey, What We Eat in America, NHANES/WWEIA; 2003-2008). As to residue levels in food, EPA assumed tolerance-level residues, 100 percent crop treated (PCT), and DEEM (ver. 7.81) default processing factors.

ii. Chronic exposure. In conducting the chronic dietary exposure assessment, EPA used DEEM-FCID, ver. 3.16, which incorporated consumption data from the USDA's NHANES/WWEIA; 2003-2008. As to residue levels in food, EPA assumed tolerance-level residues, 100 PCT, and DEEM (ver. 7.81) default processing factors.

iii. Cancer. Based on the data summarized in Unit III.A., EPA has concluded that sulfentrazone does not pose a cancer risk to humans. Therefore, a dietary exposure assessment for the purpose of assessing cancer risk is unnecessary.

iv. Anticipated residue and percent crop treated (PCT) information. EPA did not use anticipated residue or PCT information in the dietary assessment for sulfentrazone. Tolerance-level residues and 100 PCT were assumed for all food commodities.

2. Dietary exposure from drinking water. The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for sulfentrazone in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of sulfentrazone. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/about-water-exposure-models-used-pesticide.

Based on the Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS) and Pesticide Root Zone Model Ground Water (PRZM GW), the estimated drinking water concentrations (EDWCs) of sulfentrazone for acute exposures are estimated to be 37.3 parts per billion (ppb) for surface water and 134 ppb for ground water; and for chronic exposures for non-cancer assessments are estimated to be 5.3 ppb for surface water and 98 ppb for ground water.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For the acute dietary risk assessment, the water concentration value of 134 ppb was used to assess the contribution to drinking water. For the chronic dietary risk assessment, the water concentration of value 98 ppb was used to assess the contribution to drinking water.

3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

Sulfentrazone is currently registered for the following uses that could result in residential exposures: Residential home lawns/turf and recreational turf, such as golf courses. EPA assessed residential exposures using the following assumptions: Adults were assessed for potential short-term dermal and inhalation handler exposures from applying sulfentrazone to residential turf/home lawns and for short-term post-application dermal exposure from contact with treated residential and recreational turf.

Children, ages 11 < 16 years old and 6 < 11 years old, were assessed for post-application dermal exposure from contact with treated residential and recreational turf (home lawns and golf courses). Children, ages 1 < 2 years old, were assessed for post-application short-term dermal and incidental oral exposures (hand-to-mouth, object-to-mouth, and episodic ingestion of granules), as well as short-term incidental oral soil ingestion scenarios from contact with residential turf/home lawns.

The recommended adult residential exposure scenario for use in the aggregate assessment reflects short-term dermal exposure from applications to turf via backpack sprayer. The recommended residential exposure scenario for use in the combined short-term aggregate assessment for children ages 1 < 2 years old reflects dermal and hand-to-mouth exposures from post-application exposure to turf applications. This combination should be considered a protective estimate of children's exposure to pesticides used on turf since the incidental oral scenarios are considered inter-related, likely occurring interspersed amongst each other across time; therefore, combining these scenarios would be overly conservative because of the conservative nature of each individual assessment. Further, this scenario is considered protective of potential post-application exposures to children, ages 6 < 11 and 11 < 16 years old, as children 1-2 years old represent the population subgroup for children with the greatest exposure, and is therefore considered protective of other children population subgroups. Intermediate-term exposure is not expected.

Chronic exposures are not expected and were not assessed. Finally, residential handler and/or post-application inhalation risk estimates were not combined with dermal or oral risk estimates in the aggregate risk assessment since the toxicological effects in the inhalation toxicological study were portal-of-entry and were different from those seen in the dermal and oral toxicological studies. Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/standard-operating-procedures-residential-pesticide.

4. Cumulative effects from substances with a common mechanism of toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

EPA has not found sulfentrazone to share a common mechanism of toxicity with any other substances, and sulfentrazone does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that sulfentrazone does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/cumulative-assessment-risk-pesticides.

1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

2. Prenatal and postnatal sensitivity. There is evidence of increased quantitative susceptibility following in utero exposure in the oral and dermal rat developmental toxicity studies. Developmental effects, including decreased fetal body weights and reduced/delayed skeletal ossifications, were observed at doses that were not maternally toxic. In the 2-generation reproduction study in rats, offspring effects such as decreased body weights and decreased litter survival were observed at a slightly maternally toxic dose (slightly decreased body-weight gain), indicating possible slightly increased qualitative susceptibility.

3. Conclusion. EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced to 1X. That decision is based on the following findings:

i. The toxicity database for sulfentrazone is complete.

ii. In the ACN and SCN studies, observed effects included changes in motor activity and FOB parameters, clinical signs, and body-weight decrements. There is low concern for neurotoxicity since:

1. Effects were seen at relatively high doses;

2. Effects occurred in the absence of neuropathology;

3. There is no evidence of neurotoxicity in other available studies in the toxicity database;

4. Effects are well-characterized with clearly established NOAEL/LOAEL values; and

5. The selected PODs are protective of these effects.

iii. There was evidence for increased quantitative susceptibility following oral and dermal exposures in the developmental toxicity studies in rats. Although developmental toxicity was observed at lower doses than maternal toxicity in both studies in the rat, the concern is low based on the following considerations:

1. The toxicology database for assessing pre- and postnatal susceptibility is complete;

2. There are clear NOAELs and LOAELs for the developmental effects observed via both the oral and dermal routes;

3. The PODs used for assessing dietary and dermal exposure risks are based on developmental and/or offspring toxicity;

4. The portal-of-entry effects seen in the 26-day inhalation study are protective of the developmental toxicity; and

5. There are no residual uncertainties for pre- and/or postnatal toxicity.

iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100 PCT and tolerance-level residues. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to sulfentrazone in drinking water. EPA used similarly conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. These assessments will not underestimate the exposure and risks posed by sulfentrazone.

EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to sulfentrazone will occupy 1.1% of the aPAD for all infants less than 1-year-old and 6.7% of the aPAD for females 13-49 years old, the population groups receiving the greatest exposure.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to sulfentrazone from food and water will utilize 7.0% of the cPAD for children 1-2 years old, the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of sulfentrazone is not expected.

3. Short-term risk. Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Sulfentrazone is currently registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to sulfentrazone. Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in an aggregate MOE of 490 for adults. Because EPA's level of concern for sulfentrazone is a MOE of 100 or below, this MOE is not of concern.

4. Intermediate-term risk. Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). An intermediate-term adverse effect was identified; however, sulfentrazone is not registered for any use patterns that would result in intermediate-term residential exposure. Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for sulfentrazone.

5. Aggregate cancer risk for U.S. population. Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, sulfentrazone is not expected to pose a cancer risk to humans.

6. Determination of safety. Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to sulfentrazone residues.

Adequate enforcement methodology, gas chromatography (GC), is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: [email protected].

In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.

No Codex MRLs have been established for sulfentrazone on the crops cited in this document.

Two comments were received in response to the notice of filing. One was against the establishment of any tolerances for sulfentrazone and the other stated “deny this application to change the tolerance on this product.”

Although the Agency recognizes that some individuals believe that pesticides should be banned on agricultural crops, the existing legal framework provided by section 408 of the Federal Food, Drug and Cosmetic Act (FFDCA) authorizes EPA to establish tolerances when it determines that the tolerance is safe. Upon consideration of the validity, completeness, and reliability of the available data as well as other factors the FFDCA requires EPA to consider, EPA has determined that these sulfentrazone tolerances are safe. The commenters have provided no information supporting a contrary conclusion.

Therefore, tolerances are established for residues of sulfentrazone in or on Brassica, leafy greens, subgroup 4-16B at 0.60 ppm; chia, seed at 0.15 ppm; nut, tree, group 14-12 at 0.15 ppm; stalk and stem vegetable subgroup 22A at 0.15 ppm; teff, forage at 0.50 ppm; teff, grain at 0.15 ppm; teff, hay at 0.30 ppm; teff, straw at 1.5 ppm; and vegetable, Brassica, head and stem, group 5-16 at 0.20 ppm. In addition, the following existing tolerances are removed as unnecessary since they are superseded by the new tolerances: asparagus; Brassica, head and stem, subgroup 5A; Brassica, leafy greens, subgroup 5B; nut, tree, group 14; pistachio; and turnip, tops.

This action establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), nor is it considered a regulatory action under Executive Order 13771, entitled “Reducing Regulations and Controlling Regulatory Costs” (82 FR 9339, February 3, 2017). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), do not apply.

This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq.).

This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).

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

Therefore, 40 CFR chapter I is amended as follows:

The Commission adopted this Order on Reconsideration on January 30, 2018, and the decisions set forth therein for the Phase II auction, along with all associated requirements also set forth therein and the amendment to the heading of § 54.315 of the Commission's rules, 47 CFR 54.315, go into effect May 14, 2018, except for the new or modified information collection requirements related to the location adjustment process contained in paragraphs 12-14 and the amendment to 47 CFR 54.315(c)(1)(ii), that require approval by the Office of Management and Budget (OMB). The Commission will publish a document in the Federal Register announcing approval of those information collection requirements and the date they will become operative.

This is a summary of the Commission's Order on Reconsideration in WC Docket Nos. 10-90, 14-58, 14-259, AU Docket No. 17-182; FCC 18-5, adopted on January 30, 2018 and released on January 31, 2018. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW, Washington, DC 20554, or at the following internet address: https://transition.fcc.gov/Daily_Releases/Daily_Business/2018/db0131/FCC-18-5A1.pdf

1. Discussion. The Commission declines to reconsider the weights it adopted for bids in the Phase II auction for the varying performance tiers and latency levels. In adopting these weights, which the Commission found to be within a reasonable range of the increments proposed in the record, the Commission appropriately recognized the value of higher-speed and lower-latency services to consumers. The Commission sought to balance its preference for higher-quality services with its objective to use the finite universal service budget effectively. Based on its predictive judgment, the Commission concluded that its approach is likely to promote competition within and across areas by giving all service providers the opportunity to place competitive bids, regardless of the technology they intend to use to meet their obligations.

2. The Commission disagrees with Hughes' contention that low-latency, high-speed bids will always necessarily win. Bids will be scored relative to the reserve price and therefore bids placed for lower speeds and high latency will have the opportunity to compete for support, but will have to be particularly cost-effective to compete with higher tier bids.

3. Hughes presents a hypothetical example that only reinforces the conclusion that adopting minimal weights would be inappropriate. Even if the Commission were to adopt Hughes' proposed weights, it is unclear from Hughes' own statements in the record whether Hughes could place winning bids. Hughes argues that the Commission failed to take into account record evidence that “the lower bound for satellite providers' bids will be above $185 per customer per month in the 25/3 Mbps tier,” and that there was no data in the record to contradict its showing. Assuming that Hughes could receive from subscribers a reasonably comparable rate of $88 per month for offerings at 25/3 Mbps, Hughes claims that the lower bound for satellite providers' bids in this tier will be above $185 per customer per month. In the example, Hughes compares a fiber-based provider bidding a reserve price of $250 in the Gigabit tier to a satellite provider bidding $187 in the Baseline tier under two scenarios. Under the hypothetical, the Gigabit bid would win using the Commission's adopted weights; using Hughes' proposed weights, the satellite provider would win. If the fiber-based provider and the satellite provider required $250 and $187 in support per location, respectively, neither would win given the Commission's decision to adopt a per location funding cap of $146.10. Notwithstanding the reserve price, the Commission is not convinced that awarding $187 per customer for high-latency, lower-speed satellite service would be the preferred outcome, or particularly cost-effective, if it could fund a Gigabit network for only $63 more per customer. Lowering support amounts is not the Commission's only goal. Rather, the Commission must balance—within a finite budget—its goal of lower support amounts and wider coverage with its goal of service at higher speeds and lower latency.

4. Hughes has not presented any analysis or data that persuades the Commission that it should alter the balance it sought to achieve with the adopted weights. The Commission previously concluded that adopting smaller weight differences between tiers, as Hughes advocates, would be inappropriate. The Commission was concerned that minimal weighting could deprive rural consumers of the higher-speed, lower-latency services that consumers value and that are common in urban areas. The Commission predicted that minimal weight differences would likely result in bids in lower tiers prevailing, leaving all consumers with minimum service even though some service providers might be able to offer increased speeds for marginally more support.

5. The Commission is not persuaded that it should reconsider the weights adopted by the Commission to reflect the consumer preference data cited by Hughes. In the Phase II Auction FNPRM Order, 82 FR 14466, March 21, 2017, the Commission concluded that “establishing weights based on specific data is likely to be a drawn out and complicated process that may further delay the Phase II auction and may not produce an improved outcome in the auction.” Hughes argues that the Commission adopted weights that provide “too great of a bidding advantage to high-speed, high-capacity, low-latency services,” and claims that “[s]atellite broadband customers are just as satisfied as the customers of other types of broadband providers, notwithstanding the inevitable latency resulting from the data travel time to and from a geostationary satellite.” Hughes now claims that “changing the bidding weights would require simply changing numeric values in the Commission's existing auction software and result in no delay.” Even if it were true that changing the auction software would be easy, there would only be no delay if the Commission simply accepted Hughes values and ignored data cited by other parties. Nothing in Hughes' reply comments fundamentally changes the Commission's prior conclusion.

6. The Commission previously rejected arguments that it should adopt a narrower weight for latency than for speed tiers to account for claims that consumers value higher speed over latency. The Commission emphasized that “these claims do not address the concerns raised by commenters about the inherent limitations of high latency services—particularly for interactive, real-time applications and voice services given that high latency providers may be the only voice providers in the area.” Hughes does not address the inherent limitations of satellite voice service, particularly in rural areas, and argues that there is no valid policy reason to provide such an advantage to low-latency bids. The Commission disagrees. In areas where winning bidders begin receiving Phase II support, the incumbent price cap carriers not receiving such support will be immediately relieved of their federal high-cost eligible telecommunications carrier (ETC) obligation to offer voice telephony in those census blocks, and the winning bidder will have the responsibility of providing the supported service: voice telephony. The potential savings to the Fund of supporting non-terrestrial broadband services must be balanced with the fact that providers of such services will have the obligation to provide the supported service—voice telephony—to rural consumers as well.

7. The Commission also is not persuaded by Hughes' argument that it should reduce the speed and latency weights to “account for satellite broadband systems' more expedited deployment capabilities.” Hughes argues that satellite service is “quicker to market” because it is not affected by obstacles faced by terrestrial broadband providers such as lengthy permitting processes, construction delays, limited consumer demand, or geographical isolation. Although satellite service may theoretically be available sooner in rural areas, it is not clear that satellite providers will be meeting the needs of rural and underserved communities any sooner than other providers. The Commission granted a petition for reconsideration regarding re-auctioning areas served by high-latency service providers, filed by ViaSat and supported by Hughes, because it agreed that it may be difficult for high-latency service providers to obtain enough subscribers to meet a 35 percent subscription threshold by the end of the third year of support. In doing so, the Commission was persuaded by comments suggesting that many of the factors related to low adoption are likely to be present in more rural high-cost areas of the country. The Commission has no reason to think these factors have changed and decline to modify the weights to account for “speed to market.”

8. For the reasons stated above, the Commission declines to reconsider the weights the Commission adopted for bids in the Phase II auction for the varying performance tiers and latency levels.

9. Discussion. As an initial matter, the Commission clarifies that it has not yet specified which of the methods for subjective determination of transmission quality identified in ITU-T Recommendation P.800 should be used to demonstrate compliance with the second part of the two-part standard (MOS of four or higher). Based on the sparse record before the Commission, it declines to do so at this time. ADTRAN proposes that the Commission specify use of a conversational-opinion test and argues that this is preferable to a listening-opinion test, or the ITU's other recommended option: interview and survey tests. The Commission finds that there is insufficient information in the record to specify which of the ITU's recommended options applicants should be prepared to use to demonstrate an MOS of four or higher. The Commission expects that the specific methodology will be adopted by the Bureaus and Office of Engineering and Technology (OET) by June 2018, consistent with the Commission's previous direction to refine a methodology to measure the performance of ETCs' services subject to general guidelines adopted by the Commission.

10. The Commission also clarifies that recipients of Phase II support awarded through competitive bidding should use the same testing methodologies for measuring peak period roundtrip latency adopted for price cap carriers accepting model-based Phase II support. That is, the same testing methodologies should be used by Phase II recipients whether they are demonstrating compliance with the 100 ms requirement or the 750 ms requirements. As set forth in the Phase II Service Obligations Order, 78 FR 70881, November 27, 2013, providers can rely on existing network management systems, ping tests, or other commonly-available measurement tools, or on the alternative Measuring Broadband America (MBA) program results if they have deployed at least 50 white boxes in funded areas throughout the state.

11. Discussion. The Commission adopted the standalone voice requirement in 2011. When it adopted the separate standalone broadband reasonable comparability requirement in 2014, the Commission explained that “high-cost recipients are permitted to offer a variety of broadband service offerings as long as they offer at least one standalone voice service plan and one service plan that provides broadband that meets the Commission's requirements.” Setting aside the untimeliness of these requests, the Commission would not reconsider the requirement that Connect America Fund recipients offer voice telephony—the supported service—at rates that are reasonably comparable to rates for voice service in urban areas. The Commission is not persuaded by arguments that, because VoIP is provided over broadband networks and over-the-top voice options are available, broadband service providers need only offer broadband as a standalone service. Phase II auction recipients may be the only ETC offering voice in some areas and not all consumers may want to subscribe to broadband service. To comply with Connect America Fund service obligations, support recipients can offer VoIP over their broadband network on a standalone basis, but they must offer the service at the reasonably comparable rate for voice services.

12. Discussion. The Commission clarifies that it will permit Phase II auction support recipients to bring to the Commission's attention disparities between the number of locations estimated by the CAM and the number of locations actually on the ground in the eligible census blocks within their winning bid areas in a state. If a support recipient can sufficiently demonstrate that it is unable to identify enough actual locations on the ground across all the eligible census blocks to meet its total state requirement, its obligation will be reduced to the total number of locations it was able to identify in the state and its support will also be reduced on a pro rata basis. Specifically, within one year after release of the Phase II auction closing public notice, a recipient that cannot identify enough actual locations must submit evidence of the total number of locations in the eligible areas in the state, including geolocation data (indicating the latitude/longitude and address of each location), in a format to be specified by the Bureau, for all the actual locations it could identify. The Commission directs the Bureau to establish the procedures and specifications for the submission of this information, such as collecting the data through the Universal Service Administrative Company's (USAC) High Cost Universal Service Broadband (HUBB) online location reporting portal. Relevant stakeholders would have the opportunity to review and comment on the information and to identify other locations, following which the Bureau shall issue an order addressing the recipient's showing and any such comments. The evidence submitted by a support recipient will also be subject to potential audit.

13. The Commission directs the Bureau to implement this process, consistent with the Commission's prior direction to the Bureau concerning model location adjustments. Specifically, in cases where the Bureau has determined by a preponderance of the evidence that there are no additional locations in the relevant eligible census blocks in the state, the Commission directs the Bureau to adjust the support recipient's required state location total and reduce its support on a pro rata basis for that state. The Commission directs the Bureau to specify the types of information that a support recipient should submit to demonstrate that it could not locate additional locations on the ground, specify the types of evidence that commenters should submit to dispute the evidence provided by the support recipients and set the parameters of this review process, set the parameters for the audits, and adopt any other necessary implementation details. The Commission directs the Bureau to issue a public notice or order (following its issuance of a notice and opportunity for comment) detailing instructions, deadlines, and requirements for filing valid geolocation data and evidence for both support recipients and commenters.

14. The Commission adopts this process because it is persuaded that potential bidders may be reluctant to bid on census block groups if the number of locations estimated by the CAM is substantially different from the number of actual locations currently on the ground, leaving those areas without an opportunity to get served through the Phase II auction. While parties claiming that there are discrepancies between the CAM and the facts on the ground have not demonstrated that the data and analyses they are relying on are necessarily more accurate than the CAM, the Commission agrees that support recipients should not be penalized if the actual facts on the ground differ from the CAM's estimates. Accordingly, the Commission has decided to require support recipients seeking to adjust their required locations to gather and submit geolocation data to demonstrate that they have done the necessary legwork to identify locations within their service areas. By requiring applicants to submit geolocation data and demonstrate that there are no additional locations in the relevant areas, providing an opportunity for relevant stakeholders to comment on the findings, and conducting audits, the Commission also intends to prevent any cherry picking that might occur if support recipients only identify the easiest-to-serve locations and ignore harder-to-serve locations. The Commission also emphasizes that applicants are required to conduct the necessary due diligence prior to submitting their short-form applications, including identifying locations they will serve within the eligible areas, so that they can certify that they will be able to meet the relevant public interest obligations when they submit their applications.

15. The Commission declines to permit support applicants to identify additional locations to serve above their required state total with an accompanying increase in support. The Commission has a finite Phase II budget that will be allocated through the auction. Accordingly, the Commission would be constrained from giving support recipients more support.

16. The Commission is also not convinced that it should take the further step of broadening the Commission's existing definition of locations for all Phase II auction recipients so they have more potential locations that they can serve in their winning census blocks. The focus of Phase II has been on serving housing units and businesses that receive mass market service, with areas being designated as high-cost by the CAM based on the cost to serve these types of locations. Moreover, reserve prices are being set using the CAM, and the Commission proposed awarding no more support than the CAM calculates is needed to serve housing units and businesses receiving mass market services in high-cost areas, with a cap on extremely high-cost locations. Accordingly, the Commission declines to permit all recipients to divert Phase II support away from housing units and businesses receiving mass market services to other types of locations because some recipients may find it difficult to serve the number of locations identified by the model.

17. Finally, the Commission declines to monitor a support recipient's compliance at a census-block level or to allow a support recipient to count toward meeting its deployment obligation locations that do not exist. In comments filed on specific bidding procedures for this auction, several parties propose allowing recipients that make service available to all actual locations in a census block to receive credit for making service available to all model-indicated locations within that census block. For instance, under this proposal, if a census block had only six actual locations to be served, and the CAM indicated there were 14 locations to be served, a recipient would receive credit for serving 14 locations in that census block after serving only six. Such a system could create perverse incentives to focus deployment on the types of census blocks in the example, leading to fewer consumers receiving broadband overall. The Commission already decided it would monitor compliance at the state-level so that a support recipient would have to serve locations in other eligible census blocks in the state if it cannot locate enough actual eligible locations within a census block, and the opportunity to petition the Commission to reconsider this decision has passed. The commenters' challenge to this statewide approach is untimely. To the extent there are discrepancies between the number of actual locations on the ground and the CAM-estimated statewide location totals, a support recipient can take advantage of the process adopted above.

18. Discussion. The Commission denies Verizon's request. The Commission is not persuaded that it should reduce the service obligation to give recipients 90 percent flexibility. The Commission acknowledges that, because costs will be averaged at the census block level, all the locations the CAM identified in each census block in the authorized bids will count towards Phase II auction recipients' funded location total, unless adjusted using the process adopted above. While this differs from the Phase II model-based support requirements, in which some of the locations in some of the census blocks do not count toward the state-required location totals, Phase II auction bidders will have the advantage of choosing which eligible census blocks to include in their bids. Because compliance will be determined on a state-wide basis, the bidder can identify additional locations in the other eligible census blocks within the census block group or choose to bid on additional census block groups where it is able to identify more locations in eligible census blocks than the CAM had identified to meet its statewide total. As the Commission explained above, if a support recipient sufficiently demonstrates that it is unable to identify enough locations to meet its total support obligation statewide, it can also have its location total adjusted with an accompanying reduction in support.

19. If the Commission were to permit Phase II auction recipients to use up to 90 percent flexibility in each state, the result could be as much as an additional five percent of locations potentially remaining unserved in Phase II auction-funded census blocks. Because these unserved locations would be in census blocks where Phase II auction recipients are receiving support, targeting support to these locations through another mechanism could prove difficult. Instead, the Commission concludes that 95 percent flexibility is a more reasonable balance between ensuring that as many locations as possible get served in Phase II auction-funded areas and giving recipients some flexibility in the case of unforeseeable circumstances.

20. The Commission acknowledges that some bidders may bid for more support to compensate for the risk of having to return support if they cannot meet the 100 percent service milestone. But the Commission concludes that this potential increase in costs is outweighed by the benefits of ensuring that at least 95 percent—as opposed to 90 percent—of the required number of locations in Phase II-funded areas are served, particularly given that unserved locations in Phase II-funded areas would be difficult to target with another support mechanism. Additionally, the Commission expects that the competitive pressure imposed by competing for a finite budget in the Phase II auction will help mitigate bid inflation. Finally, any support that is returned by a Phase II recipient that serves less than 100 percent of the required number of locations can be repurposed to support broadband through other universal service mechanisms.

21. For these reasons, the Commission also is not persuaded that it should permit Phase II auction recipients to take advantage of the 95 percent flexibility without returning an associated amount of support. Moreover, the Commission is not convinced by claims that it is unnecessary for such recipients to return support because bids will “already reflect the cost of building out to the minimum number of locations.” Instead, the Commission expects that all Phase II auction bidders will bid with the intention of serving 100 percent of funded locations, will factor the cost of serving 100 percent of the locations into their bids, and will take advantage of the flexibility only if necessary. Indeed, if the Commission lowered the flexibility to 90 percent, under Verizon's logic, the Commission would be conceding that even more locations within eligible blocks could be unserved following the auction. Because Phase II auction bidders are required to conduct due diligence prior to bidding, the Commission explained that it adopted the flexibility to address “unforeseeable challenges” that Phase II auction recipients may have in meeting their deployment obligations. If a Phase II auction bidder initially plans to build to only 95 percent of the required number of locations and then later in the support term experiences unforeseeable events, it will be subject to non-compliance measures if it is unable to serve at least 95 percent of locations and is unable to obtain a waiver. The Commission expects it would be difficult for a recipient to meet its burden of demonstrating good cause to grant a waiver of the deployment obligations if it did not plan to build to 100 percent of funded locations at the outset of its support term.

22. Discussion. The Commission declines to reconsider the Commission's decision not to adopt an accelerated payment option for recipients of Phase II auction support. The Commission is not convinced that the benefits of an accelerated payment option would outweigh any potential additional burden on rate payers. Moreover, as the Commission explained, service providers already have the incentive to build out their networks more quickly so that they can begin earning revenues to help with their costs. They also have an incentive to meet the final service milestone as soon as possible because once it has been verified that they have met their deployment obligations, they can further reduce costs by no longer maintaining a letter of credit. While Crocker Telecommunications suggests that the requirement that Phase II auction recipients offer the required services at rates that are reasonably comparable to those offered in urban areas means that revenues may not offset the higher costs of building in rural areas, nothing precludes a recipient from securing other funding options that can help with the upfront costs of building out and maintaining its network before it receives its full ten years of support.

23. Additionally, the Commission is concerned about its ability to accurately predict the amount by which the Phase II auction budget could be exceeded and, in turn, the potential impact of an accelerated option. Crocker Telecommunications suggests that, given the size of the Phase II auction budget relative to the entire universal service budget, and taking into consideration the additional contributions from providers that will be offering VoIP over their Phase II-funded networks, an accelerated payment option would not result in “dramatic swings in the contribution factor” if the Commission exceeds its annual Phase II auction budget. Whereas in the rural broadband experiments, the Commission had access to the entire $100 million budget at the start of the program, and thus could make an accelerated payment option available because the Commission could cover any upfront payment requests without needing to increase the contribution factor or wait for the following year's budget, here, however, the Commission will have only the annual Phase II auction budget available each year. Too many unknowns remain about the Phase II auction—including the number of bidders that will participate, the number of bidders that would request and qualify for an accelerated support option, the size of those bidders' bids, and the timing for when the bidders would be eligible to receive accelerated support—to predict with any degree of certainty how much the Commission could potentially exceed the annual budget if it were to adopt an accelerated option.

24. Even if the Commission could determine that giving Phase II auction recipients the option of receiving accelerated support would not dramatically increase the contribution factor, the Commission is not convinced that it would serve the public interest to do so. The Phase II auction is one of many universal service programs, and the Commission is responsible for making decisions that balance the objectives of all of the programs with the burdens on the end-user rate payers that fund the programs. The Commission is not persuaded that increasing the contribution factor by even a small margin for the Phase II auction would be justified for the sole purpose of providing more support earlier in the term, given the Commission's efforts to also remain within a budget for other universal service programs.

25. Discussion. The Commission dismisses as untimely NRECA and UTC's petition for reconsideration of the Commission's decision to exclude from the Phase II auction RBE census blocks that are served by an unsubsidized competitor with broadband at speeds of 10/1 Mbps. The Commission decided in the December 2014 Connect America Order, 80 FR 4446, January 27, 2015, that “any area” served by an unsubsidized competitor offering 10/1 would be excluded from the Phase II auction. The Commission also stated that shortly before the Phase II auction it expected to “update the list of census blocks that will be excluded from eligibility” from the Phase II auction “based on the most current data” so as to “take into account any new deployment that is completed” prior to the auction. The Commission did not indicate that there would be any exceptions to this decision. The Commission's decision not to offer support in areas served by an unsubsidized competitor is one of the fundamental principles of the Connect America Fund, so it is reasonable to expect that the Commission would make explicit any exceptions to this policy.

26. Because the Commission made the decision to exclude all census blocks served by an unsubsidized competitor from the Phase II auction in the December 2014 Connect America Order, NRECA and UTC should have filed a petition for reconsideration of this decision within 30 days of publication of that order in the Federal Register. NRECA and UTC failed to do so. Instead, NRECA and UTC filed a petition for reconsideration of this decision after the May 2016 Phase II Auction Order, 81 FR 44414, July 7, 2016. In that order, the Commission took steps to implement the decisions it had already made about Phase II auction eligible areas in the December 2014 Connect America Order, including its decision to exclude areas served by unsubsidized competitors, by deciding that it would: (1) Rely on the most recent publicly available FCC Form 477 data for identifying eligible Phase II auction census blocks, (2) conduct a limited challenge process, (3) average costs at the census block level, and (4) direct the Bureau to release a preliminary list of eligible census blocks. NRECA and UTC do not take issue with these implementation decisions. Because NRECA and UTC instead seek reconsideration of the Commission's underlying decision in the December 2014 Connect America Order to exclude from the Phase II auction census blocks served by unsubsidized competitors, the Commission dismisses this portion of the petition as untimely.

27. Notwithstanding the untimely nature of this portion of the petition, the Commission denies it on the merits. The Commission similarly denies the timely filed portion of the petition asking it to reconsider its decision to exclude from the auction RBE census blocks served by price cap carriers at broadband speeds of 10/1 Mbps. In both instances, the Commission concludes that its decision to exclude these census blocks reasonably balances the Commission's objectives in furtherance of the public interest. The Commission has repeatedly emphasized that while it has a preference for higher speeds, higher data usage, and lower latency, it must balance these preferences against its objective of maximizing its finite budget to serve as many unserved consumers as possible and not overbuilding locations served by private capital. For this reason, the Commission adopted different performance tiers for the Phase II auction starting with 10/1 Mbps speeds, and for this reason the Commission decided to make ineligible census blocks already served by unsubsidized competitors and price cap carriers at broadband speeds of 10/1 Mbps. Although the decision to exclude these census blocks means that these areas may not have access to higher speeds through the Phase II auction, the Commission found that using the Phase II auction budget to address the digital divide by targeting those areas that lack a provider offering even 10/1 Mbps speeds to at least one residential location was a more effective use of the limited Phase II budget.

28. UTC and NRECA are asking the Commission to use its finite budget to fund census blocks where either an unsubsidized competitor using private capital or a price cap carrier has already deployed broadband at speeds meeting or exceeding the Commission's minimum 10/1 Mbps speeds. The Commission recognizes that all locations in these census blocks may not be served with 10/1 Mbps or higher speeds, as they would have been if the blocks were included in the Phase II auction. Nevertheless, the Commission concludes that, on balance, it better serves the public interest to focus its finite budget on areas that lack any broadband provider offering speeds that meet the Commission's requirements than on areas that have such a provider somewhere in the block. This approach will ensure that the Commission's budget will be used to serve consumers that completely lack access to broadband meeting its minimum speed requirements rather than diverting funds to potentially overbuild areas where consumers already have access to such service.

29. The Commission is not convinced by UTC and NRECA's arguments that the “cost efficiencies that would be gained by removing [the rural broadband experiment] census blocks are greatly outweighed by the public interest benefits that would be lost if [the] census blocks go unfunded.” Although it is possible that the current provider offering 10/1 Mbps in these areas may cease offering service at these speeds, it also is possible that the current provider could improve its offerings without Connect America support. Similarly, it is possible that some price cap carriers or unsubsidized competitors may target only one location in the RBE census blocks with 10/1 Mbps broadband service to make them ineligible for the Phase II auction. But consumers overall may benefit if such service providers take this opportunity to expand their 10/1 Mbps broadband offerings without Phase II auction support because that support then could be directed to areas that are totally unserved. There is also a possibility that service providers that were interested in bidding in RBE census blocks that are now ineligible may still win support in surrounding eligible areas. Such recipients may be able to leverage their funded networks in eligible areas so that it becomes cost-effective to deploy higher speeds in the ineligible census blocks absent support. Finally, if an area that was excluded from the Phase II auction does subsequently become unserved, either because the provider ceases offering service in that area or the provider does not upgrade its broadband service speeds to meet the Commission's current definition of “served,” the Commission could make that area eligible for the Remote Areas Fund or for other future competitive bidding to the extent it remains unserved.

30. The Commission also is not persuaded by NRECA and UTC's claims that potential applicants “acted in good faith” in assuming that all RBE census blocks would be made eligible for the Phase II auction or that the Commission's decisions “penalize[ ]” those potential applicants for moving forward and deploying broadband prior to the Phase II auction. As the Commission explains below, all potential bidders have known since at least April 2014 that the Commission contemplated excluding certain census blocks from the Phase II auction, and it had been the Commission's longstanding policy to exclude census blocks served by unsubsidized competitors for its programs since the Connect America Fund was created. But even if the Commission were to agree that it was reasonable for applicants to assume that all RBE census blocks would be included, the Commission is not convinced that applicants that intended to bid on these blocks are worse off than applicants that intend to bid on other census blocks. Any census block that is on the preliminary eligible census block list could subsequently become ineligible if it is reported as served in the most recent publicly available Form 477 when the final list of eligible census blocks is released. This means that any applicant could invest resources to get ready to bid for an area, only to later discover that it is no longer eligible. The Commission took measures to reduce this possibility by directing the Bureau to release the final census block list three months prior to the short-form application filing deadline so that applicants have time to plan and prepare for bidding. The Commission also concludes that the potential costs applicants incur in planning to bid on census blocks that ultimately become ineligible are outweighed by the benefits to consumers of using the Phase II auction budget efficiently.

31. Moreover, the fact that some applicants already deployed networks in the RBE blocks, even though they acknowledge they had no guarantee of winning support through the auction, provides further support for the Commission's decision not to make these census blocks eligible for the auction. The Commission did not adopt the eligibility rules or the public interest obligations for the Phase II auction until the Phase II Auction Order in May 2016. Thus, the entities that NRECA and UTC cite in their petition as already having deployed broadband to these areas in July 2016 did not know, when they deployed broadband to these areas, if they could meet the eligibility requirements or what public obligations would be required; whether their applications would ultimately be approved to participate in the auction; whether they would win in the Phase II auction; and, whether they would be authorized to receive support. Given these uncertainties, it seems unlikely that a broadband provider would deploy to an area if it thought it could not sustain the service without support. Because these providers could make a business case to serve these areas, even at the risk that they would not qualify to participate in the auction or win support, the Commission sees no reason why it should use its finite funds to support these areas instead of areas where no provider has been able to make a business case to serve.

32. The Commission also disagrees with NRECA and UTC's claims that its decisions favor price cap carriers. NRECA and UTC claim that price cap carriers were given the “right of first refusal to model based support without any removal of census blocks in those areas.” However, they neglect to acknowledge that census blocks that were served by unsubsidized competitors at 4/1 Mbps and above (the Commission's minimum speed requirement when the decision was made) were removed from the offer of model-based support, as were the RBE census blocks that are the subject of the petition. Moreover, price cap carriers and other competitive bidders are both precluded from receiving Phase II support in ineligible RBE census blocks because they were removed from the offer of model-based support and from the Phase II auction.

33. The Commission also does not find it persuasive to compare its decisions with respect to the offer of model-based support to price cap carriers with its decisions to remove certain census blocks from the Phase II auction. NRECA and UTC claim that the Commission's decisions are “arbitrary and capricious” because they “disparately den[y] competitive providers . . . from being able to receive funding under Phase II in areas where they have deployed broadband networks.” Price cap carriers were able to receive Phase II funding in areas where they had already deployed 10/1 broadband service. But for the offer of model-based support, the Commission offered price cap carriers a state-wide commitment in high-cost areas so that if they accepted support, they would be required to offer voice and broadband at speeds of 10/1 Mbps to the required number of locations in their service area in the state where they were already an ETC, and in most cases they were already receiving universal service funding in those areas. The Commission decided that it preferred this approach as opposed to one in which the Commission would immediately adopt competitive bidding everywhere because price cap carriers were “in a unique position to deploy broadband networks rapidly and efficiently” throughout their “large service areas.” The Commission further concluded that, on balance, and in its predictive judgment, its approach “best serves consumers in these areas in the near term, many of whom are receiving voice services today supported in part by universal service funding and some of whom also receive broadband, and will speed the delivery of broadband to areas where consumers have no access today.”

34. Here, the Commission also used its predictive judgment when deciding how to allocate its finite Phase II auction budget to best serve consumers, but under different conditions. For the Phase II auction, a service provider need not be the incumbent to compete for support; bidders can be selective about which eligible areas they include in their bids; bidders may not have received universal service support in the past to serve the areas for which they intend to bid; and, there are likely more areas eligible for support than there is support available. For the offer of model-based support, the Commission was constrained by the service area of a specific price cap carrier and reliant on only one incumbent carrier to reach its objectives of maximizing coverage. Here, the Commission is constrained by the Phase II auction budget. Therefore, it decided to take a different approach in the Phase II auction by targeting support only to those areas that are unserved by price cap carriers and unsubsidized competitors at 10/1 Mbps minimum broadband speeds. Nothing in the record persuades the Commission that it would better serve the public interest by reconsidering this approach.

35. Nor is the Commission convinced that its decision to exclude certain census blocks from the Phase II auction “frustrate[s] the fundamental purpose” of the rural broadband experiments. NRECA and UTC claim that the purpose of the experiments was to “challenge status quo broadband from the price cap carriers.” While the Commission may have indicated that it expected the rural broadband experiments to provide the Commission with information about “which and what types of parties are willing to build networks that will deliver services that exceed” the performance standards the Commission adopted for the offer of model-based support, the Commission intended to use what it learned to inform the rules it adopted for the Phase II auction. The Commission did not decide to exclude the RBE census blocks from the offer of model-based support to price cap carriers until after rural broadband experiment bidders had placed their bids, suggesting that it was not the fundamental purpose of the program to give losing rural broadband experiment bidders another opportunity to bid for support in the RBE census blocks in the Phase II auction. Instead, the rural broadband experiments served their purpose by giving the Commission valuable experience and data it could use when determining the public interest obligations and eligibility requirements for the Phase II auction. The Commission is under no obligation to ensure that all participants in the rural broadband experiments have the opportunity to bid for their desired census blocks in the auction, particularly when it would conflict with the Commission's overall objectives for the Phase II auction.

36. Finally, the Commission disagrees with NRECA and UTC's claims that applicants had no notice that the Commission might exclude RBE census blocks from the Phase II auction. Consistent with the requirements of Section 553 of the Administrative Procedure Act, interested parties had an opportunity for meaningful comment on the Commission's proposals to exclude certain census blocks from Phase II auction eligibility. The Commission noted in the April 2014 Connect America FNPRM, 79 FR 39196, July 9, 2014, that, if its proposal to establish 10 Mbps as the minimum broadband downstream speed was adopted, “Phase II funds would only be available in a competitive bidding process for any area lacking 10 Mbps/1 Mbps.” In the FNPRM, the Commission sought comment on excluding from the Phase II auction “any area” that is served by a price cap carrier that offers fixed residential voice and broadband meeting the Commission's requirements, and on excluding from Phase II “those census blocks” that are served by a facilities-based terrestrial competitor offering voice and broadband services at 10/1 Mbps.

37. Although the Commission did not seek comment on applying these exclusions specifically to the RBE census blocks, such action is a logical outgrowth of the Commission's proposals. Under the “logical outgrowth” standard, a notice of proposed rulemaking does not violate notice requirements under the Administrative Procedures Act if it “provide[s] the public with adequate notice of the proposed rule followed by an opportunity to comment on the rule's content.” First, the Commission sought comment “on the broader question of whether universal service funds are ever efficiently used when spent to overbuild areas where another provider has already deployed service.” Given the broad nature of this question, the parties were on notice that the Commission was contemplating eliminating support for served areas in any universal service context. Second, while the FNPRM did not explicitly propose that the RBE census blocks would be made eligible for the Phase II auction if they were removed from the offer of model-based support, both NRECA and UTC filed comments in response to the FNPRM requesting that the Commission make the RBE census blocks available for competitive bidding. Because they had the opportunity to urge the Commission to include the census blocks in the Phase II auction, they also had the opportunity to comment on how the Commission's proposals for the Phase II auction—including whether to exclude areas served by unsubsidized competitors—should or should not apply to the RBE census blocks. In fact, those comments also separately discuss the Commission's proposals to remove from eligibility the Phase II auction census blocks served by price cap carriers and raise similar arguments to those raised in the petition. In the section seeking comment on the interplay between the Phase II offer of model-based support and the rural broadband experiments, the Commission did not suggest that census blocks removed from the offer of model-based support would be exempt from its broader Phase II auction proposals if the removed blocks were considered eligible for the Phase II auction inventory.

38. Discussion. The Commission declines to reconsider its Phase II auction eligibility rules and automatically qualify to participate in the Phase II auction those entities that were selected as provisional winning bidders for the rural broadband experiments. The Commission is not persuaded that provisionally-selected bidders that failed to submit all of the required information during the rural broadband experiments are necessarily qualified for the Phase II auction. Because provisionally-selected bidders that were not ultimately authorized to receive support did not submit all of the required technical and financial information at the post-selection review stage, Commission staff did not fully assess their qualifications once they were named as winning bidders.

39. Furthermore, the Commission is not convinced that it should permit provisionally-selected bidders that were ultimately authorized to receive rural broadband experiment support to participate in the Phase II auction without meeting the eligibility requirements for the Phase II auction. Although the Commission acknowledges that such entities underwent more extensive vetting than defaulting provisionally-selected bidders, eligibility requirements for applicants seeking to bid in the rural broadband experiments were not as rigorous as those proposed and adopted for the Phase II auction. As the Commission previously indicated, the eligibility considerations for participation in the rural broadband experiments bidding were different than they are for the Phase II auction. The rural broadband experiments were intended to award support to discrete experiments, and if the bidder defaulted, the area that was included in the bid would be eligible for the Phase II auction if it remained unserved. By contrast, the Commission seeks to balance maximizing coverage with its preference for supporting higher speeds, higher usage allowances, and lower latency through the Phase II auction, and if a bidder defaults, it would thwart these objectives by leaving the relevant area unserved when another qualified bidder may have been able to serve the area if it had won the support.

40. Moreover, because the obligations for the Phase II auction are not the same as those of the rural broadband experiment, the Commission concludes that it serves the public interest to independently assess the qualifications of rural broadband experiment recipients seeking to participate in the Phase II auction. The Commission has adopted different speed, capacity, and latency requirements and a different build-out timeline for the Phase II auction. When the Commission authorized provisionally-selected bidders to receive rural broadband experiment support, it was authorizing those entities based on the specific technologies and networks they intended to use to meet their rural broadband experiment obligations. For the Phase II auction, the Commission has proposed to determine an applicant's eligibility to bid for the performance tier and latency combinations it selects in part based on information regarding how it intends to meet the Phase II obligations, which may differ from how it intended to meet its rural broadband experiment obligations. Finally, the Commission began authorizing rural broadband experiment recipients in 2015, and the last rural broadband experiment recipient was authorized in 2016. Because the Phase II auction will not be held until 2018, an applicant's technical and financial qualifications may have changed since the Commission last had the opportunity to review them.

41. Discussion. The Commission grants Broad Valley and Crocker Telecommunications' petition for reconsideration in part by permitting Phase II auction recipients to reduce the value of their letter of credit to 60 percent of the total support already disbursed plus the amount of support that will be disbursed in the coming year once it has been verified that the Phase II auction recipient has met the 80 percent service milestone. However, the Commission also denies Broad Valley and Crocker Telecommunications' petition for reconsideration in part by declining to make further reductions in the value of the letter of credit.

42. The Commission is persuaded by commenters that claim that the Commission's existing letter of credit rules may impose significant costs on Phase II auction recipients, particularly on small providers. The Commission finds that it is reasonable to provide some additional relief from these costs by permitting Phase II recipients to reduce further the amount of support that a letter of credit must cover for Phase II recipients offering the required service to 80 percent of the required number of locations in a state. Because the Commission requires recipients to submit the geocoded locations that count towards their service obligations in an online portal with built-in validations, USAC will be able to quickly verify that a recipient's 80 percent service milestone has been met, thereby enabling the recipient to reduce the value of its letter of credit. As the Commission acknowledged in the Phase II Auction Order, the Commission expects that the risk of default will lessen as a Phase II auction recipient makes progress towards meeting its Phase II auction service milestones because, as recipients offer service to more locations, they have the opportunity to offset more of their deployment costs with revenues.

43. The letter of credit requirement applies to all winning bidders, which simplifies the administration of the letter of credit rules. However, the exact costs of obtaining and maintaining a letter of credit will affect each potential bidder in the Phase II auction differently. The letter of credit costs will likely vary based on the amount of support that a Phase II auction winning bidder is authorized to receive, and the impact of those costs is likely to vary based on the size and creditworthiness of the Phase II recipient. Therefore, the Commission cannot reasonably predict the cost of the requirement for each potential bidder relative to the benefit to the public of protecting the funds from default. However, the costs for a letter of credit in the range of several percentage points, when applied to the sizable amounts that may be awarded to bidders here, could well be considerable, particularly for smaller bidders. The Commission concludes on reconsideration that, on balance, the benefits of relieving all Phase II auction recipients of some additional costs of maintaining a letter of credit later in the term of support, after the recipient has met significant deployment milestones, outweigh the risk that the Commission will not be able to recover an additional portion of the support already disbursed if the recipient is unable to repay the Commission in the event of a default. Moreover, as the Commission discusses below, an applicant that is affected by high letter of credit costs may choose to build out its network more quickly so that it can close out its letter of credit sooner.

44. The Commission is not persuaded by claims that it should take further steps to reduce the cost of a letter of credit for Phase II auction recipients. While Broad Valley and Crocker Telecommunications present new proposals that would further reduce costs for recipients, the Commission is not convinced that these cost reductions would outweigh the associated risks to the public's funds. Under the Commission's rules, the Commission is able to recover the full amount of support that has been disbursed in prior years and support that will be disbursed in the coming year until the fourth year service milestone has been met, with only modest adjustments to the value of the letter of credit after a recipient has met the significant deployment milestones in the fourth and fifth years. In contrast, under Broad Valley's and Crocker Telecommunications' proposals, for the first three years of support, and prior to a recipient significantly deploying its network, the letter of credit would only cover support that had been disbursed in the previous year(s). Accordingly, the Commission would not be able to recover support that is disbursed in the year that a recipient defaults. Moreover, under Broad Valley's and Crocker Telecommunications' proposals, more drastic reductions would be made in the value of the letter of credit earlier in the support term. As a result, throughout the build-out period, the Commission would not be able to recover more than two years of disbursements if a recipient defaults.

45. Under these proposed approaches, the Commission would recover far less support if the recipient stops offering service and could not repay the Commission for the support associated with the locations that remain unserved. The Commission noted that the letter of credit will be drawn only in situations where the Phase II auction recipient does not repay the Commission for the support associated with its compliance gap, and that the recipients unable to repay the support are also more likely to be at risk for going into bankruptcy and ceasing operation of their networks. Without a letter of credit, the Commission has no security to protect itself against the risks of default. Accordingly, the Commission found that it was necessary to ensure it could recover a significant amount of support in such situations. Broad Valley and Crocker Telecommunications do not address these concerns in their petitions.

46. The Commission expects that its decision to make a further modest reduction in the required value of the letter of credit for Phase II auction recipients that have substantially met their obligations will help address some of the cost concerns of potential bidders, including small entities and new entrants. But the Commission is not persuaded that it should address these concerns by further reducing the value of the letter of credit. The Commission acknowledges that each winning bidder will have to certify in its long-form application that it will have available funds for all projects costs that exceed Phase II support. The Commission also recognizes that small entities and new entrants, which often lack the resources of larger and established companies so that letter of credit costs have more of an impact on their budgets, may have to factor more of these letter of credit costs in their bids, potentially leading to less competitive bids. However, all participants in the Phase II auction will have to factor in the various costs of meeting the Phase II auction obligations when deciding whether to participate in the auction and how much to bid to ensure they can cover all of the costs. The Commission took a number of steps at the request of small entities to help lessen these costs, including expanding the number and types of banks eligible to issue letters of credit so that small entities can obtain letters of credit from banks with which they have existing partnerships. Although some entities may still find that participating in the auction is cost-prohibitive or that they are unable to place competitive bids, the Commission is not convinced that it should put its ability to recover a significant amount of support at risk if these same entities were to participate and later discover that they are unable to meet the Phase II auction obligations and unable to repay the Commission for their compliance gap.

47. The Commission is not persuaded that making large reductions in the required value of the letter of credit when a recipient meets its service milestones would encourage recipients to build out their networks faster. Instead, the Commission expects that the letter of credit requirements it adopts today may encourage more rapid deployment. By making only modest adjustments for the fourth- and fifth-year service milestones, and requiring a recipient to maintain a letter of credit only until it has been verified that the recipient has met the final service milestone, the Commission expects that recipients will move faster to meet the final service milestone so that they no longer have to maintain a letter of credit. Indeed, smaller bidders, which might be most affected by letter of credit costs, are also more likely to have winning bids that can be completed in less than the full six-year deployment term. Moreover, if the recipient could instead significantly reduce the value of its letter of credit when it reaches earlier milestones, it may not have as much of an incentive to meet the final service milestone as quickly.

48. Discussion. The Commission declines to reconsider the formula it adopted for applying the weights for performance tier and latency combinations to give bids placed in Pennsylvania, in areas where Verizon declined Phase II support, an advantage over other bids by adding an additional negative weight for such bids. The Commission also declines to waive the Phase II auction rules to add such a weight to Pennsylvania bids.

49. Based on the record before the Commission, Pennsylvania has not persuaded the Commission that its proposal would more effectively balance its Phase II objectives in furtherance of its section 254 obligations and the public interest. The Commission balanced its interest in ensuring that consumers in declined states get access to broadband services with its objective of maximizing the finite Phase II budget by deciding to award support to cost-effective and higher service quality bids through the Phase II auction and then prioritize unserved areas in declined states in the Remote Areas Fund. As part of this balancing, the Commission determined that its adopted framework may encourage bidders to bid in declined areas and incentivize states to offer complementary support, so that declined states may still have a strong possibility of being served through the Phase II auction absent a preference. Bidders might be more interested in bidding in the declined areas in the state through the Phase II auction because those areas are lower cost. While the ranking of bids on a bid-to-reserve price basis, rather than on a dollar-per-location basis, may remove a potential bidding advantage for bidders in lower cost areas because those areas tend to have more locations, bidders may nonetheless be more likely to make a business case to serve such areas because they are lower cost. Bidders might also be more attracted to declined areas, and may have a higher likelihood of winning such areas, if a state such as Pennsylvania made available support that bidders could leverage to reduce the amount of Connect America support they were requesting, therefore making their bids more cost-effective when compared to other bidders nationwide.

50. The Commission is not convinced by Pennsylvania and the National Association of Regulatory Utility Commissioners' (NARUC) claims that Pennsylvania's proposal would “provide significant cost effectiveness and financial synergies that may not be available absent modification.” In fact, the Commission finds that adopting a negative weight could actually thwart its objectives of maximizing the Phase II auction budget and incentivizing states to contribute support. First, the negative weight would effectively double count the support that Pennsylvania offers to bidders because bidders would be able to reduce their bids by the amount of Pennsylvania support in addition to a negative weight applied to their Connect America bids in proportion to the amount of Pennsylvania support they receive. This could result in bidders asking for more Connect America support than they might if they could only use Pennsylvania support to reduce their bids (i.e., without the additional negative weight). With the negative weight applied to a Connect America bid that already accounts for Pennsylvania support, they could potentially win even though their bid is not as cost-effective as other bidders. Second, the negative weight could result in Pennsylvania making less support available than it would without this factor because the weight would give Pennsylvania bidders at least some advantage over other bidders, regardless of the amount of support provided by Pennsylvania.

51. The Commission also is not persuaded that the negative weight that Pennsylvania proposes would permit the Commission to effectively leverage the funds that Pennsylvania does make available to meet its Phase II auction objectives. Pennsylvania's petition does not describe with specificity the amount of funding that will be made available, and how the Commission will have assurance that the funding Pennsylvania makes available will actually be provided to the applicant. And although Pennsylvania's proposal would allocate federal support through the Phase II auction rather than establishing a separate allocation mechanism for Pennsylvania, the results of the auction may be skewed in a way that conflicts with Phase II objectives if a preference is given to bidders based on state support that is allocated in a manner that is inconsistent with decisions the Commission made for the Phase II auction. For example, Pennsylvania does not describe what specific restrictions will be placed on its funding to ensure it is used in areas that are eligible for the Phase II auction, how Pennsylvania will ensure that its funding is made available on a technology-neutral basis, and whether Pennsylvania will be using market-based mechanisms to allocate support. Without such information and safeguards, the Commission risks giving Pennsylvania bidders an advantage in the Phase II auction to the detriment of other cost-effective bidders even though state funding may ultimately not be made available, be spent to overbuild areas that already have broadband service, or be allocated in a manner that conflicts with the Commission's Phase II objectives. Unlike New York's NY Broadband Program, where the Commission found it could align its stated Phase II objectives with New York's existing broadband-funding program by adopting specific conditions to its waiver of the Phase II auction rules, here the Commission does not have enough specific information about the various programs Pennsylvania intends to use to allocate support in order to consider any appropriate conditions that might address its concerns.

52. In addition, the Commission is not convinced by Pennsylvania's claims that the negative weight would not “detract[]” from the Commission's goals of deploying broadband nationwide and would not “negatively impact[]” support that is available to other declined states. Due to the finite Phase II auction budget, there is a potential that not all interested bidders will ultimately be awarded support. Accordingly, any mechanism that would give Pennsylvania bidders an opportunity to make less cost-effective bids than other bidders in other states, but still win, has the potential to unreasonably skew support to the state at the expense of other areas that may be served more cost-effectively. Such a mechanism also could result in fewer consumers receiving broadband. For New York, the Commission knew the maximum amount of support that could be allocated through New York's program and it adopted certain measures that could stretch that support beyond the census blocks in New York that were eligible for the Phase II offer of model-based support. Because Pennsylvania has not provided specific information regarding how much support it intends to make available, and the value of the negative weight is based on how much state support a Pennsylvania bidder will receive, the Commission is unable to assess the potential impact of the negative weight on its nationwide broadband deployment objectives.

53. The Commission also disagree with Pennsylvania's claims that such a negative weight will not add complexity to the Phase II auction. First, a process must be created to determine and verify how much support each applicant has received or will receive from Pennsylvania state programs to determine how much negative weight to apply. Second, an auction system must be designed that uses a different formula for calculating bids in only the declined Pennsylvania areas. These steps add a significant layer of complexity to the auction and could potentially lead to a delay in commencing the Phase II auction.

54. The Commission acknowledges that Pennsylvania's proposed approach could reduce the possibility that Pennsylvania will have to wait “until the finalization of the Remote Areas Fund to make progress on its “intra-county digital divides,” may make it more likely that an amount equivalent to the support that Verizon declined is allocated to Pennsylvania through the Phase II auction rather than through the Remote Areas Fund, and would give Pennsylvania recognition for its past and future contributions to broadband deployment. However, the benefits of adopting the approach Pennsylvania recommends are outweighed by the drawbacks the Commission has discussed, and it is not persuaded that altering the balance already achieved by the Commission through its existing Phase II auction and Remote Areas Fund framework would serve the public interest. Pennsylvania is one of a number of states, including other states where Phase II model-based support was declined, that have supported and continue to support broadband deployment. The Commission concludes the most effective way to accomplish its Phase II objectives and leverage these state programs is to have bidders factor any state support that they have received or will receive into their bids so that they can place cost-effective bids within the existing Phase II auction and Remote Areas Fund auction framework.

55. The Commission disagrees with the assumption that states are entitled to receive the amount of support that the price cap carrier declined in the respective states. The Commission has made several decisions that contradict this assumption, including comparing all bids nationwide, making extremely high-cost census blocks nationwide eligible for the Phase II auction, adopting a limited budget, and deciding to score bids against each other nationwide on a ratio-to-reserve price basis. Instead, the Commission has acknowledged the importance of connecting a similar number of unserved consumers in the states that would have been reached had the Phase II offer been accepted and has committed to provide sufficient support to do so through both the Phase II auction and the Remote Areas Fund, to the extent possible.

56. The Commission also finds that Pennsylvania has not demonstrated good cause for waiving the Phase II auction scoring formula. First, Pennsylvania has not established special circumstances that warrant deviation from the Phase II auction scoring formula. When the Commission waived the Phase II auction program rules for New York, the Commission found that the state was uniquely situated to quickly and efficiently further its goal of broadband deployment. The state had committed a significant portion of its own support as matching support, and demonstrated that there were unique timing considerations given that it had already implemented its own broadband program and had aggressive service deadlines. Such conditions are not present here. As explained above, the Commission already intends to address Pennsylvania's status as a declined state through the existing framework it adopted for the Phase II auction and the Remote Areas Fund, and it is able to leverage any support that Pennsylvania makes available through that same framework. And while the Commission acknowledges and appreciates Pennsylvania's past efforts to encourage broadband deployment in the state, Pennsylvania has not demonstrated why its past state contributions warrant waiver of rules for the future allocation of federal support.

57. Second, even if the Commission were to find that Pennsylvania had established special circumstances, for the reasons explained above, Pennsylvania has not demonstrated the public interest would be served by waiving the Phase II auction formula to add a negative weight for bids placed in declined areas in the state. New York was able to demonstrate that waiver of the Phase II auction program rules would serve the public interest for a number of reasons including that it would result in accelerated broadband deployment, it would enable the Commission to use Phase II support efficiently and effectively by leveraging matching New York support in Connect America Phase II-eligible areas and avoiding overbuilding areas served by New York's program, and support would be awarded in a technology-neutral manner using a market-based mechanism consistent with Phase II auction objectives. Such conditions are not present here. For the reasons the Commission already discussed, although Pennsylvania's proposed approach could result in more declined areas in Pennsylvania being served through the Phase II auction, Pennsylvania has not demonstrated that its requested modification would necessarily further the Commission's objectives of using the finite Phase II auction budget efficiently or fully explained how its request would result in a more effective federal-state partnership. Instead, the Commission concludes that the framework it has adopted for the Phase II auction and the Remote Areas Fund will more effectively balance all of these objectives, while still leading to widespread broadband deployment across Pennsylvania's high-cost areas with complementary state support. Thus, the Commission concludes it would not serve the public interest to grant Pennsylvania a waiver.

58. This Order on Reconsideration contains new or modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. It will be submitted to the Office of Management and Budget (OMB) for review under Section 3507(d) of the PRA. OMB, the general public, and other Federal agencies will be invited to comment on the new or modified information collection requirements contained in this proceeding. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), the Commission previously sought specific comment on how it might further reduce the information collection burden for small business concerns with fewer than 25 employees.

59. The Commission will send a copy of this Order on Reconsideration to Congress and the Government Accountability Office pursuant to the Congressional Review Act, see 5 U.S.C. 801(a)(1)(A).

60. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission prepared Initial Regulatory Flexibility Analyses (IRFAs) in connection with the USF/ICC Transformation FNPRM, 76 FR 78384, December 16, 2011, the April 2014 Connect America FNPRM, and the Phase II Auction FNPRM (collectively, Phase II FNPRMs). The Commission sought written public comment on the proposals in the Phase II FNPRMs including comments on the IRFAs. The Commission included Final Regulatory Flexibility Analyses (FRFAs) in connection with the December 2014 Connect America Order, Phase II Auction Order and the Phase II Auction FNPRM Order (collectively, Phase II Orders). This Supplemental Final Regulatory Flexibility Analysis (Supplemental FRFA) supplements the FRFAs in the Phase II Orders to reflect the actions taken in this Order on Reconsideration and conforms to the RFA.

61. Need for, and Objectives of, this Order on Reconsideration. This Order on Reconsideration considers the remaining issues raised by parties challenging the Commission's orders implementing the Phase II auction, in which service providers will compete to receive support of up to $1.98 billion to offer voice and broadband service in unserved high-cost areas. Specifically, the Commission resolves petitions challenging the Commission's decisions on the following issues: How to compare bids of different performance levels, standalone voice requirements, Phase II auction deployment and eligibility, and state-specific bidding weights, among other matters. The Commission also adopts a process by which a support recipient that sufficiently demonstrates that it cannot identify enough actual locations on the ground to meet its Phase II obligations can have its total state location obligation adjusted and its support reduced on a pro rata basis. Additionally, the Commission modifies its letter of credit rules to provide some additional relief for Phase II auction recipients by reducing the costs of maintaining a letter of credit. By resolving these issues, the Commission moves a step closer to holding the Phase II auction and, in turn, to the goal of closing the digital divide for all Americans, including those in rural areas of our country.

62. Response to Comments by the Chief Counsel for Advocacy of the Small Business Administration. Pursuant to the Small Business Jobs Act of 2010, which amended the RFA, the Commission is required to respond to any comments filed by the Chief Counsel of the Small Business Administration (SBA), and to provide a detailed statement of any change made to the rules as a result of those comments. The Chief Counsel did not file any comments in response to the relevant IRFAs.

63. Description and Estimate of the Number of Small Entities to which the Rules Will Apply. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the rules adopted herein. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A “small business concern” is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the SBA.

64. As noted above, FRFAs were incorporated into the Phase II Orders. In those analyses, the Commission described in detail the small entities that might be significantly affected. In this Order on Reconsideration, the Commission hereby incorporates into this Supplemental FRFA the descriptions and estimates of the number of small entities from the previous FRFAs in the Phase II Orders.

65. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities. The data, information and document collection required by the Phase II Orders as described in the previous FRFAs in this proceeding are hereby incorporated into this Supplemental FRFA. In this Order on Reconsideration, the Commission also adopts a process whereby a support recipient can demonstrate there are not enough actual locations on the ground to meet its state location requirement. The Order on Reconsideration directs the Bureau to implement the specific procedures for this filing.

66. Steps Taken to Minimize the Significant Economic Impact on Small Entities, and Significant Alternatives Considered. The RFA requires an agency to describe any significant alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): “(1) the establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) and exemption from coverage of the rule, or any part thereof, for small entities.

67. The analysis of the Commission's efforts to minimize the possible significant economic impact on small entities as described in the previous Phase II Orders FRFAs are hereby incorporated into this Supplemental FRFA. In addition, by making a modest reduction in the required value of the letter of credit for recipients that have substantially met their service obligations, the Commission is further reducing the costs of this requirement for such entities, including small entities. Moreover, the Commission adopted a process by which a support recipient can demonstrate that there are not enough actual locations on the ground to meet its state location requirement. If the support recipient makes a sufficient demonstration, it can have its state location obligation adjusted along with a pro rata reduction in support. This will particularly benefit entities that bid to serve smaller areas, which the Commission expects will include small entities. Such entities might not have otherwise been able to locate enough locations in the areas where the CAM did not overestimate the available locations in their bids to meet their obligation and would potentially have been subject to non-compliance measures. The Commission also expects that the Bureau will factor in the unique challenges faced by small entities in implementing this process.

68. People with Disabilities. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to [email protected] or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

69. Accordingly, it is ordered, pursuant to the authority contained in sections 4(i), 214, 254, 303(r), 403, and 405 of the Communications Act of 1934, as amended, 47 U.S.C. 154(i), 214, 254, 303(r), 403, and 405, and §§ 1.1, 1.3, 1.427, and 1.429 of the Commission's rules, 47 CFR 1.1, 1.3, 1.427, and 1.429, that this Order on Reconsideration is adopted, effective thirty (30) days after publication of the text or summary thereof in the Federal Register.

70. It is further ordered that part 54 of the Commission's rules, 47 CFR part 54, IS amended as set forth in the following, and such rule amendment shall be effective thirty (30) days after publication of the rule amendment in the Federal Register, except to the extent they contain new or modified information collection requirements that require approval by the Office of Management and Budget under the Paperwork Reduction Act. The rules that contain new or modified information collection requirements subject to PRA review shall become effective after the Commission publishes a notice in the Federal Register announcing such approval and the relevant effective date.

71. It is further ordered that, pursuant to § 1.429 of the Commission's rules, 47 CFR 1.429 the Petition for Clarification or Reconsideration filed by ADTRAN, Inc. on July 5, 2016 is denied to the extent described herein.

72. It is further ordered that, pursuant to § 1.429 of the Commission's rules, 47 CFR 1.429 the Petition for Reconsideration filed by Broad Valley Micro Fiber Networks Inc. on July 20, 2016 is granted in part, dismissed in part, and denied in part to the extent described herein.

73. It is further ordered that, pursuant to § 1.429 of the Commission's rules, 47 CFR 1.429 the Petition for Reconsideration filed by Crocker Telecommunications, LLC on July 18, 2016 is granted in part, dismissed in part, and denied in part to the extent described herein.

74. It is further ordered that, pursuant to § 1.429 of the Commission's rules, 47 CFR 1.429 the Petition for Reconsideration filed by Hughes Network Systems, LLC on April 20, 2017 is denied to the extent described herein.

75. It is further ordered that, pursuant to § 1.429 of the Commission's rules, 47 CFR 1.429 the Petition for Reconsideration filed by the National Rural Electric Cooperative Association and the Utilities Technology Council on July 21, 2016 is dismissed in part and denied in part to the extent described herein.

76. It is further ordered that, pursuant to §§ 1.3 and 1.429 of the Commission's rules, 47 CFR 1.3, 1.429 the Petition for Reconsideration, Modification, or Waiver filed by the Pennsylvania Public Utility Commission and the Pennsylvania Department of Community and Economic Development on April 19, 2017 is denied to the extent described herein.

77. It is further ordered that, pursuant to § 1.429 of the Commission's rules, 47 CFR 1.429 the Petition for Reconsideration filed by Southern Tier Wireless, Inc. on July 20, 2016 is granted in part, dismissed in part, and denied in part to the extent described herein.

78. It is further ordered that, pursuant to § 1.429 of the Commission's rules, 47 CFR 1.429 the Petition for Reconsideration filed by Verizon on August 8, 2016 is denied in part to the extent described herein.

For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR part 54 as follows:

DoD is relocating the definition of “information technology” from DFARS 202.101 to DFARS 239.7301. This specific definition of “information technology” was established in section 806, entitled “Requirements for Information Relating to Supply Chain Risk,” of the National Defense Authorization Act for Fiscal Year (FY) 2011 (Pub. L. 111-383). Section 806(b)(6) used the definition of “information technology” in 40 U.S.C. 11101(6) to define a “covered item of supply”. On October 30, 2015, DoD published in the Federal Register (80 FR 67244) the final rule for DFARS case 2012-D050, Requirements Relating to Supply Chain Risk, incorporating this “information technology” definition into DFARS 202.101, Definitions, as opposed to DFARS 239.7301, Definitions. This rule will align this specific definition of “information technology” with DFARS 239.73, Requirements for Information Relating to Supply Chain Risk, as originally intended in Public Law 111-383.

The statute that applies to the publication of the Federal Acquisition Regulation (FAR) is the Office of Federal Procurement Policy statute (codified at Title 41 of the United States Code). Specifically, 41 U.S.C. 1707(a)(1) requires that a procurement policy, regulation, procedure or form (including an amendment or modification thereof) must be published for public comment if it relates to the expenditure of appropriated funds, and has either a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure or form, or has a significant cost or administrative impact on contractors or offerors. This final rule is not required to be published for public comment because the rule merely relocates existing text within the DFARS. This rule affects only the internal operating procedures of the Government.

This rule does not add any new provisions or clauses or impact existing provisions or clauses. There are no reporting, recordkeeping, or other compliance requirements in this rule.

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

This rule is not subject to E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, because this rule is not a significant regulatory action under E.O. 12866.

Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 41 U.S.C. 1707(a)(1) (see section II. of this preamble), the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

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

Therefore, 48 CFR parts 202 and 239 are amended as follows:

DoD is amending the DFARS to remove outdated coverage of consolidation of contract requirements, which is defined at DFARS 207.170 as “the use of a solicitation to obtain offers for a single contract or multiple award contract to satisfy two or more requirements of a department, agency, or activity for supplies or services that previously have been provided to, or performed for, that department, agency, or activity under two or more separate contracts.” This coverage implemented 10 U.S.C. 2382, which was repealed by section 1671 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239). Section 1671 also amended section 44 of the Small Business Act (15 U.S.C. 657q) to remove the requirement for DoD to comply with 10 U.S.C. 2382. As a result, DoD is now required to comply with 15 U.S.C. 657q.

10 U.S.C. 2382 imposed limitations on the use of acquisition strategies involving consolidation, including requirements to identify alternative approaches that would involve a lesser degree of consolidation and to determine that consolidation is necessary and justified. Section 44 of the Small Business Act (15 U.S.C. 657q) contains similar limitations. The Federal Acquisition Regulation (FAR) addresses consolidation, including the limitations of 15 U.S.C. 657q, at FAR 7.107. By removing the outdated DFARS coverage of consolidation, this rule will reduce confusion among the DoD contracting workforce caused by differing requirements in the FAR and DFARS.

This rule deletes DFARS section 207.170 in its entirety to remove the obsolete text on consolidation of contract requirements. In addition, paragraphs (a)(i)(A) and (a)(ii)(A) of DFARS section 210.001 are also deleted to remove the reference to the deleted text at DFARS 207.170. In paragraph (c)(11)(A) of the DFARS section 219.201, the reference to deleted text at DFARS 207.107 is replaced by a reference to FAR 7.107, where contract consolidate and the limitations of 15 U.S.C. 657q are currently addressed.

The statute that applies to the publication of the Federal Acquisition Regulation (FAR) is the Office of Federal Procurement Policy statute (codified at title 41 of the United States Code). Specifically, 41 U.S.C. 1707(a)(1) requires that a procurement policy, regulation, procedure or form (including an amendment or modification thereof) must be published for public comment if it relates to the expenditure of appropriated funds, and has either a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure or form, or has a significant cost or administrative impact on contractors or offerors. This final rule is not required to be published for public comment because the rule merely removes obsolete text from the DFARS, which affects only the internal operating procedures of the Government.

This rule does not create any new provisions or clauses nor impact any existing provisions or clauses.

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

This rule is not subject to E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, because the rule relates to agency organization, management, or personnel.

Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 41 U.S.C. 1707(a)(1) (see section III. of this preamble), the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

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

Therefore, 48 CFR part 207, 210, and 219 are amended as follows:

I. Background

DoD published a proposed rule in the Federal Register at 81 FR 65606 on September 23, 2016, to implement section 821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 (Pub. L. 113-291) and section 872 of the NDAA for FY 2016 (Pub. L. 114-92), to revise the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (“the Test Program”).

Section 821 of the NDAA for FY 2015 provides for contractors participating in the Test Program to report, on a semiannual basis, specific information related to their comprehensive subcontracting plans. This information is expected to assist in determining if Test Program participants have achieved cost savings while enhancing opportunities for small businesses.

In addition, section 821—

• Repeals section 402 of Public Law 101-574, which suspended liquidated damages under comprehensive small business subcontracting plans;

• Requires consideration, as part of the past performance evaluation of an offeror, of any failure to make a good faith effort to comply with its comprehensive subcontracting plan;

• Extends the Test Program from December 14, 2014, through December 31, 2017;

• Increases the threshold for participation in the Test Program from $5 million to $100 million; and

• Prohibits negotiation of comprehensive subcontracting plans with contractors who failed to meet the subcontracting goals of their comprehensive subcontracting plan for the prior fiscal year.

Section 872 of the NDAA for FY 2016 removes the prohibition on negotiation of comprehensive subcontracting plans with contractors who failed to meet the subcontracting goals of their comprehensive subcontracting plan for the prior fiscal year.

This final rule also implements section 826 of the NDAA for FY 2017 (Pub. L. 114-328), which further extends the Test Program through December 31, 2027.

One respondent submitted a public comment in response to the proposed rule. DoD reviewed the public comment in the development of the final rule.

There are no changes made to the final rule as a result of the public comment; however, other conforming changes are made.

Comment: The respondent urged DoD to state in its regulations that any civilian injured through exposure to toxic substances at a military installation would be considered a service-disabled veteran for purposes of eligibility for DoD programs.

Response: The comment is outside the scope of this case.

The text at DFARS 219.702-70(f) is revised to reflect the expiration date for the Test Program of December 31, 2027, to implement section 826 of the NDAA for FY 2017. References in DFARS clause 252.219-7004 to the “Data Universal Numbering System (DUNS) number” are revised to read “unique entity identifier”. Paragraph headers are added at DFARS 219.702-70(a) and 252.219-7004(b) and (e).

This rule applies the requirements of section 821 of the NDAA for FY 2015 to contracts for the acquisition of commercial items, including commercially available off-the-shelf (COTS) items. The rule is not applicable to the contracts at or below the simplified acquisition threshold. Accordingly, the Director, DPAP, has signed a determination and finding to apply this rule to contracts for the acquisition of commercial items, including COTS items, for DFARS clauses 252.219-7003, Small Business Subcontracting Plan (DoD Contracts), and 252.219-7004, Small Business Subcontracting Plan (Test Program).

This final rule amends the DFARS to implement section 821 of the NDAA for FY 2015, section 872 of the NDAA for FY 2016, and section 826 of NDAA for FY 2017, all of which provide revisions to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. Section 826 extended the Test Program through December 31, 2027.

Customarily, an individual small business subcontracting plan is required to be negotiated by large business firms for each contract above $700,000. Under the Test Program, participants negotiate a comprehensive subcontracting plan (CSP) to cover all applicable contacts, in lieu of providing a separate plan for each individual contract. To be eligible for the Test Program, the program participants are required to be accepted into the program and to have at least three DoD contracts during the preceding year with an aggregate value of at least $100 million. There are currently nine large business firms that are currently participating in the Test Program. The CSPs for these nine large businesses cover approximately 8,000 contracts.

This rule revises DFARS clause 252.219-7004, Small Business Subcontracting Plan (Test Program), to require the nine Test Program participants to report, on a semiannual basis, specific information related to their CSPs. This information is expected to assist DoD in determining if the participants have achieved cost savings while enhancing opportunities for small businesses. Contracting officers conduct compliance reviews each year; and, if it is determined that the contractor failed to make a good faith effort to comply with the CSPs, the contracting officer may assess liquidated damages. Any failure to meet negotiated goals will also be considered as part of the evaluation of the participant firm's past performance. However, very few, if any, failures are expected in the Test Program.

Over the next 10 years, significant cost savings are expected to accrue to the public and the Government through use of CSPs by greatly reducing administrative burdens, while also advancing the interests of small business subcontractors. Use of CSPs may also foster an environment that provides visibility to a firm of its overall subcontracting program, thereby potentially providing greater opportunities to ensure equitable consideration on an enterprise-wide basis for business opportunities for all its subcontractors.

DoD has performed a regulatory cost analysis on this rule. The following is a summary of the estimated public annualized cost savings in millions, calculated in 2016 dollars at a 7-percent discount rate in perpetuity:

To access the full Regulatory Cost Analysis for this rule, go to the Federal eRulemaking Portal at www.regulations.gov, search for “DFARS Case 2015-D013,” click “Open Docket,” and view “Supporting Documents.”

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

This final rule is considered to be an E.O. 13771 deregulatory action. Details on the estimated cost savings can be found in section IV. of this preamble.

A final regulatory flexibility analysis (FRFA) has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

DoD is issuing a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to implement section 821 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2015 (Pub. L. 113-291), section 872 of the NDAA for FY 2016 (Pub. L. 114-92), and section 826 of the NDAA for FY 2017 (Pub. L. 114-328). Section 821 of the NDAA for FY 2015 provides several changes to the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (Test Program), including new reporting and eligibility requirements, an extension of the Test Program, and authority to assess liquidated damages. Section 872 of the NDAA for FY 2016 removes one of the eligibility requirements. Section 826 of the NDAA for FY 2017 extends the Test Program through December 31, 2027. The objectives of this rule are to collect data to assist in assessing the successes or shortcomings of the Test Program and to provide the means to hold Test Program participants accountable for failure to make a good faith effort to comply with their comprehensive subcontracting plans.

There were no issues raised by the public in response to the initial regulatory flexibility analysis provided in the proposed rule.

The rule will not apply to small entities. Therefore, the rule does not impose any reporting or recordkeeping requirements on any small entities.

DoD has not identified any alternatives that are consistent with the stated objectives of the applicable statutes. However, DoD notes that the rule may have a positive economic impact on small entities because the rule encourages Test Program participants to make a good faith effort to comply with their comprehensive subcontracting plans.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35), because the rule does not impose a collection of information on ten or more members of the public.

Therefore, 48 CFR parts 211, 215, 219, 242, and 252 are amended as follows:

I. Background

DoD published a proposed rule in the Federal Register at 81 FR 93875 on December 22, 2016, recommending revisions to the DFARS to implement section 898 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 114-92). Section 898 requires that DoD not preclude a nonprofit organization from competing for a contract for religious-related services on a United States military installation. The proposed revisions set forth policy and procedures that allow nonprofit organizations to participate in small business set-asides and directed contracting officers not to use the sole source authorities at FAR 6.302-5(b)(4) through (7) when acquiring religious-related services on a United States military installation. The proposed rule also contained a new provision to ensure that potential offerors are aware that a nonprofit organization will not be precluded from competing for a contract for religious-related services under a small business set-aside, notwithstanding that it is not one of the small business types identified in FAR 19.000(a)(3).

The comment period for the proposed rule closed on February 21, 2017. There were no public comments submitted in response to the proposed rule.

There are no changes made in the final rule from the proposed rule.

This rule applies the requirements of section 898 of the NDAA for FY 2016 to contracts at or below the simplified acquisition threshold (SAT), and to contracts for the acquisition of commercial items. The rule is not applicable to the contracts for the acquisition of commercially available off-the-shelf (COTS) items. Accordingly, the Director, DPAP, has signed a determination and finding to apply this rule to contracts or subcontracts in amounts not greater than the SAT and the acquisition of commercial items, excluding COTS items, for DFARS clause 252.219-7012, Competition for Religious-Related Services.

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

This rule is not subject to E.O. 13771 (82 FR 9339, February 3, 2017), because this rule is not a significant regulatory action.

A final regulatory flexibility analysis (FRFA) has been prepared consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

The objective of this final is to implement section 898 of the National Defense Authorization Act for Fiscal Year 2016. The rule does so by amending the DFARS to establish the policy and procedures necessary to ensure nonprofit entities, such as religious organizations, are not precluded from participating in acquisitions for religious related services on U.S. military installations. There were no public comments received in response to the initial regulatory flexibility analysis.

This rule may have a significant economic impact on a substantial number of small businesses that typically compete for contracts for the covered services, since most of the contracts awarded for religious-related services fall within the dollar range reserved exclusively for small business participation (over the micro-purchase threshold, but no more than the simplified acquisition threshold (SAT)). The rule may also have a significant economic impact on nonprofit organizations, since these entities are normally precluded from competing for such acquisitions that are reserved for small business concerns. However, the impact is also bounded as this is a small sector in terms of the numbers of purchase orders DoD awards in a year for these requirements, and the dollar value of these orders is relatively low.

According to data obtained from the Federal Procurement Data System (FPDS) for FY 2015, DoD awarded 290 contracts to 232 unique businesses for religious-related services under the product services code for Chaplain Services (G002), the majority of which (95 percent) are valued below the SAT. Of those 290 contracts, approximately 160 contracts were awarded to 130 unique small business concerns (56 percent). The FPDS data further indicates that of the 160 contracts awarded to small business, 137 of the contracts were awarded on the basis of a total small business set-aside, including one total set-aside to women-owned small business concerns. In addition, in order to carry out the Congressional mandate of section 898, this rule restricts the use of the sole source authorities at FAR 6.302-5(b)(4) through (7) when contracting for religious-related services on U.S. military installations; as a result, such solicitations would have to be competed in a manner that allows nonprofit organizations to participate. Analysis of FPDS data for FY 2015 reveals that four contracts were awarded to a HUBZone small business concern on a sole source basis.

Additional FPDS data was obtained for FY 2016, which showed DoD awarded 256 contracts to 212 unique businesses for religious-related services under product service code G002, of which the majority (91 percent) were valued below the SAT. Of those 256 contracts, 158 contracts (62 percent) were awarded to 130 unique small business concerns (63 percent). 116 contracts were solicited using a total small business set-aside. Again, as a result of this rule, such solicitations could not preclude a nonprofit organization from submitting an offer and being considered for award. Six contracts were awarded on a sole source basis under the Small Business Act 8(a) Business Development Program (8(a) Program); however, this rule restricts DoD contracting officers from using the sole source authority at FAR 6.302-5(b)(4) for the 8(a) Program to procure religious-related services to be performed on a U.S. military installation. In order to comply with section 898, any requirements currently in the 8(a) program would be required, upon renewal, to be solicited in a manner that does not preclude a nonprofit organization from the competition.

There are no reporting, recordkeeping, or compliance requirements associated with this rule.

There are no significant alternative approaches to the rule that would minimize the impact on small entities and meet the stated objectives of the statute.

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

Therefore, 48 CFR parts 212, 213, 219, 237, and 252 are amended as follows:

DoD is amending the DFARS to implement section 1216 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328). Section 1216 requires that funding amounts available to the Department of Defense may not be obligated or expended for a construction or other infrastructure program or project of the Department in Afghanistan if military or civilian personnel of the United States Government, or their representatives with authority to conduct oversight of such program or project, cannot safely access such program or project. The prohibition may be waived with an approved determination.

To implement section 1216, this rule adds a new DFARS section 225.7705, Prohibition on use of funds for contracts of certain programs and projects in Afghanistan that cannot be safely accessed. The procedures provided in this new section are strictly internal to the Government, in that they instruct the contracting officer to not obligate funds on the covered contracts, unless (1) Government personnel can safely access the project, or (2) a determination is approved by the appropriate authority to waive this restriction, as outlined in the statute.

This rule does not add any new burdens or impact applicability of clauses and provisions at or below the simplified acquisition threshold, or to acquisition of commercial items.

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

This rule is not subject to E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, because the rule relates to agency organization, management, or personnel.

The statute that applies to the publication of the Federal Acquisition Regulation is codified at Title 41 of the United States Code (formerly known as the Office of Federal Procurement Policy Act). Specifically, 41 U.S.C 1707(a)(1) requires that a procurement policy, regulation, procedure or form (including an amendment or modification thereof) must be published for public comment if it relates to the expenditure of appropriated funds, and has either a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure or form, or has a significant cost or administrative impact on contractors or offerors. This final rule is not required to be published for public comment, because it only provides procedures for United States Government personnel to follow for certain programs and projects in Afghanistan that cannot be safely accessed. These requirements affect only the internal operating procedures of the Government.

Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 41 U.S.C. 1707(a)(1) (see section VI. of this preamble), the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

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

Therefore, 48 CFR part 225 is amended as follows:

I. Background

DFARS subpart 237.72, Educational Service Agreements, prescribes policies and procedures for acquiring educational services from schools, colleges, universities, or other educational institutions. An educational service agreement (ESA) is an ordering agreement under which the Government may acquire educational services. DFARS 237.7202(a) prohibits the use of ESAs as a contracting method for training in the legal profession, except when in connection with the detailing of commissioned officers to law schools under 10 U.S.C. 2004.

The limitation at DFARS 237.7202(a) was established at a time when legal training was acquired only for the purpose of obtaining doctorate degrees for military judge advocates. DoD's need for legal training has evolved since the implementation of the text at DFARS 237.7202(a). Since 10 U.S.C. 2004 contains no prohibition against acquiring other training in the legal profession, this rule amends the DFARS to delete the language at DFARS 237.7202(a). Removal of this limitation will allow DoD to make agreements that permit payment for masters of laws degrees and other legal training needs, in accordance with applicable law, regulation, and policy.

The statute that applies to the publication of the Federal Acquisition Regulation (FAR) is codified at Title 41 of the United States Code (formerly known as the Office of Federal Procurement Policy Act). Specifically, 41 U.S.C. 1707(a)(1) requires that a procurement policy, regulation, procedure or form (including an amendment or modification thereof) must be published for public comment if it relates to the expenditure of appropriated funds, and has either a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure or form, or has a significant cost or administrative impact on contractors or offerors. This final rule is not required to be published for public comment, because it is simply allowing the contracting officer to use an ESA when acquiring training in the legal profession. Contracting officers can already use ESAs for the acquisition of training in any other profession. This requirement affects only the internal operating procedures of the Government.

This rule does not add any new provisions or clauses or impact existing provisions or clauses. There are no reporting, recordkeeping, or other compliance requirements in this rule.

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

This rule is not subject to E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, because the rule relates to agency organization, management, or personnel.

Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule under 41 U.S.C. 1707(a)(1) (see section II. of this rule), the analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

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

Therefore, 48 CFR part 237 is amended as follows:

Electronic Access

This rule is accessible via the internet at the Office of the Federal Register website at https://www.federalregister.gov. Background information and documents are available at the Pacific Fishery Management Council's website at http://www.pcouncil.org/.

The Pacific Coast Groundfish Fishery Management Plan (PCGFMP) and its implementing regulations at title 50 in the Code of Federal Regulations (CFR), part 660, subparts C through G, regulate fishing for over 90 species of groundfish off the coasts of Washington, Oregon, and California. The Pacific Fishery Management Council (Council) develops biennial groundfish specifications and management measures. NMFS published the final rule to implement the 2017-18 specifications and management measures for most species of the Pacific coast groundfish fishery on February 7, 2017 (82 FR 9634).

The Council, in coordination with Pacific Coast Treaty Indian Tribes and the States of Washington, Oregon, and California, recommended the following changes to current groundfish management measures at its March 8-14, 2018 meeting in Rohnert Park, California: (1) Increase the incidental halibut retention in the primary sablefish fishery, (2) increase the recreational sub-bag limit for canary rockfish and add a three flatfish limit through changes to Washington state recreational management measures, and (3) increase the recreational sub-limit for canary rockfish through changes to California recreational management measures.

Under the authority of the Northern Pacific Halibut Act of 1982, the Council developed a Catch Sharing Plan for the International Pacific Halibut Commission Regulatory Area 2A. The Catch Sharing Plan allocates the Area 2A annual total allowable catch (TAC) among fisheries off Washington, Oregon, and California. Pacific halibut is generally a prohibited species for vessels fishing in Pacific coast groundfish fisheries, unless explicitly allowed in groundfish regulations and authorized by the Pacific halibut Catch Sharing Plan. In years where the Pacific halibut TAC is above 900,000 pounds (lb) (408 metric tons (mt)), the Catch Sharing Plan allows the limited entry fixed gear sablefish primary fishery an incidental retention limit for Pacific halibut north of Point Chehalis, WA (46°53.30′ North latitude [N. lat.]). On March 24, 2018, NMFS implemented a 2018 Area 2A TAC of 1,190,000 lb (540 mt)(83 FR 13080; March 26, 2018). Consistent with the provisions of the Catch Sharing Plan, the limited entry fixed gear sablefish primary fishery north of Pt. Chelais, WA has an incidental total catch limit of 50,000 lb (22.7 mt) for 2018.

Current regulations at § 660.231(b)(3)(iv) provide for halibut retention starting on April 1 with a landing ratio of 140 lb (64 kilograms (kg)) dressed weight of halibut, for every 1,000 lb (454 kg) dressed weight of sablefish landed, and up to an additional 2 halibut in excess of this ratio. These limits were based on the 2017 Pacific halibut retention limit of 70,000 lb (32 mt) and resulted in a catch of 35,866 lb (16 mt) of incidental halibut. At the March 2018 Council meeting, based on 2017 catch totals, the number of vessels fishing that participated, and the average number of trips taken, which constitutes the best available information, the Council recommended an increase from 140 lb (64 kg) to 160 lb (73 kg) dressed incidental Pacific halibut retention per 1,000 lb (454 kg) dressed sablefish. This increase would allow total catch of Pacific halibut to approach, but not exceed, the 2018 allocation for the sablefish primary fishery north of Pt. Chelais, WA (50,000 lb or 22.7 mt) and provide greater opportunity for industry to attain a higher percentage of the sablefish primary fishery allocation. This ratio can be adjusted through routine inseason action based on participation and landings in the fishery, if warranted.

In order to allow increased incidental halibut catch in the sablefish primary fishery, the Council recommended and NMFS is revising incidental halibut retention regulations at § 660.231(b)(3)(iv) to increase the catch ratio to “160 lb dressed weight of halibut for every 1,000 lb dressed weight of sablefish landed and up to 2 additional halibut in excess of the 160 lb per 1,000 lb ratio per landing.”

At the Council's March 2018 meeting, the Washington Department of Fish and Wildlife (WDFW) requested changes to their recreational groundfish regulations for the remainder of 2018. Specifically, WDFW proposed an increase to the canary rockfish sub-limit from one to two fish with retention allowed in all marine areas, and proposed to allow the retention of three flatfish in addition to the status quo aggregate daily groundfish limit of nine.

In June 2016, the Council recommended the Washington recreational groundfish seasons and regulations for the 2017 and 2018 fishing years. NMFS implemented the regulations through the 2017-18 harvest specifications and management measures, which permitted retention of up to one canary rockfish in Marine Areas 1 and 2 (Columbia River and south coast subareas) and prohibited canary rockfish retention in Marine Areas 3 and 4. Although the canary rockfish stock was declared rebuilt in 2017, retention had been prohibited in previous years due to poor stock condition. Because retention was previously prohibited, there has been uncertainty about angler behavior, including whether they would target canary rockfish. To address this uncertainty, the analysis for the existing landing limits assumed a high level of targeting to ensure management measures remained precautionary. The analysis projected that a two fish sub-limit in all management areas would result in between 66.1 mt and 137.1 mt of recreational canary rockfish landings, however this analysis did not consider the estimated results of the 2017 Washington recreational fishery.

The 2017 final mortality estimate for canary rockfish in the Washington recreational fishery is 4.8 mt out of a 50 mt harvest guideline for 2017 and 2018. Because 2017 landings were much lower than expected, the Council updated the initial analysis to project landings for the 2018 fishing year. The updated analysis did not assume a high level of targeting because the final 2017 estimates suggests that anglers are not actively targeting canary rockfish. The updated analysis projected canary rockfish mortality to be 5.67 mt under a one canary sub-limit and 6.22 mt under a two canary sub-limit. While the two canary rockfish limit does produce slightly higher impacts to canary rockfish than the one canary sub-limit, a difference of about 0.6 mt, the overall projected impacts of either the one- or two-fish limit are well below the 2018 harvest guideline of 50 mt.

Therefore, the Council recommended, and NMFS is amending the regulations at § 660.360(c)(1) to increase in the limit in the Washington recreational fishery from one to two canary rockfish for all marine areas.

In March 2017, the Council recommended that NMFS reduce the aggregate groundfish limit from 12 to 9 fish per angler per day, and the daily rockfish sub-limit from 10 to 7 fish per angler per day, resulting in a 7 rockfish sub-limit with two additional groundfish allowed to be kept for a total of 9 fish. The rockfish sub-limit was reduced in response to lower harvest levels in 2017 and 2018, but the aggregate groundfish limit was kept at two fish above the rockfish sub-limit to minimize rockfish bycatch associated with anglers targeting other groundfish, such as lingcod. At the time, Washington did not request excluding flatfish from the aggregate groundfish limit. Since last year, when these limits went into effect stakeholders that target flatfish reported to WDFW that they have been negatively affected by the reduction in the aggregate limit, which was not the original intent of that reduction.

In response to stakeholder input, WDFW proposed a flatfish limit of three fish per angler per day, which would be in addition to the overall aggregate groundfish limit. The groundfish aggregate limit would remain at nine fish, and the sub-limits for all species, aside from canary rockfish, would all remain unchanged. This change to include a separate flatfish limit of three fish has no impact on the rockfish population given that flatfish prefer soft sand or muddy bottom, which is not the preferred habitat of rockfish. Additionally, flatfish retention would still only be allowed under current open season dates and status quo depth restrictions. Projected impacts to flatfish are expected to be similar to final estimates in 2016 before the aggregate limit was reduced.

Therefore, the Council recommended, and NMFS is amending the regulations at § 660.360(c)(1) to implement a three flatfish limit, not to be counted against the aggregate groundfish limit of nine fish, for the 2018 Washington recreational fishing year.

Similar to the canary rockfish limit off Washington, the Council analyzed the current canary rockfish sub-limit in California in the 2017-18 harvest specifications and management measures. During that process, California Department of Fish and Wildlife (CDFW) evaluated a range of sub-bag limits (one to five) for canary rockfish given the stock had recently been declared rebuilt. Much like WDFW, CDFW expressed a need for caution in determining the initial sub-bag limit for canary rockfish due to uncertainty about targeting this newly rebuilt species. Therefore, NMFS implemented a one fish sub-bag limit for California in 2017.

The 2017 canary rockfish mortality in California was lower than expected. Preliminary estimates indicate canary rockfish mortality was 77.4 mt, or 57.3 percent of the California harvest guideline of 135 mt. Seasonal catch trends for canary were similar to other rockfish, with higher catches observed in the spring and summer months when weather is more favorable. Because of the low catch in the preliminary estimates for 2017, CDFW analyzed projected impacts under a two-fish sub-bag limit for 2018, taking into account the most recent fishery performance. Under the two-fish sub-bag limit, projected canary rockfish mortality would be 110.4 mt or 81.8 percent of the 2018 harvest guideline.

Therefore, based on the new preliminary attainment information for 2017, the Council recommended and NMFS is amending the regulations at § 660.360(c)(3) to increase the California recreational canary rockfish sub-bag limit from one fish to two fish.

This final rule makes routine inseason adjustments to groundfish fishery management measures, based on the best available information, consistent with the PCGFMP and its implementing regulations.

This action is taken under the authority of 50 CFR 660.60(c) and is exempt from review under Executive Order 12866.

The aggregate catch data used to support these regulatory actions is available for public inspection in person at the Office of the Administrator, West Coast Region, NMFS, during normal business hours.

NMFS finds good cause to waive prior public notice and comment on the revisions to groundfish management measures under 5 U.S.C. 553(b) because notice and comment would be impracticable and contrary to the public interest. The adjustments to management measures in this document affect commercial and recreational fisheries off the coasts of Washington, Oregon and California. No aspect of this action is controversial, and changes of this nature were anticipated in the biennial harvest specifications and management measures established through a notice and comment rulemaking for 2017-18 (82 FR 9634). Accordingly, for the reasons stated below, NMFS finds good cause to waive prior notice and comment.

The Pacific halibut catch limit for Area 2A is large enough in 2018 to provide for incidental halibut retention, per the Pacific halibut Catch Sharing Plan for Area 2A, in the limited entry fixed gear sablefish primary fishery north of Point Chehalis. Therefore, at its March 2018 meeting, the Council recommended an increase from 140 lb (64 kg) to 160 lb (73 kg) of dressed weight halibut per 1,000 lb (454 kg) of dressed weight sablefish. The Council recommended this increased limit be implemented by April 1, 2018, the start of the limited entry fixed gear sablefish primary fishery, or as soon as possible thereafter. Therefore, there was not sufficient time after that meeting to undergo proposed and final rulemaking before this action needs to be implemented to increase Pacific halibut harvest opportunity, to allow Pacific halibut to be retained throughout the limited entry fixed gear sablefish primary season, and to achieve attainment of incidental Pacific halibut quota in this fishery given the most recent Pacific halibut catch data and the Area 2A catch limit.

During its March 2018 meeting, the Council recommended an increase to the Washington recreational canary rockfish sub-limit from one fish to two fish in all marine areas. The 2017-18 harvest specifications and management measures implemented precautionary landing limits just as canary rockfish was declared rebuilt. The 2017 Washington recreational fishery catch data show that only 4.8 mt of the 50 mt harvest guideline was landed. Increasing the canary rockfish sub-limit should create additional opportunity to attain the harvest guideline in 2018.

Additionally, WDFW proposed a three fish limit for flatfish that would not count towards the aggregate groundfish limit. WDFW received stakeholder input that the 2017 decrease in the aggregate rockfish limit has constrained anglers targeting flatfish. Excluding flatfish from the aggregate limit eases this constraint.

Therefore, based on the new preliminary data, the input from stakeholders who target flatfish, and the need to provide additional economic opportunities to the recreational fleet while also potentially reducing discards, there was not sufficient time after the March meeting to undergo a full proposed and final rulemaking before this action needs to be in effect. Affording the time necessary for prior notice and opportunity for public comment would prevent NMFS from managing this recreational fishery using the best available science to increase harvesting opportunities of canary rockfish and flatfish, as required by the PCGFMP and applicable law.

During the March 2018 meeting, CDFW proposed an increase to their canary rockfish sub-bag limit. The 2017-18 harvest specifications and management measures implemented precautionary landing limits just as canary rockfish was declared rebuilt. Preliminary data from CDFW shows that 2017 recreational canary rockfish catch was low in 2017. Increasing the canary rockfish sub-limit should create additional opportunity to attain the harvest guideline in 2018.

There was not sufficient time after the March meeting to undergo proposed and final rulemaking before this action needs to be in effect. The California recreational fishery begins on April 15th. Affording NMFS the time necessary for prior notice and opportunity for the public to comment would prevent NMFS from managing the recreational fishery with the best available information to increase harvest opportunities for recreational anglers in California.

NMFS also finds good cause to waive the 30-day delay in effectiveness pursuant to 5 U.S.C. 553(d)(1), so that this final rule may become effective April 13, 2018. This inseason action implements a number of increases to incidental and directed landing limits based on updated fishery information and new supporting analyses provided to the Council at its March 2018 meeting. Affording the time necessary for prior notice and opportunity for public comment reduces the time these increased landing limits are available to fishing vessels during the 2018 fishing year, and delays the use of the best available information in managing the fishery.

For the reasons set out in the preamble, NMFS amends 50 CFR part 660 as follows:

NMFS manages the groundfish fishery in the BSAI according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

In accordance with § 679.22(a)(7)(i)(C)(2), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that 113 metric tons of Pacific cod have been caught by catcher vessels less than 60 feet (18.3 m) LOA using jig or hook-and-line gear in the Bogoslof exemption area described at § 679.22(a)(7)(i)(C)(1). Consequently, the Regional Administrator is prohibiting directed fishing for Pacific cod by catcher vessels less than 60 feet (18.3 m) LOA using jig or hook-and-line gear in the Bogoslof Pacific cod exemption area.

After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the directed fishery closure of Pacific cod by catcher vessels less than 60 feet (18.3 m) LOA using jig or hook-and-line gear in the Bogoslof Pacific cod exemption area. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of April 9, 2018.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.22 and is exempt from review under Executive Order 12866.