Background

Section 602 of the Agricultural Act of 1978 (7 U.S.C. 5712), as amended, requires all exporters of wheat and wheat flour, feed grains, oil seeds, cotton, pork, beef, and products thereof, and other commodities that the Secretary of Agriculture may designate produced in the United States to report to USDA, on a weekly basis, information regarding export sales contracts entered into or subsequently modified during the reporting period, including, inter alia, the type, class, and quantity of the commodity sought to be exported. The Export Sales Reporting Requirements regulations in 7 CFR part 20 implement section 602's requirements, and the commodities for which reports are required are set forth in the appendix to part 20. Information collected is aggregated and included in the weekly U.S. Export Sales report published by the Foreign Agricultural Service (FAS).

FAS has received informal inquiries whether exports of different types of beef and pork carcasses must be reported under the regulations. This final rule clarifies the descriptions in the appendix of “fresh, chilled or frozen muscle cuts/whether or not boxed” for beef and pork by adding a footnote that sets out an illustrative list of items covered by this description, such as carcasses and half-carcasses.

This rule is being issued as a final rule without prior notice and opportunity for comment. The Administrative Procedure Act (APA) states notice of proposed rulemaking is not required “when the agency for good cause finds . . . that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” 5 U.S.C. 553(b)(B). To issue a rule that is immediately effective, an agency similarly must find good cause for dispensing with the 30-day delay required by the APA. Because this change is interpretive in nature and intended to avoid potential confusion, FAS finds that the notice and comment provisions of 5 U.S.C. 553 are not necessary. Similarly, the agency finds that a delay in effectiveness would serve no useful purpose. Accordingly, under 5 U.S.C. 553(b)(B) and (d), notice and public comment thereon and a delay in effectiveness are unnecessary. Therefore, this final rule is effective when published in the Federal Register.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been determined to be not significant and was not reviewed by the Office of Management and Budget (OMB) in conformance with Executive Order 12866.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of Information and Regulatory Affairs has designated this rule as not a major rule, as defined by 5 U.S.C. 804(2).

This rule has been reviewed for compliance with Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments, proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal government and Indian tribes. FAS has assessed the impact of this rule on Indian tribes and determined that this rule does not, to the knowledge of FAS, have tribal implications that required tribal consultation under Executive Order 13175. If a tribe requests consultation, FAS will work with USDA Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions, and modifications identified herein are not expressly mandated by Congress.

Executive Order 13771 directs agencies to reduce regulation and control regulatory costs and provides that for every new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process. This rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.

Accordingly, for the reasons stated in the preamble, 7 CFR part 20 is amended as follows:

Section 19(b)(2) of the Federal Reserve Act (12 U.S.C. 461(b)(2)) requires each depository institution to maintain reserves against its transaction accounts and nonpersonal time deposits, as prescribed by Board regulations, for the purpose of implementing monetary policy. Section 11(a)(2) of the Federal Reserve Act (12 U.S.C. 248(a)(2)) authorizes the Board to require reports of liabilities and assets from depository institutions to enable the Board to conduct monetary policy. The Board's actions with respect to each of these provisions are discussed in turn below.

Pursuant to section 19(b) of the Federal Reserve Act (Act), transaction account balances maintained at each depository institution are subject to reserve requirement ratios of zero, three, or ten percent. Section 19(b)(11)(A) of the Act (12 U.S.C. 461(b)(11)(A)) provides that a zero percent reserve requirement shall apply at each depository institution to total reservable liabilities that do not exceed a certain amount, known as the reserve requirement exemption amount. Section 19(b)(11)(B) provides that, before December 31 of each year, the Board shall issue a regulation adjusting the reserve requirement exemption amount for the next calendar year if total reservable liabilities held at all depository institutions increase from one year to the next. No adjustment is made to the reserve requirement exemption amount if total reservable liabilities held at all depository institutions should decrease during the applicable time period. The Act requires the percentage increase in the reserve requirement exemption amount to be 80 percent of the increase in total reservable liabilities of all depository institutions over the one-year period that ends on the June 30 prior to the adjustment.

Total reservable liabilities of all depository institutions increased by 4.3 percent, from $8,042 billion to $8,387 billion, between June 30, 2018, and June 30, 2019. Accordingly, the Board is amending Regulation D to set the reserve requirement exemption amount for 2020 at $16.9 million, an increase of $0.6 million from its level in 2019.1

Pursuant to Section 19(b)(2) of the Act (12 U.S.C. 461(b)(2)), transaction account balances maintained at each depository institution over the reserve requirement exemption amount and up to a certain amount, known as the low reserve tranche, are subject to a three percent reserve requirement. Transaction account balances over the low reserve tranche are subject to a ten percent reserve requirement. Section 19(b)(2) also provides that, before December 31 of each year, the Board shall issue a regulation adjusting the low reserve tranche for the next calendar year. The Act requires the adjustment in the low reserve tranche to be 80 percent of the percentage increase or decrease in total transaction accounts of all depository institutions over the one-year period that ends on the June 30 prior to the adjustment.

Net transaction accounts of all depository institutions increased 3.4 percent, from $2,410 billion to $2,491 billion, between June 30, 2018, and June 30, 2019. Accordingly, the Board is amending Regulation D to set the low reserve tranche for net transaction accounts for 2020 at $127.5 million, an increase of $3.3 million from 2019.

The new low reserve tranche and reserve requirement exemption amount will be effective for all depository institutions for the fourteen-day reserve maintenance period beginning January 16, 2020. For depository institutions that report deposit data weekly, this maintenance period corresponds to the fourteen-day computation period that begins December 17, 2019. For depository institutions that report deposit data quarterly, this maintenance period corresponds to the seven-day computation period that begins December 17, 2019.

Section 11(b)(2) of the Federal Reserve Act authorizes the Board to require depository institutions to file reports of their liabilities and assets as the Board may determine to be necessary or desirable to enable it to discharge its responsibility to monitor and control the monetary and credit aggregates. The Board screens depository institutions each year and assigns them to one of four deposit reporting panels (weekly reporters, quarterly reporters, annual reporters, or nonreporters). The panel assignment for annual reporters is effective in June of the screening year; the panel assignment for weekly and quarterly reporters is effective in September of the screening year.

In order to ease reporting burden, the Board permits smaller depository institutions to submit deposit reports less frequently than larger depository institutions. The Board permits depository institutions with net transaction accounts above the reserve requirement exemption amount but total transaction accounts, savings deposits, and small time deposits below a specified level (the “nonexempt deposit cutoff”) to report deposit data quarterly. Depository institutions with net transaction accounts above the reserve requirement exemption amount and with total transaction accounts, savings deposits, and small time deposits greater than or equal to the nonexempt deposit cutoff are required to report deposit data weekly. The Board requires certain large depository institutions to report weekly regardless of the level of their net transaction accounts if the depository institution's total transaction accounts, savings deposits, and small time deposits exceeds or is equal to a specified level (the “reduced reporting limit”). The nonexempt deposit cutoff level and the reduced reporting limit are adjusted annually, by an amount equal to 80 percent of the increase, if any, in total transaction accounts, savings deposits, and small time deposits of all depository institutions over the one-year period that ends on the June 30 prior to the adjustment.

From June 30, 2018, to June 30, 2019, total transaction accounts, savings deposits, and small time deposits at all depository institutions increased 3.5 percent, from $12,601 billion to $13,046 billion. Accordingly, the Board is increasing the nonexempt deposit cutoff level by $29.0 million to $1.058 billion for 2020 (up from $1.029 billion in 2019). The Board is also increasing the reduced reporting limit by $60.6 million to $2.208 billion for 2020 (up from $2.147 billion in 2019).2

Beginning in 2020, the boundaries of the four deposit reporting panels will be defined as follows. Those depository institutions with net transaction accounts over $16.9 million (the reserve requirement exemption amount) or with total transaction accounts, savings deposits, and small time deposits greater than or equal to $2.208 billion (the reduced reporting limit) are subject to detailed reporting, and must file a Report of Transaction Accounts, Other Deposits and Vault Cash (FR 2900 report) either weekly or quarterly. Of this group, those with total transaction accounts, savings deposits, and small time deposits greater than or equal to $1.058 billion (the nonexempt deposit cutoff level) are required to file the FR 2900 report each week, while those with total transaction accounts, savings deposits, and small time deposits less than $1.058 billion are required to file the FR 2900 report each quarter. Those depository institutions with net transaction accounts less than or equal to $16.9 million (the reserve requirement exemption amount) and with total transaction accounts, savings deposits, and small time deposits less than $2.208 billion (the reduced reporting limit) are eligible for reduced reporting, and must either file a deposit report annually or not at all. Of this group, those with total deposits greater than $16.9 million (but with total transaction accounts, savings deposits, and small time deposits less than $2.208 billion) are required to file the Annual Report of Deposits and Reservable Liabilities (FR 2910a) report annually, while those with total deposits less than or equal to $16.9 million are not required to file a deposit report. A depository institution that adjusts reported values on its FR 2910a report in order to qualify for reduced reporting will be shifted to an FR 2900 reporting panel.

The provisions of 5 U.S.C. 553(b) relating to notice of proposed rulemaking have not been followed in connection with the adoption of these amendments. The amendments involve expected, ministerial adjustments prescribed by statute and by the Board's policy concerning reporting practices. The adjustments in the reserve requirement exemption amount, the low reserve tranche, the nonexempt deposit cutoff level, and the reduced reporting limit serve to reduce regulatory burdens on depository institutions. Accordingly, the Board finds good cause for determining, and so determines, that notice in accordance with 5 U.S.C. 553(b) is unnecessary.

The Regulatory Flexibility Act (RFA) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.3 As noted previously, the Board has determined that it is unnecessary to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply.

In accordance with the Paperwork Reduction Act of 1995,4 the Board reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.

For the reasons set forth in the preamble, the Board is amending 12 CFR part 204 as follows:

The Women's Business Center Program (WBC Program) was created under the authority of Title II of the Women's Business Ownership Act of 1988 (Pub. L. 100-533). The WBC Program authority is now codified in the Small Business Act (Act), 15 U.S.C. 656. The initial Demonstration Training Program, later renamed the WBC Program, was created with the Congressional intent to remove barriers to the creation and development of small businesses owned and controlled by women and to stimulate the economy by aiding and encouraging the growth and development of such businesses. The specific objectives of the Demonstration Training Program were to provide long-term training and counseling to potential and current women business owners, including those who are Socially and Economically Disadvantaged as defined in 13 CFR 124.103 and 124.104.

Since its creation, the WBC Program has transformed through a number of public laws from a Demonstration Training Program into a permanent program. The laws that have impacted the WBC Program include the following: The Women's Business Development Act of 1991 (Pub. L. 102-191); the Women's Business Centers Sustainability Act of 1999 (Pub. L. 106-165); the U.S. Troop Readiness, Veterans' Care, Katrina Recovery, and Iraq Accountability Appropriations Act of 2007 (Pub. L. 110-28); and the Small Business Jobs Act of 2010 (Pub. L. 111-240).

Section 29 of the Act, 15 U.S.C. 656, authorizes the SBA to provide financial assistance, in the form of grants, to private nonprofit organizations to conduct five-year projects for the benefit of small business concerns owned and controlled by women. The Act further authorizes the SBA to renew a grant for additional three-year periods and provides that there are no limitations on the number of times a grant may be renewed.

On November 22, 2016, the SBA published a proposed rule with a request for public comment in the Federal Register to outline program requirements and standardize the delivery of the WBC Program (81 FR 83718). The information proposed by the SBA included clarification of terms and definitions as well as overall program policies.

This final rule codifies the SBA's oversight responsibilities of the WBC Program into a newly created Part 131 of the SBA's regulations by incorporating the following: (A) Standard definitions for the program (13 CFR 131.110); (B) program-participation requirements and application procedures (13 CFR 131.210, 13 CFR 131.300, 13 CFR 131.400); (C) financial-management and grant-administration requirements (13 CFR 131.500); (D) oversight and programmatic and financial-examination provisions (13 CFR 131.700 and 13 CFR 131.720); (E) procedures for the suspension, termination, and non-renewal of a grant (13 CFR 131.830); and (F) procedures for dispute resolution (13 CFR 131.840).

The comment period was open from November 22, 2016, to January 23, 2017, and the SBA received 46 comments. Of the 46 comments received, 36 were from individuals or groups that concurred with the comments submitted by the Association of Women's Business Centers (AWBC). This preamble includes the SBA's response to all of the comments received.

One of the comments received referenced the intended use of the Women's Business Center (WBC or Center) regulations. The commenter indicated that while the SBA's intent of the proposed rule is to outline policies and procedures for the WBC Program and streamline both the program announcement and the notice of award, it continually references both of the aforementioned program documents for additional guidance. The commenter suggested that program applicants and/or participants should not have to refer to multiple documents for guidance. While the proposed rule references both the program announcement and the notice of award (NOA), the Office of Women's Business Ownership (OWBO) anticipates that both documents will include references to the regulations, resulting in consistency for the program. The regulations will continue to reference the program announcement and NOA, which outline the period of performance and is the legally binding agreement signed annually by the host organization and an authorized staff person at the SBA. In addition, any changes to the grant, including award amounts, SBA targeted/specialized services, initiatives or populations will continue to appear in the annual program announcement(s) and/or NOA.

There were three comments to the Advanced Notice of Proposed Rulemaking (ANPRM) (80 FR 22434, April 22, 2015) that a commenter indicated were not fully addressed in the Notice of Proposed Rulemaking (NPRM). The comments were: (1) Training—The commenter stated that the training provided by OWBO is limited, only addresses compliance, and does not include training on best practices. OWBO shares best practices through regular outreach to the network of WBCs. Best practices are also shared at the annual WBC training conference held by the AWBC. Historically, the compliance training coordinated by OWBO has included instruction on the preparation of effective funding applications, budgets, and modifications. OWBO has also paired new WBCs or new WBC staff with experienced, effective centers or staff for discussions that included, but were not limited to, the pros and cons of using certain training curriculums, what and how to charge fees for services, and marketing strategies. (2) Data Collection System—Several commenters identified the need for the SBA to update the current data collection system. As an Agency priority, the SBA recently improved the Entrepreneurial Development Management Information System (EDMIS) to reduce system errors related to data uploading. The Agency continues to identify ways to improve or replace EDMIS. We appreciate the ongoing feedback from our stakeholders. (3) Repository of Information—A commenter requested that the SBA outline its plan to develop a repository of information for WBCs. The commenter further stated that the repository should include information on best practices, program materials, and documents that can be shared among WBCs. It should also include a forum for questions and answers, an up-to-date map of current WBCs, their managers, and program profiles that include a description of their services, outputs, and outcomes. Additionally, the commenter envisioned the clearinghouse/repository as a forum for WBCs to ask questions and solicit advice. Currently, some of the information identified by the commenter (program materials and reporting documents) can be accessed at the SBA's public website for the program, www.sba.gov/wbc. The locations and contact information for all WBCs are included in the local SBA assistance tool at https://www.sba.gov/tools/local-assistance/wbc. OWBO is continuing to identify new opportunities for sharing relevant information across the WBC network.

As stated in the preamble of the proposed rule, the SBA intends to work with women's organizations to develop an information repository; however, this rulemaking action is not the proper forum to include an outline of such repository. The creation and management of a repository, as part of this rule, would necessitate frequent modifications to its governing documents. As the repository develops and evolves, it would become extremely burdensome and ineffective for the SBA to continually revise the program regulations. The commenter further suggested that the SBA provide funds to the AWBC to develop a clearinghouse if the SBA is unable to develop one. However, there are currently no resources available to the SBA to develop and manage a clearinghouse or to direct and fund another entity to carry out such a function.

One public comment addressed concerns with the Women-Owned Small Business Procurement Program (WOSB), 13 CFR part 127. However, the WOSB Program is outside the scope of this rule.

This section defines 57 words and phrases used in the management and oversight of the WBC Program. These definitions have been consolidated from existing documents, including program announcements and cooperative agreements, to ensure consistency and clarity within the WBC Program.

Several commenters suggested that the definition for counseling be revised. Specifically, a commenter questioned why resource partners and SBA district office personnel are included in the definitions, as WBCs do not require assistance from other resource partners or SBA district office personnel to provide counseling services. Based on the public comments received, the SBA has determined that it will remove the definitions related to district office personnel as well as to resource partners.

Commenters recommended that the definition for full-time be clarified and that the “full-time” executive director or program manager of a given WBC be able to have responsibilities for associated programs that support and extend the impact of the SBA-funded WBC Program. This rule does not prohibit the Executive Director or WBC Program Director from performing tasks associated with activities that support the WBC project. Rather, the proposed rule defines a full-time employee as one who should not engage in activities that do not pertain to the WBC project. Activities in support of the WBC project are therefore allowable. Additionally, part-time staff paid through the WBC budget are allowed to complete any task(s) associated with the WBC project. The SBA has determined that the definition will remain as originally proposed.

The proposed rule limited the term of an Interim Program Director to no more than 60 days. The SBA received several comments suggesting 60 days did not allow the center sufficient time to identify a new WBC Program Director. In light of the comments and upon further consideration, the SBA has decided to increase the time allowed for an Interim Director to remain in position on an interim basis from 60 days to 90 days. The language in this final rule has been revised.

The proposed rule defined socially and economically disadvantaged women as, “women who have been subjected to racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups and without regard to their individual qualities. It also includes women whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same or similar line of business.” A commenter suggested that the word gender be added just before the word racial in this definition. It is the SBA's position that women have been recognized as socially disadvantaged on a case-by-case basis under the SBA's contracting programs on the grounds that they have experienced cultural bias on the basis of gender. There is not a gender-based presumed group for women as there are for race-based groups or members of minority groups, but individual women have been recognized by the SBA as being socially disadvantaged. The SBA would like to avoid conflicting definitions of socially and economically disadvantaged. Furthermore, 13 CFR 124.103 expressly references the fact that social disadvantage can be based on gender in 13 CFR 124.103(c)(2)(i). Additionally, all of the examples included under § 124.103(c)(3) involve cases of women establishing social disadvantage. Given the aforementioned information, the SBA has determined that the definition will remain as originally proposed.

A commenter suggested that the SBA change the terms “counseling records” and “training records” to “client records.” The SBA agrees with the recommendation and included revised language in this final rule.

As part of the negotiation process for the cooperative agreement, the ANPRM required that each Center do the following: (1) Collaborate with its local SBA district office and OWBO to develop annual goals, and (2) receive written concurrence on annual goals from its SBA district office for inclusion in the application submission. However, a public commenter reported that many district offices do not have staff equipped to provide this support. The commenter also stated that receiving written concurrence from the SBA district office for inclusion in the application submission places the burden of coordination on the WBC. Lastly, the commenter included an example from the previous year of one SBA district office that was reluctant to provide concurrence at the WBC's request because they felt it was providing “preferential treatment.” The SBA agrees with the commenter. Therefore, this provision will be removed from the final rule.

Paragraph (e) requires that all new applicants accepted into the WBC Program after the effective date of this rule be required to include the specific identification “Women's Business Center” as part of their WBC's official name. The proposed rule similarly required that any WBC applying for a renewal grant after the effective date of this rule also include the specific identification “Women's Business Center” as part of its official name. The rule further proposes that any existing WBC that does not include “Women's Business Center” in its name (until such time that a renewal application is submitted) must include the following language prominently on its website and promotional documents: “The Women's Business Center is funded in part by the U.S. Small Business Administration.” A commenter wrote that the two sentences seemed contradictory. In the first sentence, “must” is used. In the second sentence, it seems inclusion of “Women's Business Center” in the official name is optional as long as “funded in part by the SBA” is prominently displayed on websites and promotional documents. The commenter recommended that the language be clarified. The SBA agrees with the commenter and has revised the language for clarification.

A commenter requested that the SBA define “official” name and explain how it differs from “legal name.” The SBA's intention is that the official name is the name assigned to the WBC by its host organization. The legal name is the name of the host organization and is the name usually listed in the Application for Federal Assistance, SF 424. For clarification, the language in this final rule has been revised.

The SBA received several comments regarding whether the costs incurred to change the official name of the WBC to comply with the rule are allowable. As this rule only applies to the official name of the WBC and not the host organization, costs associated with the name change should be minimal and are allowable.

Paragraph (g) addresses conflict of interest. A commenter suggested that it was reasonable to require employees, contractors, and consultants to sign a conflict-of-interest statement, but thought the requirement to have volunteers sign a conflict-of-interest statement was burdensome. The SBA has revised this section of the proposed rule and the submission of conflict-of-interest policy statements is no longer required. However, the WBC must implement conflict-of-interest policies consistent with 2 CFR 2701.112.

Paragraph (a) of § 131.330 requires WBCs to create and update client records to document each time services are provided to a client. A comment was received stating that this language focuses on documentation of counseling services and does not document the provision of training services, despite the fact that 85% of the WBC's clients receive training. SBA agrees that this regulatory provision was unclear, and the Agency has revised the rule to refer to services generally and removed references to any specific category of services.

Paragraph (b)(5) of the proposed rule prohibited WBCs from intervening in loan decisions, servicing loans, making credit recommendations, or influencing decisions regarding the award of any loans or lines of credit on behalf of the WBC's clients, unless the WBC operates as an SBA Microloan Intermediary and is awarding an individual or small business concern an SBA microloan. A comment was received that recommended the SBA expand the exception, since not all WBCs who are lenders are microlenders, if they make small business loans above the microloan definition. The commenter further explained that not all WBCs who are microlenders are SBA microlenders. The SBA does not agree with the commenter to expand the exception related to the WBCs' involvement in loan activities. The SBA loan programs include restrictions and protections against self-dealing that may not be present in other non-SBA lending programs. As such, other lending programs may present greater risk of conflicts of interest. The language in paragraphs (b)(5) and (6) of the rule remains the same to ensure compliance regarding WBC loan activities.

A comment was received regarding the WBC Program Director's participation in the loan process. The commenter suggested that the policies governing WBCs should exempt Certified Development Financial Institutions (CDFIs) in addition to SBA microlenders. The commenter also stated that the relationship between the WBC Director and the loan client is critical to the growth and success of the client's business and that the WBC Director maintains an ongoing relationship with clients through site visits and check-ins. This commenter further stated that the involvement of the WBC Program Director was critical to the loan process, not only for the SBA microlenders but also for the CDFIs. The SBA agrees that the role of the WBC Program Director is important in supporting access to capital. However, the WBC staff must limit their interaction in the loan process to loan packaging activities. The language in sections (b)(5) and (b)(6) of this rule remains the same to ensure compliance regarding WBC loan activities.

One commenter suggested that WBC Program Directors be allowed as much time as possible for fundraising activities. This rule does not propose restrictions on fundraising activities or the time allowed for fundraising. However, fundraising activities require prior approval from the Assistant Administrator of OWBO and must comply with 2 CFR 200.442.

In paragraph (c)(2), the WBC Program Director is required to have the necessary authority from the host organization to control all WBC budgets and expenditures. A commenter wrote that, while they support the requirement, many WBCs do not have this authority from the host organization. The commenter suggested that the regulations be revised to include guidelines on how the SBA will properly enforce this requirement. Because SBA's guidance in this area may develop over time based on practical experience, lessons learned, and changing circumstances, SBA believes that this guidance could be flexible and more effectively provided through annual program announcements rather than via regulation. Therefore, as a result of the comment received, this provision of the proposed rule has been removed.

To ensure effective management of the WBC project, paragraph (a)(2) outlines the actions a WBC must take if there is a vacancy in the WBC Program Director position. Several commenters indicated that the 90-day timeframe included in the proposed rule did not allow sufficient time to recruit and hire a permanent WBC Program Director. While the SBA will uphold the 90-day requirement, the rule's language has been revised to allow the approved Interim WBC Program Director to remain in the position past 90 days upon obtaining the prior written approval from the Assistant Administrator of OWBO or designee.

Paragraph (a)(3) of the proposed rule requires an Interim Program Director to allocate his/her time and effort solely to the WBC Program until a permanent WBC Program Director is in position. A commenter suggested that an Interim Program Director may have other responsibilities within the recipient organization. The commenter also stated that while the Interim Program Director should allocate a large percentage of his/her time and effort to the WBC, it may not be possible or necessary to allocate all of his/her time and effort solely to the WBC Program. The SBA agrees with the commenter and has revised the language in this final rule.

Paragraph (b) outlines the SBA's process to ensure that candidates for the WBC Program Director position are qualified to manage the day-to-day operations of the WBC project. A comment was submitted stating that the SBA's involvement in the hiring of the WBC Program Director should be limited to reviewing legal issues such as conflict of interest, disbarment (sic), and payment of taxes. Additionally, the commenter stated that since the SBA grant represents partial funding for the WBC, not the entire funding, personnel decisions should be left to the discretion of the recipient organization. The SBA has determined that it is important to review a candidate's resume to ensure that the candidate has the core competencies outlined in paragraph (a)(1) of this rule. It should be noted that all funds (Federal, non-Federal cash match, and program income) included in the WBC budget are considered WBC project funds and constitute full funding for the project. Further, in adherence to 2 CFR 200.201(b)(5) and 2 CFR 200.308, changes in the project leader or key person require the prior written approval of the Federal awarding agency. Therefore, provisions of the proposed rule remain unchanged.

Several commenters noted that the application process, especially for existing WBCs, is onerous and gives no deference to past performance. Further, several commenters recommended for the process to be streamlined. SBA concurs with those comments and has removed the sections related to application procedures (e.g., new applications, renewals, and decisions) from the rule. This approach will afford SBA the flexibility to innovate and refine the application process based on practical experience as well as current Office of Management and Budget regulations. Subsequent sections of this rule have been renumbered reflecting this deletion.

Paragraph (b)(1) outlines application selection criteria, including the applicant organization's expertise in providing long-term and short-term training and counseling programs, and, most specifically, experience in providing targeted business development services to a distinct population.

A commenter suggested that the term “distinct population” be replaced with “women.” The commenter further stated that the selection criteria should be focused on the applicant's experience and commitment to helping women. The SBA agrees with the commenter that the focus of the program is women but will maintain the use of the term “distinct population” in this section of the rule, as the definition for “distinct population” specifically references women. However, the language has been revised to reference the definition for “distinct population,” which is included in the Definitions section of this rule.

This section limits the option to carry over any unexpended Federal funds to the next funding period to WBCs within the first or second year of an initial phase project only. Several commenters suggested that more flexibility is needed as there may be some circumstances that impact a Center's ability to expend funds. WBCs are responsible for matching all carryover funds. It has been the SBA's experience that when unexpended Federal funds are carried over to the next funding period, WBCs often have difficulty raising matching funds for both the carryover funds and the option year funds. This creates a situation in which the organization will match and spend the carryover funding but is then not able to spend the current year funding, thus creating a cycle where it must request carryover funding the following year. While there is never a penalty for requesting less funding, carryover funding represents an underutilization of the Federal funds provided. Also, elimination of the carryover does not preclude a Center from requesting the maximum amount of available funding the following year.

The SBA has given the issue of carryover funds further consideration and determined that based on the public comments received, it would be more efficient to address this issue via policy. Therefore, the language in this final rule has been revised accordingly.

Paragraph (i)(l) outlines items that cannot be considered as sources of matching funds, including uncompensated student labor. A commenter requested that the prohibition of student labor for matching funds be clarified. The commenter explained that some WBCs, including those whose recipient organizations are universities, utilize university undergraduate and graduate students for substantive work. These students receive school credit for their work instead of monetary compensation. Lastly, the commenter suggested that the services provided by these students be allowed as matching funds. The SBA reviewed the issue and determined that a WBC can claim student volunteer time as an in-kind contribution, provided the WBC can document adequate valuation for the services. However, if a WBC is providing some form of tuition remission to the student volunteers and claiming that as a direct cost under its grant (or including it in its indirect cost rate), then it cannot also claim that time as an in-kind contribution. If the WBC will not claim the student's time under the grant in some way, and if the WBC can adequately document the value of the services provided, then the WBC should be able to claim student volunteer time as an in-kind contribution. The SBA removed the language in the proposed rule that prohibited the use of student volunteer time as in-kind match. Relatedly, a commenter raised the notion of using the in-kind criteria established by the IRS and referenced in FASB FAS 116 which describes how volunteer service hours can used as match. OWBO disagrees with this comment and concludes that 2 CFR 200.96 and 2 CFR 200.306 is sufficient in this area and would also cover special circumstances such as allowing donated salaries to be used as cash match.

The SBA also received a comment that described the process used to validate match as tedious and burdensome. The commenter suggested that the match requirement be decreased significantly or eliminated entirely. Based on the public comments received regarding the match requirements, the Agency has determined to address this issue via policy and has removed paragraphs (d) through (h) of this section from the final rule.

This section detailed the process through which advances and reimbursements were disbursed. Several commenters noted that the program had accumulated administratively burdensome requirements over its existence and where appropriate should be curtailed. Section 131.570 was removed as its provisions should implemented via policy.

This section lists the types and frequencies of reports required for submission. One commenter suggested that, while the SBA/OWBO has streamlined many of its reporting requirements, additional improvements could be made to eliminate duplication of time and effort. The commenter also indicated that the renewal application process could be shortened by simply updating the information that was included in the initial application. The requirement to submit a renewal application every three years is consistent with the Act. While this section of the rule does not provide information on the renewal application process (See § 131.420), the SBA has and will continue to streamline its application processes. For example, OWBO established a 10-page limit for the narrative response for renewal applications. Additionally, some of the forms previously required (e.g., Cost Sharing (SBA 1224) and Certification Regarding Debarment, Suspension and Other Responsibility Matters—Primary Covered Transactions (SBA 1623)) are no longer required. Several commenters highlighted the need for the Agency to revamp its reporting processes. Based on the public comments, the Agency undertook a comprehensive review of its reporting requirements. Redundant and ineffective processes were identified and eliminated. As a result, the Agency identified a need for continuous improvement in this area and will remove this section from the final rule. This will allow the Agency flexibility to address reporting via policy and to modify those requirements as needed in order to make the WBC program more effective and efficient and to improve the delivery of its services. Subsequent sections of this rule have been renumbered accordingly reflecting this deletion.

Several commenters noted that OWBO should provide clarity on the means, methods, and purpose of data collected by the program and should collect additional performance and demographic data. This desire for more data is hindered by § 131.900 and therefore the section has been removed from the final rule.

The Office of Management and Budget has determined that this rule constitutes a “significant regulatory action” under Executive Order 12866. However, this is not a major rule under the Congressional Review Act, 5 U.S.C. 800.

The SBA provides a detailed Regulatory Impact Analysis for this final rule below.

The WBC Program was established in 1988 as a pilot program and became permanent in 2007. Regulations for the WBC Program had not been previously promulgated. The SBA had used the program announcement and the notice of award to incorporate statutory requirements to implement the WBC Program. The annual program announcement and the notice of award have become, for all practical purposes, documents that interpret the statute. The SBA believes it is past time for regulations outlining guidance of the policies and procedures for the WBC Program. This regulation incorporates the changes required by 2 CFR part 200. The Office of Management and Budget (“OMB”) issued the “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, Final Rule (Uniform Guidance) on December 26, 2013”, which is referred to as OMB “Super Circular” or “Omni Circular” and is codified at 2 CFR part 200. The Super Circular supersedes and streamlines requirements applicable to the administration, use and audit of federal grant funds by non-profit organizations, state, local and tribal governments, and colleges and universities. This regulation also encompasses other program changes that have taken place since the WBC Program was initially established. Additionally, the AWBC has supported implementing regulations to streamline and standardize processes.

In fiscal year 2016, the WBC Program received $17 million in Federal funds, which it provided to over 100 WBCs. The SBA also received $18 million in Federal funds for WBCs in fiscal year 2017. Grantees are required to supply a one-to-one match of those funds, except in the program's initial two years, during which time the required match is two-to-one (Federal to match). The benefit of this requirement is that the grantee is as invested as the Federal Government in ensuring the success of the WBC Program, while small businesses benefit from the no- or low-cost counseling and training.

The counseling and training services that the WBCs provide help educate small businesses to promote growth, expansion, innovation, increased productivity and management improvement. In 2017, the WBC Program assisted 148,106 clients. These clients benefitted from technical advice on topics like how to obtain loans, how to create a business plan, how to promote their business, and other areas. According to a 2016 WBC survey, clients of the WBC Program created 17,438 new business starts and received over $582,000,000 in capital infusion. Further, the potential benefits of this rule are based on both incorporating all of the changes that have occurred with the publication of 2 CFR 200 and a streamlining of the program announcement and the notice of award. The new regulations further clarify the program announcement(s) issued by OWBO.

The costs to the SBA in making this revision are minimal, as most of the requirements of this rule are currently implemented and followed. The estimated annual cost to the Federal Government for oversight of the WBC Program is currently provided for in the existing SBA infrastructure.

The annual cost to the WBCs includes the burden at the time of application and the annual financial reporting required of WBCs. Over the past five years, there were a total of 133 new applications for the WBC Program, averaging 27 applications per year. The SF 424 (Application for Federal Assistance) on grants.gov does not include a field for revenue size; however, given that the majority of entities are small, the SBA can presume that the majority of applicant organizations are also small. It is projected that a grants writer would require approximately 20 hours to complete and submit the required application forms through grants.gov. Using the loaded wage for an accountant at $44.06 per hour (BLS does not publish a wage for grants writers so an accountant wage is used as a proxy; the 2018 hourly wage rate for an accountant is $33.89 and adding 30% for benefits totals $44.06 per hour), this would cost the applicant organization approximately $881 or a total cost of $23,787 to all applicants of the WBC program annually.

A participant in the WBC Program submits a Federal Financial Report and attachments twice a year, the estimated burden of which is two hours twice a year. The annual submission of a work plan requires substantially less time than the renewal application, as its purpose is to update the initial application to reflect any changes. The estimate for completion of the work plan and attachments on an annual basis is approximately 14 hours. Using the loaded wage for an accountant at $44.06 per hour, the estimated annual cost for a WBC would be $617. There are currently 113 entities that participate in the WBC Program for a total cost of $69,721.

Considering the cost to new applicants and the annual preparation of a work plan and attachments for participants, the annual cost of this rule is $93,508. The annualized cost of this rule in 2016 dollars is $89,740.

Comments were submitted regarding the costs considered in this rule. The commenters indicated that the section of the proposed rule describing the regulatory flexibility analysis minimizes the scope of WBC reporting requirements and grossly underestimates the cost and amount of time required. One commenter also suggested that, in addition to the cost and time required to submit an application, WBCs are required to submit a work plan each year. The commenter also identified the multiple reporting requirements (e.g., EDMIS quarterly reports, semi-annual or quarterly narrative and financial reports) as burdensome to the WBCs. While the commenter did not provide an estimate of time or cost for the tasks referenced in this section, the proposed rule estimated a burden to complete the required forms and reports annually at 14 hours of work. The estimate of 14 hours refers only to the time it would take on average to complete WBC application documents. Also, contrary to the statement provided by the commenter, WBCs are not required to submit an application and a work plan each year. Centers are required to submit either an application (if in a renewal phase) or a work plan (if in an option year) annually. Furthermore, there are no additional costs for the submission of budgetary and performance reports as the cost for these activities is already included as part of the funds provided to the WBC to manage the program. This rule serves to codify existing requirements. Further, the work plan submissions require narratives that do not exceed five pages. The SBA will, however, continue to explore ways to further reduce and simplify reporting requirements.

After publishing the ANPRM on April 22, 2015, the NPRM on November 22, 2016, and reviewing the comments submitted, the SBA believes that publishing regulations for the WBC Program would be the best way to create long-lasting consistency in the implementation of the WBC Program. The alternative would be to not publish regulations and instead continue to rely on grant documents to implement the WBC Program. However, 15 U.S.C. 656(n)(3) requires the SBA to issue regulations establishing standards for financial audit disclosures. Because the SBA is required to issue regulations for part of the WBC Program, the Agency believes it would be more beneficial to grantees and the public to issue regulations establishing one set of rules for the program as a whole rather than relying upon a piecemeal approach utilizing a mix of regulations and grant documents to govern the program.

Prior to developing this final rule, the SBA issued an ANPRM on April 22, 2015, to solicit comments. Additionally, public comments were solicited as part of the NPRM issued on November 22, 2016. Further, the OWBO staff attended the annual WBC training conferences to discuss policy, procedures, and the proposed regulations.

Comments for both the ANPRM and NPRM can be found at: https://www.regulations.gov/docketBrowser?rpp=50&so=DESC&sb=postedDate&po=0&dct=PS&D=SBA-2015-0007.

The SBA did not receive any comments from other Federal Agencies.

For the purposes of Executive Order 12988, Civil Justice Reform, the SBA has determined that this final rule is drafted, to the extent practicable, in accordance with the standards set forth in Sec. 3(a) and 3(b)(2), to minimize litigation, eliminate ambiguity, and reduce burden. The regulations provide for WBC Program participants' rights of appeal in the event they are aggrieved by an Agency decision, thereby limiting the possibility of litigation. This final rule does not have retroactive or pre-emptive effect.

For the purposes of Executive Order 13132, the SBA has determined that this rule has no federalism implications warranting preparation of a federalism assessment.

This final rule is an Executive Order 13771 regulatory action with an annualized cost in 2016 dollars of $89,740 and a net present value of $1,281,998. There are several unquantifiable benefits of the WBC program for small businesses including new business starts and capital infusion. Details on the estimated costs and a discussion of the benefits of this final rule can be found in the rule's regulatory impact analysis.

When an agency issues a rule, the Regulatory Flexibility Act (RFA) requires the agency to prepare a final regulatory flexibility analysis (FRFA), which describes whether the rule will have a significant economic impact on a substantial number of small entities. However, Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing a FRFA, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities.

The counseling and training services that the WBCs provide help educate small businesses to promote growth, expansion, innovation, increased productivity and management improvement. In 2017, the WBC Program assisted 148,106 clients. These clients benefitted from technical advice on topics like how to obtain loans, how to create a business plan, how to promote their business, and other areas. According to a 2016 WBC survey, clients of the WBC Program created 17,438 new business starts and received over $582,000,000 in capital infusion.

Further, the potential benefits of this rule are based on both incorporating all of the changes that have occurred with the publication of 2 CFR part 200 and a streamlining of the program announcement and the notice of award. The new regulations further clarify the program announcement(s) issued by OWBO.

This rule covers both the application process to become funded as a WBC and the on-going operations for currently funded WBCs. As these populations are different, the analysis is included for each.

This final rule could theoretically affect all nonprofit entities, as the statute requires that an entity be organized as a nonprofit in order to participate. According to the IRS, for tax year 2010 there were over 269,000 entities that filed returns as a 501(c)(3). The North American Industry Classification System (NAICS) codes that are most relevant to participation in the WBC program are 541611, Administrative Management and General Management Consulting Services and 541990, All Other Professional, Scientific and Technical Services. The size standard for both of these NAICs codes is $15 million in average annual receipts. According to the IRS, 92 percent of all 501(c)(3) filers had total revenue greater than $10 million. The majority of the 501(c) entities would fall under the threshold as a small entity. In addition, as the application process is voluntary and does not require a nonprofit entity to apply, the vast majority of nonprofits would not be affected. Over the past five years, there were a total of 133 new applications for the WBC Program, averaging between 25 and 35 applications per year. The SF 424 (Application for Federal Assistance) on grants.gov does not include a field for revenue size; however, given that the majority of entities are small, the SBA can presume that the majority of applicant organizations are also small. It is projected that a grants writer would require approximately 20 hours to complete and submit the required application forms through grants.gov. Using the loaded wage for an accountant at $44.06 per hour, this would cost the applicant organization approximately $881. These estimates are based on burden statements associated with the grants.gov application forms and anecdotal information supplied by applicant organizations to the WBC Program. Therefore, the SBA has determined that the application section of the final rule would not have a significant impact on a substantial number of small entities.

There are currently 113 entities that participate in the WBC Program, all of which are small entities. A participant in the WBC Program submits a Federal Financial Report and attachments twice a year, the estimated burden of which is two hours twice a year. The annual submission of a work plan requires substantially less time than the renewal application, as its purpose is to update the initial application to reflect any changes. The estimate for completion of the work plan and attachments on an annual basis is approximately 14 hours. Using the loaded wage for an accountant at $44.06 per hour, the estimated annual cost would be $617. Therefore, the SBA has determined that the financial reporting section of the final rule would not have a significant impact on a substantial number of small entities.

Comments were submitted regarding the SBA's compliance with the Regulatory Flexibility Act (RFA). The commenters indicated that the section of the proposed rule describing the regulatory flexibility analysis minimizes the scope of WBC reporting requirements and grossly underestimates the cost and amount of time required. One commenter also suggested that, in addition to the cost and time required to submit an application, WBCs are required to submit a work plan each year. The commenter also identified the multiple reporting requirements (e.g., EDMIS quarterly reports, semi-annual or quarterly narrative and financial reports) as burdensome to the WBCs. While the commenter did not provide an estimate of time or cost for the tasks referenced in this section, the proposed rule estimated a burden to complete the required forms and reports annually at 14 hours of work. The estimate of 14 hours refers only to the time it would take on average to complete WBC application documents. Also, contrary to the statement provided by the commenter, WBCs are not required to submit an application and a work plan each year. Centers are required to submit either an application (if in a renewal phase) or a work plan (if in an option year) annually. Furthermore, there are no additional costs for the submission of budgetary and performance reports as the cost for these activities is already included as part of the funds provided to the WBC to manage the program. This rule serves to codify existing requirements. Further, the work plan submissions require narratives that do not exceed five pages. The SBA will, however, continue to explore ways to further reduce and simplify reporting requirements.

Accordingly, the Administrator of the SBA hereby certifies that this rule will not have a significant economic impact on a substantial number of small entities.

The SBA has determined that this final rule will not impose additional reporting and recordkeeping requirements under the Paperwork Reduction Act (PRA), 44 U.S.C. Chapter 35. Currently, the following eight PRA submissions are associated specifically with the WBC Program: (1) OMB control number 3245-0140, Notice of Award and Cooperative Agreement; (2) OMB control number 3245-0169, Federal Cash Transaction Report, Financial Status Report, Program Income Report, and Narrative Program Report; (3) OMB control number 3245-0324, EDMIS data collection (Forms 641 and 888); (4) OMB control number 4040-0004, SF 424, Application for Financial Assistance; (5) OMB control number 4040-0006, SF 424A, Budget Summary for Non-Construction Projects; (6) OMB control number 4040-0007, SF 424B, Assurances for Non-Construction Projects; (7) OMB control number 4040-0013, SF-LLL, Disclosure of Lobbying Activities; and (8) 4040-0014SF-425, Federal Financial Report. These reports will not change and no new reports are required in this final rule.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 737-800 series airplanes. The NPRM published in the Federal Register on May 14, 2019 (84 FR 21279). The NPRM was prompted by reports of inadequate clearance between a FQIS tank unit at rib 21 and the stringer U-14 reinforcement angle added as a part of a split winglet modification per supplemental type certificate (STC) ST00830SE. The NPRM proposed to require a detailed inspection to measure the clearance between the FQIS tank unit and a certain reinforcement angle installed as a part of the split winglet modification, and repair if necessary.

The FAA is issuing this AD to address inadequate clearance between a certain FQIS tank unit and a certain reinforcement angle upon accomplishment of a certain split winglet modification, which could result in a potential source of ignition in a fuel tank and consequent fire, overpressure, and structural failure of the wing and possible loss of the airplane.

The FAA gave the public the opportunity to participate in developing this final rule. The following presents the comments received on the NPRM and the FAA's response to each comment.

United Airlines stated that it concurs with the proposed actions with no additional comments.

Boeing and Aviation Partners Boeing (APB) requested that we revise paragraph (c) of the proposed AD to include more detail as to which airplanes are affected. Boeing explained that STC ST00830SE has multiple configurations, and the proposed AD is applicable to only one configuration; airplanes in that configuration are identified in Aviation Partners Boeing Service Bulletin AP737-57-020, dated April 5, 2018. APB clarified further that STC ST00830SE includes both blended and split scimitar winglet configurations, but operators with aircraft modified to receive the blended winglets do not install the reinforcement that may interfere with the tank unit, and are not subject to the unsafe condition and requirements of the proposed AD.

The FAA agrees with the commenters' request for the reasons provided. The FAA has revised paragraph (c) of this AD to state that this AD applies to The Boeing Company Model 737-800 series airplanes, certificated in any category, line numbers 4919 through 5063 inclusive, modified with split winglets per STC ST00830SE and listed in Aviation Partners Boeing Service Bulletin AP737-57-020, dated April 5, 2018.

Boeing and APB requested that the FAA delete paragraph (h)(3) of the proposed AD because The Boeing Company Organization Designation Authorization (ODA) does not have AMOC authority for the referenced split scimitar winglet STC ST00830SE.

The FAA agrees with the request for the reasons provided. The FAA has removed paragraph (h)(3) of this AD.

Boeing requested that the FAA revise the Cost of Compliance section of the NPRM to clarify that APB is responsible for warranty coverage. Boeing reasoned that the NPRM's language of “according to the manufacturer . . .” did not specify which manufacturer, Boeing or APB, would be responsible for warranty coverage.

The FAA agrees with the request for the reasons provided. The FAA has revised the Costs of Compliance section of this final rule to clarify that APB is the manufacturer responsible for warranty coverage.

Boeing requested that the FAA revise the SUMMARY section of the NPRM to further clarify which airplanes are affected by the proposed AD. Boeing suggested that the FAA add “modified with split winglets and listed in Aviation Partners Boeing Service Bulletin AP737-57-020, dated April 5, 2018,” as a qualifier for the airplanes affected. In addition, Boeing requested that the FAA clarify what prompted the AD and the requirements of the AD by adding language that makes clear the reinforcement angle was added as a part of the referenced split scimitar winglet STC ST00830SE.

The FAA partially agrees with the request. The FAA disagrees with the request to add the qualifying statement of “modified with split winglets and listed in Aviation Partners Boeing Service Bulletin AP737-57-020, dated April 5, 2018,” because the SUMMARY section serves only as a brief introduction to the NPRM, and the level of detail requested by Boeing is reserved for the Regulatory Section of the proposed AD. As discussed earlier, the FAA has revised paragraph (c) of this AD to clarify that this AD applies only to The Boeing Company Model 737-800 series airplanes modified with split winglets per STC ST00830SE and listed in Aviation Partners Boeing Service Bulletin AP737-57-020, dated April 5, 2018. However, the FAA has revised the SUMMARY section of the final rule to clarify that a certain reinforcement angle was added as a part of a certain split winglet modification.

The FAA agrees with Boeing's request to clarify what prompted the NPRM and the requirements of the NPRM, for the reasons provided. The SUMMARY section of this AD has been revised accordingly.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule with the changes described previously and minor editorial changes. The FAA has determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

The FAA also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

The FAA reviewed Aviation Partners Boeing Service Bulletin AP737-57-020, dated April 5, 2018. This service information describes procedures for a detailed inspection to measure the clearance between the FQIS tank unit at rib 21 (WSTA 617) and stringer U-14 reinforcement angle on the left-hand wing, and repair including trimming the stringer U-14 reinforcement angle to obtain minimum clearance. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 16 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA estimates the following costs to do any necessary repair that would be required based on the results of the inspection. The FAA has no way of determining the number of aircraft that might need this repair:

According to Aviation Partners Boeing, some or all of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. The FAA does not control warranty coverage for affected individuals. As a result, the FAA has included all known costs in the agency's cost estimate.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

Discussion

The European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0059, dated March 20, 2019 (“EASA AD 2019-0059”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A330-200 Freighter, A330-200, and A330-300 series airplanes.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus SAS Model A330-200 Freighter, A330-200, and A330-300 series airplanes. The NPRM published in the Federal Register on June 24, 2019 (84 FR 29429). The NPRM was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The NPRM proposed to require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations.

The FAA is issuing this AD to address fatigue cracking, accidental damage, and corrosion in principal structural elements; such fatigue cracking, accidental damage, and corrosion could result in reduced structural integrity of the airplane. See the MCAI for additional background information.

The FAA gave the public the opportunity to participate in developing this final rule. The following presents the comments received on the NPRM and the FAA's response to each comment.

Delta Air Lines (DAL) stated its support for the NPRM.

DAL requested that the proposed AD include the address where inspection findings report should be sent and the time frame within which the report should be submitted. The commenter recommended that the proposed AD include a paragraph stating that all crack findings identified during the inspection tasks included in Airbus A330 Airworthiness Limitations Section (ALS) Part 2, Damage Tolerant Airworthiness Limitation Items (DT-ALI), Revision 03, dated October 15, 2018 (“Airbus A330 ALS Part 2, DT-ALI, Revision 03”), as supplemented by Airbus A330 ALS Part 2, DT-ALI, Variation 3.1, dated January 18, 2019, along with the corrective actions, be reported to Airbus via the Airbus Tech Request system within 30 days after the visit.

The commenter justified its request by explaining that paragraph 6. “Reporting,” of Section 1. of Airbus A330 ALS Part 2, DT-ALI, Revision 03, specifies reporting. The commenter explained that the philosophy behind the fatigue related inspections is that the areas being inspected are places where cracking might be found in the future, and if cracking is found in these areas the associated inspection task would be removed from Airbus A330 ALS Part 2, DT-ALI, Revision 03, and included in a service bulletin and an associated AD would be issued. The commenter concluded that the reporting in paragraph 6. “Reporting,” of Section 1. of Airbus A330 ALS Part 2, DT-ALI, Revision 03, is an important part of this process. Furthermore, the commenter stated that they could not locate information regarding where to submit reports and the timeframe for reporting.

The FAA would like to clarify the intent of the referenced damage-tolerant task in Airbus A330 ALS Part 2, DT-ALI, Revision 03, as supplemented by Airbus A330 ALS Part 2, DT-ALI, Variation 3.1, dated January 18, 2019. Unlike airplanes that follow a Supplemental Structural Inspection Program that requires reporting (those with an older certification basis that does not include damage tolerance criteria), the airplanes specified in paragraph (c) of this AD comply with 14 CFR 25.571 damage tolerance criteria. Section 25.571 requires applicants to evaluate all structures that could contribute to catastrophic failure of the airplane with respect to its susceptibility to fatigue cracking, corrosion, and accidental damage. Applicants must establish inspections or other procedures (also referred to as maintenance actions) as necessary to avoid catastrophic failure during the operational life of the airplane based on the results of these evaluations. It is intended that all maintenance actions required to address fatigue cracking, corrosion, and accidental damage are identified in the structural-maintenance program. All inspections and other procedures (e.g., modification times, replacement times) that are necessary to prevent a catastrophic failure due to fatigue are included in the ALS of the Instructions for Continued Airworthiness (ICA), as required by 14 CFR 25.1529. Therefore, reporting is not required by this AD.

FAA Advisory Circular 25.571-1D provides guidance for compliance with the provisions of 14 CFR 25.571, pertaining to the requirements for damage-tolerance and fatigue evaluation of transport category aircraft structure, and may be referenced for further information.

While airplane manufacturers may benefit from receiving information from the outcome of the ALI inspections, the EASA did not make reporting a requirement in EASA AD 2019-0059. The FAA concurs with the EASA, and therefore, this AD does not include a reporting requirement. However, operators may report the findings, as an option, to Airbus as specified in paragraph 6., “Reporting,” of Section 1. of Airbus A330 ALS Part 2, DT-ALI, Revision 03, that indicates reports should be sent to MPDtask.Reports@airbus.com. This AD has not been changed in this regard.

In paragraph (c) of the proposed AD, the FAA specified that certain airplanes with an original airworthiness certificate or original export certificate of airworthiness issued on or before “October 15, 2018” are affected. However, since this AD requires revising the existing maintenance or inspection program to incorporate the information specified in Airbus A330 ALS Part 2, DT-ALI, Revision 03, as supplemented by Airbus A330 ALS Part 2, DT-ALI, Variation 3.1, dated January 18, 2019, the FAA changed the date in paragraph (c) of this AD to “January 18, 2019.” No U.S. operators are affected by this change.

The FAA reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this final rule with the change described previously and minor editorial changes. The FAA determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

The FAA also determined that these changes will not increase the economic burden on any operator or increase the scope of this final rule.

Airbus has issued A330 Airworthiness Limitations Section (ALS) Part 2, Damage Tolerant Airworthiness Limitation Items (DT-ALI), Revision 03, dated October 15, 2018, as supplemented by Airbus A330 ALS Part 2, DT-ALI, Variation 3.1, dated January 18, 2019. This service information describes mandatory maintenance tasks that operators must perform at specified intervals. This service information also describes airworthiness limitations for certification maintenance requirements applicable to the DT-ALI. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 107 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA has determined that revising the existing maintenance or inspection program takes an average of 90 workhours per operator, although the agency recognizes that this number may vary from operator to operator. In the past, the agency has estimated that this action takes 1 work-hour per airplane. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the agency has determined that a per-operator estimate is more accurate than a per-airplane estimate. Therefore, the agency estimates the total cost per operator to be $7,650 (90 work-hours × $85 per work-hour).

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

Discussion

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0095, dated April 30, 2019 (“EASA AD 2019-0095”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Fokker Services B.V. Model F28 Mark 0070 and 0100 airplanes. The NPRM published in the Federal Register on August 30, 2019 (84 FR 45697). The NPRM was prompted by reports of lavatory waste bin fire extinguishers found depleted. The NPRM proposed to require a one-time inspection of the installation of the waste bins for interference (the inspection also includes a weight check of the waste bin fire extinguisher and an inspection of the discharge tubes for damage), modification of affected waste bins, and replacement of affected fire extinguishers. Then NPRM also proposed to require replacement of the fire extinguisher if any damaged discharge tube is found or the weight of the waste bin fire extinguisher is too low.

The FAA is issuing this AD to address insufficient clearance between the waste bin and the fire extinguisher discharge tubes, which could result in failure to discharge the extinguishing agent during a lavatory bin fire, and consequent damage to the airplane and injury to occupants. See the MCAI for additional background information.

The FAA gave the public the opportunity to participate in developing this final rule. The FAA received no comments on the NPRM or on the determination of the cost to the public.

The FAA reviewed the relevant data and determined that air safety and the public interest require adopting this final rule as proposed, except for minor editorial changes. The FAA has determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM for addressing the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

EASA AD 2019-0095 describes procedures for a one-time inspection of the installation of each affected waste bin for interference between the waste bins and the fire extinguisher discharge tubes (the inspection for interference also includes a weight check of the waste bin fire extinguisher and a detailed inspection of the discharge tubes for damage), modification of affected waste bins, and replacement of affected fire extinguishers. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 4 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

The FAA estimates the following costs to do any necessary on-condition actions that would be required based on the results of any required actions. The FAA has no way of determining the number of aircraft that might need these on-condition actions:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to transport category airplanes and associated appliances to the Director of the System Oversight Division.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Will not affect intrastate aviation in Alaska, and

(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends 14 CFR part 39 as follows:

Discussion

The FAA issued AD 2019-21-08, Amendment 39-19774 (84 FR 59926, November 7, 2019), (“AD 2019-21-08”), for Textron Aviation Inc. (Textron) Models E33, E33A, E33C, F33, G33, 35-C33, 35-C33A, K35, M35, N35, P35, S35, V35, V35A, 36, and certain Models F33A, F33C, V35B, and A36 airplanes. AD 2019-21-08 required inspecting the right aileron flight control cable end fittings (terminal attachment fittings) and replacing any damaged cable assembly. AD 2019-21-08 resulted from reports of cracked and fractured right aileron flight control cable end fittings. The FAA issued AD 2019-21-08 to prevent failure of the right aileron flight control cable assembly, un-commanded right roll of the airplane, and loss of roll control in the left direction, which may lead to loss of control of the airplane.

Since the FAA issued AD 2019-21-08, the FAA received a comment that AD 2019-21-08 should not apply to Models K35, M35, N35, and P35 airplanes. Textron verified those airplane models have a different configuration with the heating duct in a different location. The FAA has determined to supersede AD 2019-21-08 with this AD that retains all of the required actions from AD 2019-21-08 but removes airplane Models K35, M35, N35, and P35 from the applicability.

The FAA is issuing this AD because it evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This AD requires inspecting the right aileron flight control cable end fittings that thread into the turnbuckle for corrosion, pitting, and cracks and replacing any damaged cable assembly.

An unsafe condition exists that requires the immediate adoption of this AD without providing an opportunity for public comments prior to adoption. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because the quantity of recent reports of failure of the right aileron flight control cable end fittings necessitates that the corrective actions be accomplished within 30 days. Therefore, the FAA finds good cause that notice and opportunity for prior public comment are impracticable. In addition, for the reasons stated above, the FAA finds that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and the FAA did not provide you with notice and an opportunity to provide your comments before it becomes effective. However, the FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under the ADDRESSES section. Include the Docket Number FAA-2019-0959 and Product Identifier 2019-CE-051-AD at the beginning of your comments. The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this final rule. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

The FAA will post all comments it receives, without change, to https://www.regulations.gov, including any personal information you provide. The FAA will also post a report summarizing each substantive verbal contact it receives about this final rule.

The FAA estimates that this AD affects 3,161 airplanes of U.S. registry.

The FAA estimates the following costs to comply with this AD:

The FAA estimates the following costs to do any necessary replacement that would be required based on the results of the inspection. The FAA has no way of determining the number of airplanes that might need this replacement:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.

The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to small airplanes, gliders, balloons, airships, domestic business jet transport airplanes, and associated appliances to the Director of the Policy and Innovation Division.

The requirements of the Regulatory Flexibility Act (RFA) do not apply when an agency finds good cause pursuant to 5 U.S.C. 553 to adopt a rule without prior notice and comment. Because FAA has determined that it has good cause to adopt this rule without notice and comment, RFA analysis is not required.

This AD will not have federalism implications under Executive Order 13132. This AD will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

For the reasons discussed above, I certify that this AD:

(1) Is not a “significant regulatory action” under Executive Order 12866, and

(2) Will not affect intrastate aviation in Alaska.

Accordingly, under the authority delegated to me by the Administrator, the FAA amends part 39 of the Federal Aviation Regulations (14 CFR part 39) as follows:

In 2016, the FASB adopted ASC Topic 326 through its issuance of Accounting Standards Update No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. 1 Upon its effective date, this standard will replace the existing incurred loss model for determining the allowance for loan losses with an expected credit loss model. The staff is publishing this staff accounting bulletin to update existing staff guidance 2 with respect to methodologies and supporting documentation for measuring credit losses. This updated guidance continues to focus on the documentation the staff would normally expect registrants engaged in lending transactions to prepare and maintain to support estimates of current expected credit losses for loan transactions. This update is applicable upon a registrant's adoption of Topic 326.

On November 15, 2019, the FASB delayed the effective date of the standard for certain small public companies and other private companies.3 As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC's definition, as well as private companies and not-for-profit entities. Nothing in this staff accounting bulletin should be read to accelerate or delay the effective dates of the standard as modified by the FASB.

The statements in SABs are not rules or interpretations of the Commission, nor are they published as bearing the Commission's official approval. They represent staff interpretations and practices followed by the staff in the Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the federal securities laws.

Accordingly, part 211 of title 17 of the Code of Federal Regulations is amended as follows:

The staff hereby adds Section M to Topic 6 of the Staff Accounting Bulletin Series. Accordingly, the staff hereby amends the Staff Accounting Bulletin Series as follows:

The Department is amending two provisions of 20 CFR part 686, which implements subtitle C of title I of WIOA. Through these amendments, the Department is aligning these regulatory provisions with the language in WIOA by broadening the authority to issue contract solicitations from the Employment and Training Administration (ETA) to the Secretary of Labor. The Department is making this procedural change to the WIOA regulation to provide greater flexibility in the management and operation of the Job Corps program by allowing the Secretary of Labor to designate the component of the Department that is authorized to issue solicitations for the operation of Job Corps centers, outreach and admissions, career transitional services, and other operational support services. This change will provide the Department with the flexibility to more efficiently manage the Job Corps procurement process, which will in turn allow greater economies of scale and operational efficiencies. This rule is consistent with the President's Management Agenda Cross-Agency Priority (CAP) Goal Number 5—Sharing Quality Services. The Department is implementing this CAP, in part, via the Department's Enterprise-Wide Shared Services Initiatives whose primary goals are as follows:

1. Improve human resources efficiency, effectiveness, and accountability;

2. Provide modern technology solutions that empower the DOL mission and serve the American public through collaboration and innovation;

3. Maximize DOL's federal buying power through effective procurement management; and

4. Safeguard fiscal integrity, and promote the effective and efficient use of resources.

This rule will assist the Department's implementation of its Enterprise-Wide Shared Services Initiative.

This rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.

Sec. 147(a) of WIOA authorizes the Secretary of Labor to enter into agreements with eligible entities to operate Job Corps centers and to provide activities to a Job Corps center. Two provisions in the regulation implementing subtitle C of Title I of WIOA implement section 147(a). Title 20 CFR 686.310(a) broadly states that the Secretary selects eligible entities to operate contract centers on a competitive basis in accordance with applicable statutes and regulations, and 20 CFR 686.340(a) states that the Secretary selects eligible entities to provide outreach and admission, career transition, and operational support services on a competitive basis in accordance with applicable statutes and regulations. However, both provisions also specifically require ETA to develop and issue solicitations for these Job Corps contracts. These provisions are inconsistent with section 147(a) and constrain the Department's ability to assign the authority to develop and issue solicitations to whichever component of the agency determined appropriate to further the important goals of selecting the appropriate entities to support the Job Corps program.

This final rule amends §§ 686.310(a) and 686.340(a) by replacing “ETA” with “the Secretary.” Through this final rule, the Department is aligning the text of sections 686.310(a) and 686.340(a) with the statutory language in section 147(a) of WIOA, eliminating the inconsistency between the regulation and the statute. This change affords the Department greater flexibility to manage and oversee the Job Corps procurement process in a manner that it determines appropriate.

The Department invited written comments on all aspects of the proposed rule from interested parties for consideration prior to issuing a final rule (84 FR 45449). The written comment period closed on September 30, 2019. The Department received two significant adverse comments. The Department also received one comment that was outside the scope of the rulemaking.

One commenter that represents a national association expressed a concern that decentralization of procurement authority outside of ETA would result in “the further separation of Job Corps' programmatic, budget, and procurement authorities which could negatively impact Job Corps center operations, students, and taxpayers.” The commenter opined that the proposal, if implemented, would place Job Corps' procurement function under a different agency, with different political leadership, different goals and priorities, and different measures of performance success. This, according to the commenter, could potentially negatively impact Job Corps students. The commenter suggested that because of the interrelation between program, budget, and contracting, all Job Corps contracting functions should be consolidated under a single political official or, ideally, within the Office of Job Corps, but regardless suggested that the Department establish performance measures for contracting officials related to student outcomes.

The second commenter opined that the proposed change would affect how contracts for outreach and admission, career transition and operational services would be awarded. Specifically, the commenter expressed concern that the change would politicize the awarding of Job Corps contracts, in contravention of OMB's Uniform Guidance, rather than awards being made on the basis of an offeror's technical ability to provide the services.

No change to the proposal is being made in response to these comments. This change aligns the Job Corps regulation with the statutory language and affords the Department greater flexibility in managing the Job Corps procurement functions. The Department disagrees that this change will adversely impact the operation of the Job Corps program. The Department and ETA will continue to support Job Corps and its programmatic needs and interests, including ensuring that there is appropriate coordination and consultation during the various phases of the procurement process. ETA program and budget staff will continue to work closely with the assigned procurement staff to develop and review, as appropriate, solicitations for Job Corps operation and support contracts. Similarly, these changes do not involve or limit the evaluation of proposals or quotations submitted in response to solicitations. Additionally, the Department disagrees that this change will politicize the awarding of Job Corps contracts. The Department will continue to conduct all Job Corps procurements in accordance with the relevant provisions of the Federal Acquisition Regulations, which, contrary to the commenter's assertion, governs the development and award of all Job Corps contract solicitations and awards, as well as in compliance with all of the WIOA statutory and regulatory requirements and the evaluation and selection criteria announced in Department solicitations. Regarding the commenter's suggestion to establish performance measures for contracting officials related to student outcomes, the Department does not tie performance measures for contracting officials related to either formation or administration of contracts to program outcomes. Successful program outcomes are the responsibility of the office administering the program, in this case the Office of Job Corps, and the contractors directly serving students.

Therefore, the Department is finalizing the regulatory text as proposed.

Executive Order 12866 requires that regulatory agencies assess both the costs and benefits of significant regulatory actions. Under the Executive Order, a “significant regulatory action” is one meeting any of a number of specified conditions, including the following: Having an annual effect on the economy of $100 million or more; creating a serious inconsistency or interfering with an action of another agency; materially altering the budgetary impact of entitlements or the rights of entitlement recipients, or raising novel legal or policy issues. The Department has determined that this final rule is not a “significant” regulatory action and a cost-benefit and economic analysis is not required. This regulation merely makes a procedural change to allow flexibility to manage and oversee the Job Corps procurement process in a manner that the Department determines appropriate.

Executive Order 13563 directs 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). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility to minimize burden.

This rule makes only a procedural change to allow flexibility to manage and oversee the Job Corps procurement process in a manner that the Department determines appropriate. Therefore, this rule is not expected to have any regulatory impacts.

The Regulatory Flexibility Act (RFA), at 5 U.S.C. 603(a), requires agencies to prepare and make available for public comment an initial regulatory flexibility analysis, which describes the impact of the final rule on small entities. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the final rule is not expected to have a significant economic impact on a substantial number of small entities. This final rule does not affect small entities as defined in the RFA. Therefore, the Department certifies that the final rule will not have a significant economic impacts on a substantial number of small entities.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the Department consider the impact of paperwork and other information collection burdens imposed on the public. The Department has determined that this rule does not alter any information collection burdens.

Section 6 of E.O. 13132 requires Federal agencies to consult with State entities when a regulation or policy may have a substantial direct effect on the States, the relationship between the National Government and the States, or the distribution of power and responsibilities among the various levels of government, within the meaning of the E.O. Section 3(b) of the E.O. further provides that Federal agencies must implement regulations that have a substantial direct effect only if statutory authority permits the regulation and it is of national significance.

This final rule does not have a substantial direct effect on the States, the relationship between the National Government and the States, or the distribution of power and responsibilities among the various levels of government, within the meaning of the E.O. This final rule merely makes a procedural change for internal Departmental operations and management for Job Corps procurement.

This regulatory action has been reviewed in accordance with the Unfunded Mandates Reform Act of 1995 (the Reform Act). Under the Reform Act, a Federal agency must determine whether a regulation proposes a Federal mandate that would result in the increased expenditures by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more in any single year. This final rule merely makes an administrative change regarding the Departmental entity authorized for Job Corps procurement responsibilities. Therefore, the relevant requirements the Reform Act do not apply.

The Department has reviewed the final rule under the terms of E.O. 13175 and DOL's Tribal Consultation Policy, and have concluded that the changes to regulatory text which are the focus of the final rule would not have tribal implications, as these changes do not have substantial direct effects on one or more Indian tribes, the relationship between the Federal Government and Indian tribes, nor the distribution of power and responsibilities between the Federal Government and Indian tribes. Therefore, no consultations with tribal governments, officials, or other tribal institutions were necessary.

For the reasons stated in the preamble, the Department amends 20 CFR part 686 as follows:

I. Background

The Attorney General has delegated to the Director of ATF responsibility for administering and enforcing title I of the Gun Control Act of 1968 (GCA), Public Law 90-618, as amended, 18 U.S.C. chapter 44, relating to commerce in firearms and ammunition; and title XI, Regulation of Explosives, of the Organized Crime Control Act of 1970 (OCCA), Public Law 91-452, as amended, 18 U.S.C. chapter 40. See 18 U.S.C. 926(a); 18 U.S.C. 843; 28 CFR 0.130. Under the GCA, ATF has the authority to license applicants, renew licenses, and revoke Federal firearms licenses. 18 U.S.C. 923. The OCCA, as amended by the Safe Explosives Act, title XI, subtitle C of Public Law 107-296, the Homeland Security Act of 2002 (enacted November 25, 2002), authorizes ATF to provide licenses and permits to qualified applicants for the acquisition, distribution, storage, or use of explosive materials and to renew or revoke such licenses and permits. 18 U.S.C. 843.

On November 25, 2002, President George W. Bush signed the Homeland Security Act of 2002, Public Law 107-296 (the Act), which divided the regulatory functions of the Bureau of Alcohol, Tobacco, and Firearms into two separate agencies. The Act renamed the Bureau of Alcohol, Tobacco, and Firearms as the Bureau of Alcohol, Tobacco, Firearms, and Explosives and transferred law enforcement and certain regulatory functions to the Department of Justice. The Act also retained in the Department of the Treasury (Treasury) certain functions of the former Bureau of Alcohol, Tobacco, and Firearms. The functions retained by Treasury became the responsibility of a new Alcohol and Tobacco Tax and Trade Bureau (TTB). As a result of the Act, TTB has all regulatory authority under 27 CFR part 71 and ATF therefore cannot promulgate new regulations under that part, although ATF has continued to follow the procedures set forth in part 71 to administer hearings related to the application and revocation of Federal explosives licenses and permits. See 28 CFR 0.133(a)(2).

Regulations that implement the provisions of the GCA are set forth in 27 CFR part 478. Subpart E of part 478 relates to proceedings involving Federal firearms licensees, including the denial, suspension, or revocation of licenses and the imposition of civil fines. Specifically, 27 CFR 478.76 provides that, at a hearing for the disapproval of applications for firearms licenses, for the denial, suspension, or revocation of a firearms license, or for imposition of a civil fine under Federal firearms law, an applicant or licensee may be represented by an attorney, a certified public accountant, or any other person recognized to practice before ATF as provided in 31 CFR part 8, if the representative complies with the applicable practice requirements of 26 CFR 601.521 through 601.527.

The regulations that implement OCCA procedural and substantive requirements are found in 27 CFR part 555. Subpart E of part 555 relates to proceedings involving Federal explosives licensees and permittees, including the denial of an initial application, denial of a renewal, and revocation of a license or permit. Specifically, 27 CFR 555.78 provides that, at a hearing for the disapproval of applications for explosives licenses, and for the denial of renewal or revocation of such licenses or permits under Federal explosives law, an applicant, licensee, or permittee may be represented by an attorney, a certified public accountant, or any other person recognized to practice before ATF as provided in 31 CFR part 8, if the representative complies with the applicable practice requirements of 26 CFR 601.521 through 601.527.

On October 7, 2014, the Department of Justice published a notice of proposed rulemaking with a request for comments entitled, “Rules of Practice in Explosives License and Permit Proceedings (2007R-5P); Revisions Reflecting Changes Consistent with the Homeland Security Act of 2002.” 79 FR 60391-60405. The proposed rule sought to revise ATF regulations to add a new part that implements 18 U.S.C. 843 and 847 relating to the procedures and practice for the denials of initial applications, denials of renewal, and revocations of explosives licenses or permits by ATF under Federal explosives law. Additionally, the proposed rule sought to make minor revisions to regulations governing administrative proceedings related to the denial, suspension, or revocation of a license, and the imposition of a civil fine under Federal firearms law to reference regulations under ATF authority. These changes clarify ATF's role in explosives license proceedings and remove references to any regulations outside the scope of ATF's authority.

Comments on the notice of proposed rulemaking were to be submitted to ATF on or before January 5, 2015.

In response to the notice of proposed rulemaking, ATF received two comments. One commenter is an explosive and fertilizer trade association; and the other is a university student. Both commenters support ATF's proposal to transfer and consolidate regulations governing explosives license applications and renewals or revocation of licenses and permits, improving the enforcement of ATF's regulations.

One of the commenters, the Institute of Makers of Explosives (IME), notes that the creation of a new part 771 addresses jurisdictional and authority issues within ATF. IME agrees that ATF should maintain jurisdiction for all explosives programs and since the regulatory authority over part 71 resides with another agency, ATF should promulgate new regulations affecting the procedures for hearings that it is responsible for conducting. IME further states: “If promulgated, the new Part will bring all administrative and enforcement responsibilities connected with the explosives licensing and permitting program under the jurisdiction of ATF and will allow the Bureau, itself, to affect any necessary changes to the procedural rules governing its due process proceedings.” Further, IME agrees with ATF's clarification of 27 CFR 555.78 that will allow for self-representation in licensing and permit hearings conducted by ATF.

The second commenter, a student, generally supports the rule because the proscribed regulation changes will not hurt the economy but rather “help[s] the economy, productivity, competition, jobs, the environment, public health or safety, State, local, or tribal government and communities.” The same commenter further notes that the rule gives every person the right to due process if their application has been denied for a firearm.

The Department agrees that by promulgating regulations in a new part, 27 CFR part 771, ATF will be able to better govern and administer explosives license and permit proceedings that come under its jurisdiction.

This final rule implements the amendments to the regulations in 27 CFR 478.76, 555.73, 555.75, 555.78, 555.79, 555.82, and adds new part 771, as specified in the notice of proposed rulemaking published on October 7, 2014 (79 FR 60391-60405). Additionally, this final rule includes some minor technical amendments. First, in 27 CFR 771.5, the definition of “Application” is amended to include renewal applications and the definition of “Person” is amended to include “company.” Second, § 771.59, which governs an initial application for a license or permit, is amended to eliminate the statement that a request for hearing should include a statement of the reasons for a hearing; this change makes this provision consistent with the requirements for an existing Federal explosive licensee requesting a hearing in § 771.60. Third, §§ 771.59 and 771.60 are amended to add that the licensee or permittee will receive notice of the assignment of an administrative law judge (ALJ) by the Director of Industry Operations (DIO), if the ALJ has not already provided such notice; this clarifies that the ALJ will often provide this notification but the DIO must provide this notice if not already provided by the ALJ. Fourth, a reference to § 771.59 is added in § 771.64, which concerns part of the process following a request for a hearing, to reflect the fact that requests for a hearing can be made as a result of denial of an initial application in addition to the revocation or denial of a renewal application. Fifth, § 771.82 is amended to include a statement that the Federal Rules of Evidence are not binding on these proceedings, and to include a reference to expert testimony and the relevant Federal Rule of Evidence in § 771.82(a). These changes are necessary to clarify what is admissible in a hearing and to clarify that both opinion and expert testimony shall be admitted in a hearing when the ALJ is satisfied that the witness is properly qualified pursuant to Federal Rules of Evidence 701 or 702. Sixth, § 771.95, which governs the responsibilities of an ALJ, is amended to eliminate the sentence that ALJs shall be under the administrative control of the Director. This sentence addresses the responsibilities of the Director and not the responsibilities of the ALJs. Therefore, the sentence is unnecessary as to the responsibilities of the ALJ and confusing as to application. Seventh, § 771.97(k), which authorizes the ALJ to take any action authorized by an ATF rule and consistent with the Administrative Procedure Act, is amended to add a cross-reference to ATF's authority concerning licenses and permits, 18 U.S.C. 843, and the provision of the Administrative Procedure Act setting out authority for individuals presiding over agency hearings, 5 U.S.C. 556(c). Eighth, the final rule amends 27 CFR 771.99 to state that disorderly or contemptuous language or conduct by an attorney (either for a licensee or permittee or for the Government), may be reported to the Department of Justice, Office of Professional Responsibility, consistent with 28 CFR 0.39a(a)(9). Finally, other changes eliminate superfluous language or correct stylistic errors.

This final rule has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), The Principles of Regulation; Executive Order 13563, “Improving Regulation and Regulatory Review,” section 1(b), General Principles of Regulation, and section 6, Retrospective Analyses of Existing Rules; and Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs.”

Both Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule consolidates and clarifies regulations governing explosives license application renewal or revocation of licenses and permits. This rule would not add any costs to industry because this rule puts into regulation current industry and agency practices; therefore, the explosives industry would not need to incur any hourly or capital burdens in order to comply with this final rule. The Department has assessed the costs and benefits of this regulation and believes that the regulatory approach selected imposes no new regulatory costs and maximizes net benefits.

This final rule will not have an annual effect on the economy of $100 million or more, nor will it adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal government or communities. Similarly, it does not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency, materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof, or raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866. The Department has determined that this final rule is not a “significant regulatory action” as defined in Executive Order 12866, section 3(f). Accordingly, this final rule has not been reviewed by the Office of Management and Budget (OMB).

Because this rule is not significant under Executive Order 12866, this action is not subject to Executive Order 13771, “Reducing Regulations and Controlling Regulatory Costs.”

Section 6 of Executive Order 13563 directs agencies to develop a plan to review existing significant rules that may be “outmoded, ineffective, insufficient, or excessively burdensome,” and to make appropriate changes where warranted. The Department selected and reviewed this rule under the criteria set forth in its Plan for Retrospective Analysis of Existing Rules, and determined that this rule merely transfers and consolidates regulations governing explosives license application renewal or revocation of licenses and permits, improving the enforcement of ATF regulations.

This final rule will not have substantial direct effects on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, “Federalism,” the Attorney General has determined that this final rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

This final rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988, “Civil Justice Reform.”

The Regulatory Flexibility Act (5 U.S.C. 605(b)) exempts an agency from the requirement to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. The Attorney General has reviewed this final rule and, by approving it, certifies that it will not have a significant economic impact on a substantial number of small entities.

This final rule codifies the ATF regulations governing the procedure and practice for denying applications, denying renewals, and revoking explosives licenses or permits under Federal explosives law in a new part 771 under ATF's regulatory authority. Additionally, this final rule updates the regulations governing the denial, suspension, or revocation of a firearms license, and imposition of a civil fine under Federal firearms law to only reference regulations under ATF authority. This rule also amends the regulations to require an applicant or licensee in a proceeding concerning the denial, suspension, or revocation of a firearms license, or the imposition of a civil fine under Federal firearms law, to file a duly executed power of attorney designating his representative, and waivers, if applicable, under the Privacy Act of 1974. See 5 U.S.C. 552(a), and 26 U.S.C. 6103(c) (confidentiality and disclosure of returns and return information). This is required in the current regulations by reference to 31 CFR part 8 and 26 CFR 601.521 through 601.527. The changes in this final rule are purely administrative and do not add any new requirements that would have any impact on the economy.

This final rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Fairness Act of 1996. See 5 U.S.C. 804. This final rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.

This final rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This final rule does not impose any new reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995.

The author of this document is Denise Brown; Enforcement Programs and Services; Office of Regulatory Affairs, Bureau of Alcohol, Tobacco, Firearms, and Explosives.

Accordingly, for reasons discussed in the preamble, 27 CFR chapter II is amended as follows:

A. Background

In 2010, the Commission published in the Federal Register a final rule to simplify the procedures for handling certain civil penalty proceedings. The Commission evaluated the procedures in a pilot program extending almost nine years.

Based upon its evaluation of the simplified proceedings pilot program, the Commission determined that a special set of procedures for its simplest cases is not necessary at the present time. The Commission's overall caseload has decreased since the simplified proceedings rule was promulgated. Moreover, parties may request on a case-by-case basis that the Commission adapt the Commission's conventional procedures as necessary to expedite or simplify the processing of a case.

On October 11, 2019 (84 FR 54782), the Commission published a direct final rule withdrawing the simplified proceedings rule and permitting comment. The Commission received one comment from the Solicitor of Labor, on behalf of the U.S. Department of Labor. The Solicitor made no specific comments on the procedural rules themselves. Rather, the Solicitor suggested that the Commission should solicit more comments and data on the manner to improve the proceedings, including considering in part the simplified proceeding rules of the Occupational Safety and Health Review Commission (“OSHRC”).

The Commission already considered OSHRC's simplified proceeding rules in its determination that the Commission's simplified rules should be withdrawn. Having considered the comments received, the Commission has determined that subpart J should be withdrawn at the present time. If practice proves the necessity for different rules applicable to the Commission's simplest cases, the Commission will publish a proposal of such rules at that time.

The Commission is an independent regulatory agency under section 3(b) of Executive Order (“E.O.”) 12866 (Sept. 30, 1993), 58 FR 51735 (Oct. 4, 1993); E.O. 13563 (Jan. 18, 2011), 76 FR 3821 (Jan. 21, 2011); E.O. 13771 (Jan. 30, 2017), 82 FR 9339 (Feb. 3, 2017); E.O. 13777 (Feb. 24, 2017), 82 FR 12285 (Mar. 1, 2017); and E.O. 13132 (Aug. 4, 1999), 64 FR 43255 (Aug. 10, 1999).

The Commission has determined that this rulemaking does not have “takings implications” under E.O. 12630 (Mar. 15, 1988), 53 FR 8859 (Mar. 18, 1988).

The Commission has determined that these regulations meet all applicable standards set forth in E.O. 12988 (Feb. 5, 1996), 61 FR 4729 (Feb. 7, 1996).

The Commission has determined that this rulemaking is exempt from the requirements of the Regulatory Flexibility Act (“RFA”) (5 U.S.C. 601 et seq.), because the rule would not have a significant economic impact on a substantial number of small entities.

The Commission has determined that this rule is not a “major rule” under the Small Business Regulatory Enforcement Fairness Act (“SBREFA”) (5 U.S.C. 804(2)).

The Commission has determined that the Paperwork Reduction Act (“PRA”) (44 U.S.C. 3501 et seq.) does not apply because these rules do not contain any information collection requirements that require the approval of the OMB.

The Commission has determined that the Congressional Review Act (“CRA”) (5 U.S.C. 801 et seq.) does not apply because, pursuant to 5 U.S.C. 804(3)(C), these rules are rules of agency procedure or practice that do not substantially affect the rights or obligations of non-agency parties.

The Commission has determined that this rulemaking is not a major Federal action significantly affecting the quality of the human environment requiring an environmental assessment under the National Environmental Policy Act (“NEPA”) (42 U.S.C. 4321 et seq.).

The Commission is an independent regulatory agency, and as such, is not subject to the requirements of the Unfunded Mandates Reform Act (“UMRA”) (2 U.S.C. 1532 et seq.).

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

You may be potentially affected by this action if you manufacture, process, or use the chemical substances contained in this rule. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

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

This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127 and 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and Orders under TSCA. Importers of chemicals subject to these SNURs must certify compliance with the SNUR requirements. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, any persons who export or intend to export a chemical substance that is the subject of this rule on or after December 26, 2019 are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) (see 40 CFR 721.20), and must comply with the export notification requirements in 40 CFR part 707, subpart D.

EPA is finalizing these SNURs under TSCA section 5(a)(2) for 22 substances which were the subject of PMNs. These SNURs require persons who intend to manufacture or process any of these chemical substances for an activity that is designated as a significant new use to notify EPA at least 90 days before commencing that activity. EPA is not finalizing four proposed SNURs at 40 CFR 721.11150, 721.11163, 721.11164, and 721.11165 for the chemical substances P-14-627, P-17-200, P-17-204, and P-17-205, respectively, because the Agency is currently reviewing data submitted in support of a request to modify the underlying TSCA 5(e) Orders that forms the basis for the proposed SNURs.

In the Federal Register of October 3, 2018 (83 FR 49903) (FRL-9983-81), EPA proposed a SNUR for 26 chemical substances in 40 CFR part 721, subpart E. This comment period closed on November 2, 2018. More information on the specific chemical substances subject to this final rule can be found in the Federal Register documents for the direct final SNUR of October 3, 2018 (83 FR 49806) (FRL-9983-82). This direct final SNUR was withdrawn on December 4, 2018 (83 FR 62463) (FRL-9986-74) due to adverse public comments related to SNURs identified in the document.

The record for the batch SNUR was established in the docket under docket ID number EPA-HQ-OPPT-2018-0627. That docket includes information considered by the Agency in developing the proposed and final rules, public comments submitted for the rule, and EPA's responses to public comments received on the proposed rule.

TSCA section 5(a)(2) (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the four TSCA section 5(a)(2) factors listed in Unit II.

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

When the Agency issues an Order under TSCA section 5(e), TSCA section 5(f)(4) requires that the Agency consider whether to promulgate a SNUR for any use not conforming to the restrictions of the Order or publish a statement describing the reasons for not initiating the rulemaking. TSCA section 5(a)(2) states that EPA's determination that a use of a chemical substance is a significant new use must be made after consideration of all relevant factors, including:

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

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

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

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

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

EPA received public comments from three identifying entities on the proposed rule. The Agency's responses are described in a separate Response to Public Comments document contained in the public docket for this rule, EPA-HQ-OPPT-2018-0627. In addition, EPA is not finalizing the proposed SNURs for the substances described in P-14-627, P-17-200, P-17-204, and P-17-205 (40 CFR 721.11150, 721.11163, 721.11164, and 721.11165, respectively) because the Agency is currently reviewing data submitted in support of a request to modify the underlying TSCA 5(e) Orders that form the basis for the proposed SNURs. EPA will finalize those proposed SNURs after the data has been reviewed and any changes to the Orders and/or SNUR have been considered and identified.

Furthermore, the Response to Comments describes comments and responses that resulted in changes to the SNURs for P-17-24 and P-17-25. The regulatory text of the SNURs at 40 CFR 721.11159 and 40 CFR 721.11160 have been revised to include that dust inhalation exposure is a significant new use and to specify a significant new use as commercial use when saleable goods or service could introduce the PMN substances into a consumer setting.

EPA is establishing significant new use and recordkeeping requirements for 22 chemical substances in 40 CFR part 721, subpart E. In Unit IV. of the original direct final rule (83 FR 49806, October 3, 2018), EPA provides the following information for each chemical substance:

• PMN number.

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

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

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

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

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

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

These final rules include 22 PMN substances that are subject to Orders under TSCA section 5(e)(1)(A)(ii)(I) where EPA determined that activities associated with the PMN substances may present unreasonable risk to human health or the environment. Those Orders require protective measures to limit exposures or otherwise mitigate the potential unreasonable risk. The SNURs identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).

During review of the PMNs submitted for the chemical substances that are subject to these SNURs, EPA concluded that regulation was warranted under TSCA section 5(e), pending the development of information sufficient to make reasoned evaluations of the health or environmental effects of the chemical substances. The basis for such findings is outlined in Unit IV of the October 3, 2018 direct final rule. Based on these findings, TSCA section 5(e) Orders requiring the use of appropriate exposure controls were negotiated with the PMN submitters. As a general matter, EPA believes it is necessary to follow TSCA section 5(e) Orders with a SNUR that identifies the absence of those protective measures as Significant New Uses to ensure that all manufacturers and processors—not just the original submitter—are held to the same standard.

EPA is issuing these SNURs because the Agency wants:

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

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

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

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

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

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

When chemical substances identified in this rule are added to the TSCA Inventory, EPA recognizes that, before the rule is effective, other persons might engage in a use that has been identified as a significant new use. However, TSCA section 5(e) Orders have been issued for all the chemical substances, and the PMN submitters are prohibited by the TSCA section 5(e) Orders from undertaking activities which will be designated as significant new uses. The identities of 14 of the 22 chemical substances subject to this rule have been claimed as confidential. Based on this, the Agency believes that it is highly unlikely that any of the significant new uses described in the regulatory text of this rule are ongoing.

Furthermore, EPA designated October 3, 2018 (the date of public release of the original direct final and proposed rules) as the cutoff date for determining whether the new use is ongoing. The objective of EPA's approach has been to ensure that a person could not defeat a SNUR by initiating a significant new use before the effective date of the final rule.

In the unlikely event that a person began commercial manufacture or processing of the chemical substances for a significant new use identified as of October 3, 2018, that person will have to cease any such activity upon the effective date of the final rule. To resume their activities, these persons will have to first comply with all applicable SNUR notification requirements and wait until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.

EPA recognizes that TSCA section 5 does not require developing any particular new information (e.g., generating test data) before submission of a SNUN. There is an exception: If a person is required to submit information for a chemical substance pursuant to a rule, Order or consent agreement under TSCA section 4 (15 U.S.C. 2603), then TSCA section 5(b)(1)(A) (15 U.S.C. 2604(b)(1)(A)) requires such information to be submitted to EPA at the time of submission of the SNUN.

In the absence of a rule, Order, or consent agreement under TSCA section 4 covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to or reasonably ascertainable (see 40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing under 40 CFR part 721, subpart E. In Unit IV. of the original direct final rule (October 3, 2018; 83 FR 49806), the EPA lists potentially useful information that will be useful to EPA's evaluation. Companies who are considering submitting a SNUN are encouraged, but not required, to develop the information on the substance. EPA strongly encourages persons, before performing any testing, to consult with the Agency. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing on vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialog with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h).

In some of the TSCA section 5(e) Orders for the chemical substances regulated under this rule, EPA has established production volume limits. These limits cannot be exceeded unless the PMN submitter submits the results of specified tests. The SNURs contain the same production volume limits as the TSCA section 5(e) Orders. Exceeding these production limits is defined as a significant new use. Persons who intend to exceed the production limit must notify the Agency by submitting a SNUN at least 90 days in advance of commencement of non-exempt commercial manufacture or processing.

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

The potentially useful information identified in Unit IV. of the original direct final rule may not be the only means of addressing the potential risks of the chemical substance. However, submitting a SNUN without any test data or other information may increase the likelihood that EPA will take action under TSCA section 5(e) or 5(f). EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to conduct the appropriate tests.

SNUN submitters should provide detailed information on the following:

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

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

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

Under these procedures a manufacturer or processor may request EPA to determine whether a proposed use would be a significant new use under the rule. The manufacturer or processor must show that it has a bona fide intent to manufacture or process the chemical substance and must identify the specific use for which it intends to manufacture or process the chemical substance. If EPA concludes that the person has shown a bona fide intent to manufacture or process the chemical substance, EPA will tell the person whether the use identified in the bona fide submission would be a significant new use under the rule. Since most of the chemical identities of the chemical substances subject to these SNURs are also CBI, manufacturers and processors can combine the bona fide submission under the procedure in 40 CFR 721.1725(b)(1) with that under 40 CFR 721.11 into a single step.

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

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

EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers and processors of the chemical substances subject to this rule. EPA's complete economic analysis is available in the docket under docket ID number EPA-HQ-OPPT-2018-0627.

Additional information about these statutes and Executive Orders can be found at https://www.epa.gov/laws-regulations-and-executive-orders.

This action establishes SNURs for several new chemical substances that were the subject of PMNs and TSCA section 5(e) Orders. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011).

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

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

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

Pursuant to RFA section 605(b) (5 U.S.C. 601 et seq.), the Agency hereby certifies that promulgation of this SNUR will not have a significant adverse economic impact on a substantial number of small entities. The requirement to submit a SNUN applies to any person (including small or large entities) who intends to engage in any activity described in the final rule as a “significant new use.” Because these uses are “new,” based on all information currently available to EPA, it appears that no small or large entities presently engage in such activities. A SNUR requires that any person who intends to engage in such activity in the future must first notify EPA by submitting a SNUN. EPA's experience to date is that, in response to the promulgation of SNURs covering over 1,000 chemicals, the Agency receives only a small number of notices per year. For example, the number of SNUNs received was seven in Federal fiscal year (FY) 2013, 13 in FY2014, six in FY2015, 10 in FY2016, 14 in FY2017, and 18 in FY2018 and only a fraction of these were from small businesses. In addition, the Agency currently offers relief to qualifying small businesses by reducing the SNUN submission fee from $16,000 to $2,800. This lower fee reduces the total reporting and recordkeeping of cost of submitting a SNUN to about $10,116 for qualifying small firms. Therefore, the potential economic impacts of complying with this SNUR are not expected to be significant or adversely impact a substantial number of small entities. In a SNUR that published in the Federal Register of June 2, 1997 (62 FR 29684) (FRL-5597-1), the Agency presented its general determination that final SNURs are not expected to have a significant economic impact on a substantial number of small entities, which was provided to the Chief Counsel for Advocacy of the Small Business Administration.

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

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

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

This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined by Executive Order 12866, and this action does not address environmental health or safety risks disproportionately affecting children.

This action is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001), because this action is not expected to affect energy supply, distribution, or use and because this action is not a significant regulatory action under Executive Order 12866.

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

This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898 (59 FR 7629, February 16, 1994).

Pursuant to the CRA (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 parts 9 and 721 are amended as follows:

This action list as acceptable additional substitutes for use in several end-uses in the refrigeration and air conditioning sector.

• R-1224yd(Z) in centrifugal and positive displacement chillers and industrial process refrigeration (new and retrofit);

• R-407H in multiple refrigeration and air conditioning end-uses;

• R-448A in ice skating rinks (new equipment);

• R-449A in ice skating rinks (new equipment);

• R-449B in ice skating rinks (new equipment); and

• R-453A in refrigerated transport (new and retrofit).

EPA's review of certain substitutes listed in this document is pending for other uses. Listing in the end-uses and applications in this document does not prejudge EPA's listings of these substitutes for other end-uses. The substitutes being added through this document to the acceptable lists for specific end-uses have a similar or lower risk than other substitutes already listed as acceptable in those end-uses. However, certain substitutes may have a higher overall risk than certain other substitutes already listed as acceptable or acceptable subject to restrictions. In such cases, those already-listed alternatives have not yet prove feasible in those specific end-uses.

For additional information on SNAP, visit the SNAP portion of EPA's Ozone Layer Protection website at: www.epa.gov/snap. Copies of the full lists of acceptable substitutes for ozone-depleting substances (ODS) in all industrial sectors are available at www.epa.gov/snap/substitutes-sector. For more information on the Agency's process for administering the SNAP program or criteria for evaluation of substitutes, refer to the initial SNAP rulemaking published March 18, 1994 (59 FR 13044), codified at 40 CFR part 82, subpart G. SNAP decisions and the appropriate Federal Register citations are found at: www.epa.gov/snap/snap-regulations. Substitutes listed as unacceptable; acceptable, subject to narrowed use limits; or acceptable, subject to use conditions are also listed in the appendices to 40 CFR part 82, subpart G.

The sections below discuss each substitute listing in detail. Appendix A contains tables summarizing each listing decision in this action. The statements in the “Further Information” column in the tables provide additional information but these are not legally binding under section 612 of the Clean Air Act (CAA). Although you are not required to follow recommendations in the “Further Information” column of the table to use a substitute consistent with section 612 of the CAA, some of these statements may refer to obligations that are enforceable or binding under federal or state programs other than the SNAP program. The identification of other enforceable or binding requirements should not be construed as a comprehensive list of such obligations. In many instances, the information simply refers to standard operating practices in existing industry standards and/or building codes. When using these substitutes in the identified end-use, EPA strongly encourages you to apply the information in the “Further Information” column. Many of these recommendations, if adopted, would not require significant changes to existing operating practices.

You can find submissions to EPA for the substitutes listed in this document, as well as other materials supporting the decisions in this action, in Docket EPA-HQ-OAR-2003-0118 at www.regulations.gov.

EPA's decision: EPA finds R-1224yd(Z) acceptable as a substitute for use in:

R-1224yd(Z), marketed under the trade name AMOLEATM yd, is also known as (Z)-1-chloro-2,3,3,3-tetrafluoropropene or HCFO-1224yd(Z) (Chemical Abstracts Service Registry Number [CAS Reg. No.] 111512-60-8).

You may find the redacted submission in Docket EPA-HQ-OAR-2003-0118 at www.regulations.gov under the name, “Supporting Materials for Notice 35 Listing of R-1224yd(Z) in Refrigeration and Air Conditioning. SNAP Submission Received May 12, 2017.” EPA performed assessments to examine the health and environmental risks of this substitute. These assessments are available in Docket EPA-HQ-OAR-2003-0118:

Environmental information: The submitter indicates that according to the National Institute of Advanced Industrial Science and Technology (AIST) of Japan R-1224yd(Z) has an ozone depletion potential (ODP) of approximately 0.00012 and a 100-year integrated global warming potential (GWP) 1 of about 1.2 R-1224yd(Z) is a very short-lived substance with an atmospheric lifetime of approximately 20 days.3 The ODP of R-1224yd(Z) is significantly less than the ODPs for the ODS subject to the phase out of production and consumption under regulations issued under sections 601-607 of the CAA and consistent with Montreal Protocol on Substances that Deplete the Ozone Layer. Under CAA regulations (see 40 CFR 51.100(s)) defining volatile organic compounds (VOC) for the purpose of addressing the development of state implementation plans (SIPs) to attain and maintain the National Ambient Air Quality Standards (NAAQS), R-1224yd(Z) would be considered a VOC. That definition provides that “any compound of carbon” which “participates in atmospheric photochemical reactions” is considered a VOC unless expressly excluded in that provision based on a determination of “negligible photochemical reactivity.” Knowingly venting or releasing this refrigerant blend is limited by the venting prohibition under section 608(c)(2) of the CAA, codified at 40 CFR 82.154(a)(1). This substitute is subject to a Toxic Substance Control Act (TSCA) section 5(e) Consent Order and any subsequent TSCA section 5(a)(2) Significant New Use Rule (SNUR).

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 Publishing 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-2008-0771 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 January 24, 2020. 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-2008-0771, 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 7, 2019 (84 FR 26630) (FRL-9993-93), 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 8E8672) by Valent U.S.A., LLC, P.O. Box 8025, Walnut Creek, CA 94596. The petition requested that 40 CFR part 180 be amended by establishing tolerances for residues of the insecticide clothianidin (E)-N-[(2-Chloro-5-thiazolyl)methyl]-N′-methyl-N″-nitroguanidine in or on persimmon at 0.5 parts per million (ppm). As use of clothianidin has not been approved for domestic pesticide registrations, this tolerance is requested to cover residues of clothianidin in or on persimmon imported into the United States. That document referenced a summary of the petition prepared by Valent U.S.A., LLC, the registrant, which is available in the docket, http://www.regulations.gov. No comments were received for the Notice of Filing.

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 clothianidin including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with clothianidin 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 toxicity database for clothianidin is complete. In mammals, toxicological effects are seen primarily in the liver, hematopoietic system, and kidneys. In subchronic oral studies, the dog seemed to be more sensitive to clothianidin than the rat. In addition to decreases in body weight and body weight gains observed in both animals, dogs also displayed decreased white blood cells, albumin, and total protein, as well as some anemia. Long-term dietary administration of clothianidin did not result in a wider spectrum of effects in the dog; in contrast, the chronic feeding studies in rats showed additional effects in the liver, ovaries, and kidneys. In the mouse chronic oral study, increases in vocalization and decreases in body weight gain were noted.

Neurotoxicity was observed in acute neurotoxicity studies in the rat and mouse and in the developmental neurotoxicity study in rats but was not observed in the subchronic neurotoxicity study or any other study in the toxicity database. No increased quantitative or qualitative susceptibility was observed in the developmental rat or rabbit studies. However, there was an increase in quantitative susceptibility in the developmental neurotoxicity and reproductive toxicity studies; offspring effects were observed in the absence of maternal toxicity. There was evidence of possible effects on the immune system in the database; however, a developmental immunotoxicity study indicated no evidence of susceptibility with regard to immunotoxicity. No toxic effects were observed up to the limit dose in the 28-day dermal study in rats. Clothianidin is not carcinogenic or mutagenic.

A summary of the toxicological effects of clothianidin, the specific information on the studies received, the nature of the adverse effects caused by clothianidin, and the NOAEL and lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found in docket ID number EPA-HQ-OPP-2011-0865 under Draft Human Health Risk Assessment in Support of Registration Review.

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 clothianidin used for human risk assessment can be found in docket ID number EPA-HQ-OPP-2011-0865 under Draft Human Health Risk Assessment in Support of Registration Review.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to clothianidin, EPA considered exposure under the petitioned-for tolerances as well as all existing clothianidin tolerances in 40 CFR 180.586. EPA assessed dietary exposures from clothianidin 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 clothianidin. In estimating acute dietary exposure, EPA used food consumption information from the 2003-2008 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, EPA assumed 100 percent crop treated and tolerance-level residues for all commodities with established or proposed tolerances for clothianidin.

ii. Chronic exposure. In conducting the chronic dietary exposure assessment, EPA used the food consumption data from the USDA's 2003-2008 NHANES/WWEIA. As to residue levels in food, EPA assumed 100 percent crop treated and average residues from crop field trials for all commodities with established or proposed tolerances for clothianidin.

iii. Cancer. Based on the data summarized in Unit III.A., EPA has concluded that clothianidin 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 PCT estimates in the dietary assessment for clothianidin. 100% CT were assumed for all food commodities. Average residue levels from field-trial were used in the chronic dietary assessment.

Section 408(b)(2)(E) of FFDCA authorizes EPA to use available data and information on the anticipated residue levels of pesticide residues in food and the actual levels of pesticide residues that have been measured in food. If EPA relies on such information, EPA must require pursuant to FFDCA section 408(f)(1) that data be provided 5 years after the tolerance is established, modified, or left in effect, demonstrating that the levels in food are not above the levels anticipated. For the present action, EPA will issue such data call-ins as are required by FFDCA section 408(b)(2)(E) and authorized under FFDCA section 408(f)(1). Data will be required to be submitted no later than 5 years from the date of issuance of these tolerances.

2. Dietary exposure from drinking water. The Agency used screening-level water exposure models in the dietary exposure analysis and risk assessment for clothianidin in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of clothianidin. 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 Tier I Pesticide Root Zone Model—Ground Water (PRZM-GW) and Tier I Screening Concentration in Ground Water (SCI-GROW) models and the Tier II surface water concentration calculator (SWCC) computer model, the estimated drinking water concentrations (EDWCs) of clothianidin for acute exposures are estimated to be 67 parts per billion (ppb) for surface water and 180 ppb for ground water, and for chronic exposures are estimated to be 67 ppb for surface water and 139 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 180 ppb was used to assess the contribution to drinking water. For the chronic dietary risk assessment, the water concentration value of 139 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).

Clothianidin is currently registered for the following uses that could result in residential exposures: Turf, ornamental plants, interior plantscapes, and use in residential and commercial buildings. EPA assessed residential exposure using the following assumptions: For adults, combined dermal/inhalation exposure from application of pesticides via an aerosol can in indoor environments; for children 1 to <2 years old, the combined dermal/inhalation/incidental oral (i.e., oral hand-to-mouth) exposures from post-application exposure to indoor-surface directed/perimeter/mattress (bed bug application); for children 6 to <11 years old, dermal exposures from post-application exposure to treated gardens; and for children 11 to <16 years old, dermal exposure from post-application exposure to treated turf while golfing.

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.”

Clothianidin is a member of the neonicotinoid class of pesticides and is a metabolite of another neonicotinoid, thiamethoxam. Structural similarities or common effects do not constitute a common mechanism of toxicity. Evidence is needed to establish that the chemicals operate by the same, or essentially the same sequence of major biochemical events. Although clothianidin and thiamethoxam bind selectively to insect nicotinic acetylcholine receptors (nAChR), the specific binding site(s)/receptor(s) for clothianidin, thiamethoxam, and the other neonicotinoids are unknown at this time. Additionally, the commonality of the binding activity itself is uncertain, as preliminary evidence suggests that clothianidin operates by direct competitive inhibition, while thiamethoxam is a non-competitive inhibitor. Furthermore, even if future research shows that neonicotinoids share a common binding activity to a specific site on insect nAChRs, there is not necessarily a relationship between this pesticidal action and a mechanism of toxicity in mammals. Structural variations between the insect and mammalian nAChRs produce quantitative differences in the binding affinity of the neonicotinoids towards these receptors, which, in turn, confers the notably greater selective toxicity of this class towards insects, including aphids and leafhoppers, compared to mammals. While the insecticidal action of the neonicotinoids is neurotoxic, the most sensitive regulatory endpoint for clothianidin is based on unrelated effects in mammals, including changes in body and thymus weights, delays in sexual maturation, and still births. Additionally, the most sensitive toxicological effect in mammals differs across the neonicotinoids (such as testicular tubular atrophy with thiamethoxam, and mineralized particles in thyroid colloid with imidaclopid). Thus, there is currently no evidence to indicate that neonicotinoids share common mechanisms of toxicity, and EPA is not following a cumulative risk approach based on a common mechanism of toxicity for the neonicotinoids. 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 the policy statements concerning common mechanism determinations and procedures for cumulating effects from substances found to have a common mechanism released by OPP on EPA's website at http://www.epa.gov/pesticides/cumulative/.

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 no indication of increased quantitative or qualitative susceptibility, as compared to adults, of rat and rabbit fetuses following in utero exposure to clothianidin in developmental studies. However, increased quantitative susceptibility was observed in both the developmental neurotoxicity and rat multi-generation reproduction studies. In the developmental neurotoxicity study, offspring toxicity (decreased body weight gains, motor activity and acoustic startle response) was seen at a lower dose than that which caused maternal toxicity. In the 2-generation rat reproduction study, offspring toxicity (decreased body weight gains, delayed sexual maturation in males, decreased absolute thymus weights in F1 pups of both sexes and an increase in stillbirths in both generations) was seen at a dose lower than that which caused parental toxicity.

3. Conclusion. The EPA has determined that 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 clothianidin is complete.

ii. There are no residual concerns regarding potential pre- and post-natal toxicity in the young. A rat developmental neurotoxicity study is available and shows evidence of increased quantitative susceptibility of offspring. However, EPA considers the degree of concern for the developmental neurotoxicity study to be low for pre- and postnatal toxicity because the NOAEL and LOAEL were well characterized, and the doses and endpoints selected for risk assessment are protective of the observed susceptibility.

iii. As explained in Unit III.D.2 “Prenatal and postnatal sensitivity”, while the rat multi-generation reproduction study showed evidence of increased quantitative susceptibility of offspring compared to adults, the degree of concern is low because the study NOAEL has been selected as the POD for risk assessment purposes for relevant exposure routes and durations. In addition, the potential immunotoxic effects observed in the study have been further characterized with the submission of a developmental immunotoxicity study that showed no evidence of susceptibility. As a result, there are no concerns or residual uncertainties for pre- and postnatal toxicity after establishing toxicity endpoints and traditional UFs to be used in the risk assessment for clothianidin.

iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments assumed 100 PCT and tolerance-level residues (acute assessment) or average residues from field trials designed to produce high-end residue levels (chronic assessment). EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to clothianidin in drinking water. EPA used similarly conservative assumptions to assess post-application exposure of children. These assessments will not underestimate the exposure and risks posed by clothianidin.

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 clothianidin will occupy 18% of the aPAD for all infants (<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 clothianidin from food and water will utilize 9.0% of the cPAD for all infants (<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 clothianidin 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).

Clothianidin 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 clothianidin.

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 390 for adults and 150 children. Because EPA's level of concern for clothianidin is an 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).

Clothianidin is currently registered for uses that could result in intermediate-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 clothianidin. The short-term assessment is protective of any potential intermediate-term exposures.

5. Aggregate cancer risk for U.S. population. Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, clothianidin 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 clothianidin residues.

Adequate enforcement methods based on solvent extraction and liquid chromatography with tandem mass spectrometry separation, identification, and quantification, are available for plant (Morse Method #Meth-164—modified, RM-39C-1, or Bayer Method 00552) and livestock (Bayer Method 00624) matrices.

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: residuemethods@epa.gov.

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.

Codex has established an MRL for residues of clothianidin in persimmon at 0.4 ppm. EPA is establishing the tolerance at 0.5 ppm at the request of the petitioner, to harmonize with the higher Japanese MRL. EPA believes the higher tolerance will facilitate more trade rather than the lower Codex MRL. The higher tolerance is greater than the highest value observed in field trials and is expected to be a suitable enforcement limit for residues in imported persimmon.

Therefore, a tolerance is established for residues of clothianidin in or on persimmon at 0.5 ppm.

This action establishes a tolerance 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:

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 Publishing 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-2018-0636 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 January 24, 2020. 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-2018-0636, 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 October 24, 2018 (83 FR 53594) (FRL-9983-46), 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 8E8693) by OAT Agrio. Ltd., Tokyo, Japan, c/o Landis International, Inc., 3185 Madison Highway, P.O. Box 5126, Valdosta, Georgia 31603-5126. The petition requested that 40 CFR 180.677 be amended by establishing a tolerance for residues of the insecticide cyflumetofen, (2-methoxyethyl α-cyano-α-[4-(1,1-dimethylethyl)phenyl]-β-oxo-2-(trifluoromethyl)benzenepropanoate), in or on coffee, green bean at 0.08 parts per million (ppm). That document referenced a summary of the petition prepared by OAT Agrio. Ltd. c/o Landis International, Inc., the registrant, which is available in docket number EPA-HQ-OPP-2018-0636, http://www.regulations.gov. These tolerances were requested to cover residues of cyflumetofen in or on coffee, green bean resulting from use of this pesticide on coffee outside the United States. There is no current U.S. registration for use of cyflumetofen on coffee. There were no substantive comments received in response to the notice of filing for this pesticide petition.

Based upon review of the data supporting the referenced petition, EPA is establishing a tolerance for residues of cyflumetofen on coffee, green bean.

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 cyflumetofen in or on coffee, green bean.

On May 8, 2019 (82 FR 20037) (FRL-9990-60), EPA published in the Federal Register a final rule establishing a tolerance for residues of the insecticide cyflumetofen in or on tea, dried is safe for the general population, including infants and children. See 84 FR 20037 (FRL-9990-60). That document contains a summary of the toxicological profile and points of departure, assumptions for exposure assessment, and the safety factor for children, which have not changed. The Agency conducted a revised risk assessment to incorporate exposure to residues of cyflumetofen from use on coffee.

EPA's exposure assessments have been updated to include the additional exposure from use of cyflumetofen on coffee, i.e., reliance on tolerance-level residues and an assumption of 100 percent crop treated (PCT). Because the use on coffee is not an approved domestic use, there is no expectation of an increased exposure in drinking water or for non-dietary, non-occupational sources, although the additional dietary exposure contributes to overall aggregate exposure. Further information about EPA's risk assessment and determination of safety supporting the tolerances established in the May 8, 2019 Federal Register action, as well as the new cyflumetofen tolerance can be found at http://www.regulations.gov in the document entitled “Cyflumetofen. Human Health Risk Assessment to Support New Uses on Imported Tea,” dated March 4, 2019. The documents can be found in docket ID EPA-HQ-OPP-2017-0532.

As indicated in the supporting documents, no acute dietary exposure and risk analysis was performed for cyflumetofen since there were no appropriate studies identified in the toxicology database that demonstrated evidence of toxicity attributable to a single dose. Chronic dietary risks are below the Agency's level of concern: 2.4% of the chronic population adjusted dose (cPAD) for children 1-2 years old, the group with the highest exposure level. Moreover, the short-term aggregate risk for the population with the highest total exposure (adults 50-99 years old) was chosen since this is protective for all other adult sub-populations. There are no residential exposures expected for children; therefore, a short-term aggregate risk assessment for children is equal to the chronic food and drinking water exposure and risk estimates and is not of concern. Using the exposure assumptions described for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs above the LOC of 100 for all scenarios assessed and are not of concern.

Therefore, based on the risk assessments and information described above, EPA concludes there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to cyflumetofen residues. More detailed information on the subject action to establish a tolerance in or on coffee, green bean can be found in the document entitled, “Cyflumetofen. Human Health Risk Assessment to Support New Uses without U.S. Registration in/on Imported Coffee,” dated September 16, 2019, by going to http://www.regulations.gov. The referenced document is available in the docket established by this action, which is described under ADDRESSES. Locate and click on the hyperlink for docket ID number EPA-HQ-OPP-2018-0636.

An adequate enforcement methodology is available to enforce the HED-recommended tolerances for cyflumetofen in plant commodities. The high-performance liquid chromatography with tandem mass spectrometry (HPLC-MS/MS) method has been adequately validated, has undergone a successful ILV (independent laboratory validation), is considered adequately radio-validated and has been reviewed by the Agency for appropriateness as an enforcement method. The method limit of quantitation (LOQ) for residues of cyflumetofen in coffee is 0.01 ppm. Cyflumetofen has also been subjected to analysis by the Food and Drug Administration (FDA) multi-residue method (MRM) protocols. Cyflumetofen is not adequately recovered through any of the FDA multi-residue protocols.

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: residuemethods@epa.gov.

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.

Codex has not established maximum residue limits (MRLs) for residues of cyflumetofen in coffee commodities; therefore, there are no harmonization issues.

Therefore, a tolerance is established for residues of the insecticide cyflumetofen, (2-methoxyethyl α-cyano-α-[4-(1,1-dimethylethyl)phenyl]-β-oxo-2-(trifluoromethyl)benzenepropanoate), in or on coffee, green bean at 0.08 ppm.

This action establishes a tolerance 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 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:

A. Public Participation

GSA is publishing this direct final rule without a prior proposed rule because this is a non-controversial action resulting from changes to the Internal Revenue Code made by Public Law (Pub. L.) 115-97, known as the “Tax Cuts and Jobs Act of 2017” (December 22, 2017), and GSA anticipates no significant adverse comments. A significant adverse comment is defined as one where the comment explains why the rule would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. In determining whether a significant adverse comment is sufficient to terminate a direct final rulemaking, GSA will consider whether the comment raises an issue serious enough to warrant a substantive response in a notice-and-comment process. GSA notes that comments that are frivolous, insubstantial, or outside the scope of the rule will not be considered adverse under this procedure. A comment recommending a rule change in addition to the rule will not be considered a significant adverse comment, unless the comment states why the rule would be ineffective without the additional change. In addition, if a significant adverse comment applies to a part of a rule and that part can be severed from remainder of the rule (e.g., where a rule deletes several unrelated regulations), GSA may adopt as final those parts of the rule that are not the subject of a significant adverse comment.

For detailed instructions on sending comments and additional information on the rulemaking process, see the ADDRESSES section of this document.

The Tax Cuts and Jobs Act of 2017 suspended moving expense deductions along with the exclusion for employer reimbursements and payments of qualified moving expenses effective January 1, 2018, for tax years 2018 through 2025. Pursuant to 5 U.S.C. 5738, the Administrator of General Services is mandated to prescribe necessary regulations regarding Federal employees who relocate in the interest of the Government. The overall implementing authority is the FTR, codified in Title 41 of the Code of Federal Regulations, Chapters 300-304 (41 CFR Chapters 300-304).

The direct final rule amends the FTR in accordance with the new tax changes impacting relocation expense entitlements for those employees identified in FTR section 302-1.1 who are authorized relocation reimbursements under the FTR and who receive some or all reimbursements, direct payments, or indirect payments on or after January 1, 2018 and on or before December 31, 2025. This direct final rule amends the FTR sections pertaining to the supplemental wage rate, taxable and nontaxable relocation entitlements, Withholding Tax Allowance (WTA), Relocation Income Tax Allowance (RITA), and employee eligibility for WTA and RITA. This direct final rule also clarifies the 50-mile distance test definition for purposes of relocation expense allowances, where to find relocation mileage reimbursement rates when using a privately owned vehicle (POV) to travel from the old duty station to the new duty station, and other provisions of FTR Chapter 302 impacted by the new tax changes. In addition, this direct final rule removes certain examples and tables from FTR part 302-17 and directs readers to updated examples and tables published in an FTR bulletin on the GSA website.

Accordingly, the direct final rule amends the FTR by:

1. Section 302-1.1(b)—Revising language regarding application of the 50-mile distance test.

2. Section 302-2.6(b)—Removing the second sentence and its unnecessary reference to the Internal Revenue Code (IRC) and adding a sentence with factors for agencies to consider when authorizing an exception to the 50-mile distance test.

3. Part 302-4—Revising the authority citation to correct a typographical error.

4. Section 302-4.300—Revising the last sentence to replace a defunct website link.

5. Section 302-17.1—Revising the term “Marginal tax rate (MTR)” to remove the example and notify the reader that examples of how to determine the MTR are published in an FTR bulletin.

6. Section 302-17.5—Revising the second sentence to clarify that eligibility for WTA and RITA includes employees transferring in the interest of the Government from one official station or agency to another for permanent or temporary change of station (TCS).

7. Section 302-17.6—Revising paragraphs (b) and (c) and adding paragraph (d) to include Senior Executive Service (SES) employees making last moves home for the purpose of separating from Government service as not eligible for the WTA and RITA.

8. Section 302-17.8—Revising paragraph (a) to effectuate the new tax changes that render certain expenses non-deductible, and revising paragraph (b) to note that the table accompanying this section summarizing the FTR allowances, limitations, and tax treatment of each reimbursement, allowance, or direct payment to a service provider or vendor has been removed from the FTR and placed in an FTR Bulletin. Removing paragraph (c) because its reference to the table to § 302-17.8 is now obsolete.

9. Table to § 302-17.8. FTR Allowances and Federal Income Tax Treatments—Removing the Table because it is published in an FTR bulletin.

10. Section 302-17.12—Removing reference to “IRS Publication 521, Moving Expenses” as it does not provide additional information and guidance on WTA and RITA.

11. Section 302-17.21—Revising and adding paragraphs on which relocation expenses the WTA covers based upon the new tax changes and updating a reference regarding situations where the employee or an immediate family member does not hold full title to the home being bought or sold.

12. Section 302-17.22—Revising paragraph (a) to reflect which relocation expenses the WTA does not cover based upon the new tax changes. Removing paragraph (e) and redesignating paragraphs (f), (g), and (h) as paragraphs (e), (f), and (g), respectively.

13. Section 302-17.24—Revising to update the supplemental wage rate from “25 percent” to the applicable supplemental wage rate generally. Removing Example 1 to part 302-17 and adding a sentence notifying the reader that examples of how to calculate the WTA are published in an FTR bulletin.

14. Note to Section 302-17.24—Revising to include Medicare in the parenthetical because both Social Security and Medicare payroll taxes are collected together under the Federal Insurance Contributions Act (FICA) tax.

15. Section 302-17.30(a)—Revising to update the percentage rate from “25 percent” to the income tax withholding rate applicable to supplemental wages generally.

16. Section 302-17.40—Adding a sentence to paragraph (b) notifying the reader that examples of how to calculate the combined marginal tax rate are published in an FTR bulletin and removing Example 2 to part 302-17 from paragraph (c).

17. Section 302-17.60(d)—Removing paragraph (d) and its accompanying table as unnecessary.

18. Section 302-17.61(b)—Revising paragraphs (b)(1) and (b)(2) to update the supplemental wage rate from “25 percent” to the applicable supplemental wage rate generally, and removing from paragraph (b)(1) Example 3 to part 302-17 and references thereto in paragraphs (b)(1) and (b)(2). Adding paragraph (b)(3) to notify the reader that examples of relocation expense allowances paid by accepting or declining the WTA are published in an FTR bulletin.

19. Section 302-17.62(b)—Removing the last sentence as it refers to Example 3 to part 302-17 which is now published in an FTR Bulletin.

Executive Orders (E.O.) 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. GSA has determined that this direct final rule is a significant regulatory action and is subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. GSA has further determined that this direct final rule is not a major rule under 5 U.S.C. 804.

This direct final rule is not subject to the requirements of E.O. 13771 because it is related to agency organization, management, or personnel.

This direct final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. This direct final rule is also exempt from the Administrative Procedure Act pursuant to 5 U.S.C. 553(a)(2) because it applies to agency management or personnel.

The Paperwork Reduction Act does not apply because the changes to the FTR do not impose recordkeeping or information collection requirements, or the collection of information from offerors, contractors, or members of the public that require the approval of the Office of Management and Budget (OMB) under 44 U.S.C. 3501, et seq.

This direct final rule is also exempt from Congressional review prescribed under 5 U.S.C. 801. This direct final rule is not a major rule under 5 U.S.C. 804.

For the reasons set forth in the preamble, GSA amends 41 CFR parts 302-1, 302-2, 302-4, and 302-17 as set forth below:

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that website to view public comments.

The Covered Outpatient Drug final rule with comment period was published in the February 1, 2016 Federal Register (81 FR 5170) (final rule). The final rule implemented provisions of section 1927 of the Social Security Act (the Act) that were added by the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the Affordable Care Act) pertaining to Medicaid reimbursement for covered outpatient drugs (CODs). The final rule also revised other requirements related to CODs, including key aspects of Medicaid coverage and payment and the Medicaid Drug Rebate (MDR) program under section 1927 of the Act. The final rule became effective on April 1, 2016. However, the regulatory definitions of “States” and “United States” under § 447.502 were amended to include the U.S. territories (American Samoa, Northern Mariana Islands, Guam, Puerto Rico, and the Virgin Islands) beginning April 1, 2017.

We stated in the preamble to the final rule that U.S. territories may use existing waiver authority to elect not to participate in the MDR program consistent with the statutory waiver standards. Specifically, the Northern Mariana Islands and American Samoa may seek to opt out of participation under the broad waiver that has been granted to them in accordance with section 1902(j) of the Act. Puerto Rico, the Virgin Islands, and Guam may use waiver authority under section 1115(a)(1) of the Act to waive section 1902(a)(54) of the Act, which requires state compliance with the applicable requirements of section 1927 of the Act (81 FR 5203 through 5204).

We also stated in the final rule that, effective with the change in the definition of “United States”, drug manufacturers would be required to include prices paid by entities in the U.S. territories in the same manner in which they include prices paid by entities located in one of the 50 states and District of Columbia (81 FR 5224) in their calculations of average manufacturer price (AMP) and best price. This change requires manufacturers to include eligible sales and associated discounts, rebates, and other financial transactions that take place in the U.S. territories in their calculations of AMP and best price once the revised definitions of States and United States become effective, regardless of whether the U.S. territories seek to waive participation in the MDR program.

Based on initial discussions with the U.S. territories, it became evident that interested U.S. territories would not be ready to implement the program by April 1, 2017. Specifically, the territories needed time to develop and change electronic claims processing systems to identify and report utilization (taking into account all of the complexities in tracking utilization by National drug code numbers) and to match utilization with the unit rebate amounts to generate rebate invoices. Further, these systems must be capable of collecting, reporting, validating and tracking drug utilization on an ongoing basis. In addition, they require extensive advance planning and budgeting. We received comments during the comment period of the COD proposed rule, which requested that we delay the inclusion of the territories in the MDR program because the manufacturers and territories would need this additional time to implement provisions necessary to include territories in all aspects of the MDR program. We took these comments into consideration and in the final rule delayed the inclusion of the territories into the definitions of “States” and “United States” until 1 year after the effective date of the final rule (81 FR 5203, 5204), that is, beginning April 1, 2017. However, despite this 1-year delay, it became evident that we underestimated the timeline required, particularly in light of other demands on territorial systems development and the fact that the territories are at various stages of planning and development for these systems. While the U.S. territories have the ability to seek a waiver from the requirements that they would have to meet when classified as “States”, doing so would impose some burdens on a territory, particularly for those territories that are not included in the broad waiver authority under section 1902(j) of the Act. Moreover, waivers under section 1115 of the Act are limited to requirements applicable to States or territories under section 1902(a) of the Act, and would not apply to the requirements placed on drug manufacturers that sell in the territories. These manufacturers cannot be waived from the section 1927 of the Act requirements under which manufacturers must include sales that take place in the U.S. territories when determining AMP and best price.

We heard from various stakeholders who reiterated many of the concerns that were summarized in the final rule (81 FR 5224) that drug manufacturers would likely be prompted to increase drug prices, including prices paid by U.S. territory Medicaid programs. This would result in the U.S. territories that receive a waiver realizing an increase in their Medicaid drug costs without the offsetting benefit of receiving Medicaid rebates. Furthermore, the increase in Medicaid costs could adversely impact territories because of their Medicaid funding cap. For these reasons, in the November 15, 2016 Federal Register, we published an interim final rule with comment period (IFC) (81 FR 80003) that amended the regulatory definitions of “States” and “United States” to include the U.S. territories beginning April 1, 2020 rather than April 1, 2017 (interim final rule).

Based on further discussions with the U.S. territories since the publication of the interim final rule, we have learned that while the territories are making progress towards developing their Medicaid Management Information Systems (MMIS), only one territory would be prepared to implement the MDR program by April 1, 2020. In particular, Puerto Rico has been delayed in its development of the necessary components of the MMIS system due to the natural disasters experienced by the territory over the past 2 years, and has specifically requested another delay in the inclusion of U.S. territories in the definitions of “States” and “United States”.1

We considered whether it would be feasible to delay the inclusion of U.S. territories in the definitions of “States” and “United States” for only those territories that are not prepared to implement the MDR program by April 1, 2020. However, since all five territories are referenced in each definition, the effect of a delay for only certain territories would possibly modify the previously finalized definitions rather than merely delay their effective dates. Additionally, a delay for only certain territories would only be feasible if we were also able to expressly permit manufacturers to continue treating sales to the territories not yet included in the definitions of “States” and “United States” as excluded from their calculations of AMP and best price. Such changes would require us to undertake full notice and comment rulemaking ahead of the April 1, 2020 effective date. As discussed in section III. of this IFC, we have determined that there is insufficient time to undertake full notice and comment rulemaking ahead of the April 1, 2020 effective date.

As discussed in section I.B. of this IFC, the U.S. territories have the ability to seek a waiver from the requirements that they would have to meet when classified as “States”, but doing so would impose some burdens on a territory, and waivers under section 1115 of the Act are limited to requirements applicable to States or territories under section 1902(a) of the Act, and would not apply to the requirements placed on drug manufacturers that sell covered outpatient drugs in the territories. These manufacturers cannot be waived from the section 1927 of the Act requirements under which manufacturers must include sales that take place in the U.S. territories when determining AMP and best price. As stated previously, we heard from various stakeholders that drug manufacturers would likely be prompted to increase drug prices, including prices paid by U.S. territory Medicaid programs. While territories that need more time to prepare to implement the MDR program could seek the appropriate waiver, it would result in such territories realizing an increase in their Medicaid drug costs without the offsetting benefit of receiving Medicaid rebates.

For the reasons discussed in section I.C. of this IFC, this IFC amends the regulatory definitions of “States” and “United States” under § 447.502 to include the U.S. territories (American Samoa, Northern Mariana Islands, Guam, Puerto Rico, and the Virgin Islands) beginning April 1, 2022 rather than April 1, 2020.

We ordinarily publish a notice of proposed rulemaking in the Federal Register and invite public comment on the proposed rule. The notice of proposed rulemaking includes a reference to the legal authority under which the rule is proposed, and the terms and substances of the proposed rule or a description of the subjects and issues involved. This procedure can be waived, however, if an agency finds good cause that a notice-and-comment procedure is impracticable, unnecessary, or contrary to the public interest and incorporates a statement of the finding and its reasons in the rule issued.

As discussed in sections I.B. and C. of this IFC, in light of the longer time frames needed by territories for planning, budgeting and developing systems necessary to implement the MDR program, the competing demand on system development resources, the long time frames for manufacturer pricing determinations, and particularly delays caused by the natural disasters experienced by Puerto Rico over the past 2 years, we believe it is necessary to provide territories and manufacturers with advance notice of any change in the timing for the inclusion of territories in the MDR program.

As previously stated, we considered whether it would be feasible to delay the inclusion of U.S. territories in the definitions of “States” and “United States” for only certain territories, but the effect of such a delay would possibly modify rather than merely delay the previously finalized definitions. Additionally, such a delay would only be feasible if we were to undertake full notice and comment rulemaking ahead of the April 1, 2020 effective date to expressly permit manufacturers to continue treating sales to the territories not yet included in the definitions of “States” and “United States” as excluded from their calculations of AMP and best price. We have determined that there is insufficient time to undertake full notice and comment rulemaking ahead of the April 1, 2020 effective date. Issuance of a proposed rule would be impracticable, and contrary to public interest such that a delay of the inclusion of U.S. territories in the definitions of “States” and “United States” would not become effective until after public comments are submitted, considered, and addressed in a final rule, which would not become effective until after the April 1, 2020 effective date.

Thus, we find good cause to waive the requirement for proposed rulemaking because the short time frame remaining before the inclusion of territories would otherwise take effect does not permit sufficient time to both undertake proposed rulemaking and provide the necessary advance notice for territories and manufacturers to meaningfully adjust planning and systems development to accommodate the revised timing. Furthermore, we find good cause to waive the requirement for proposed rulemaking because it would be contrary to public interest to delay notifying manufacturers of the change in the timing of the territorial inclusion in light of the potential that, absent sufficient advance notice, drug manufacturers may raise prices on drugs sold in the territories and thereby increase drug costs for both Medicaid and non-Medicaid consumers in the territories.

Therefore, we find good cause to waive the notice of proposed rulemaking and to issue this final rule on an interim basis. We are providing a 60-day public comment period.

This IFC further delays the inclusion of the U.S. territories in the regulatory definitions of “States” and “United States” under § 447.502 until beginning April 1, 2022. This delay does not impose any new or revised information collection requirements or burden. Consequently, there is no need for review of this action by the Office of Management and Budget under the authority of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document.

We have examined the impact of this IFC as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4), Executive Order 13132 on Federalism (August 4, 1999), the Congressional Review Act (5 U.S.C. 804(2)), and Executive Order 13771 on Reducing Regulation and Controlling Regulatory Costs (January 30, 2017).

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). This rule does not reach the economic threshold of an annual effect on the economy of $100 million or more and thus is not considered a major rule. To estimate the potential impact of this rule, we reviewed current levels of Medicaid prescription drug expenditures in the 5 U.S. territories with Medicaid programs. In 4 of the 5 territories, total prescription drug spending in fiscal year (FY) 2018 was about $29 million (American Samoa, Guam, Northern Mariana Islands, and the U.S. Virgin Islands) as reported in the CMS-64 financial management reports. In Puerto Rico, prescription drug spending was not reported separately. We estimated prescription drug spending by assuming that 17 percent of managed care expenditures went towards prescription drugs; 17 percent is consistent with our analysis of managed care expenditures on drugs in Medicaid and data from the Medicaid drug rebate data system. Using this assumption, we estimated that drug expenditures in Puerto Rico were about $366 million in FY 2018. In total, we estimate Medicaid drug spending in the 5 territories was about $395 million in FY 2018.

Using this estimate as a baseline for territory spending on prescription drugs in Medicaid, we believe delaying the inclusion of the territories in the definitions of “States” and “United States” does not reach the economic threshold of an annual effect on the economy of $100 million or more for the following reasons. First, while territory prescription drug expenditures after rebates may be lower once territories participate in the MDR Program, this effect may be partially offset by an increase in gross prices when manufacturers are required to report territory drug sales for Medicaid Best Price, and therefore the impact of a delay in territory participation in the MDR Program is expected to be modest.

Second, as a condition of joining the MDR Program the territories will be required to expand their drug coverage to include every COD of every manufacturer that has a National Drug Rebate Agreement (NDRA) with the Secretary of the Department of Health and Human Services. Currently, the territories have significantly more flexibility in establishing their own drug formularies and can choose which drugs of which manufacturers they will cover. We believe this may also lead to increased prescription drug spending and offsetting some portion of the reductions in net drug spending due to the rebates.

Third, given the varying sizes of the territories (in population), it is nearly impossible to claim that all territories will experience the same economic impact if they were to join the MDR program. For example, based on the information from the CMS-64 financial management reports American Samoa's drug spending represented 1 percent of its total Medicaid spending compared to the 21 percent in the U.S. Virgin Islands.

Due to limitations in the data from the territory Medicaid programs, we are unable to quantify these effects. However, we believe that it is likely the financial impact of extending the Medicaid drug rebates to territory programs is less than $100 million.

Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), the Office of lnformation and Regulatory Affairs designated this rule as not a “major rule” as defined by 5 U.S.C. 804(2).

The RFA requires agencies to analyze options for regulatory relief of small entities. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most hospitals and most other providers and suppliers are small entities, either by nonprofit status or by having revenues of less than $7.5 million to $38.5 million in any 1 year. Individuals and states are not included in the definition of a small entity. We are not preparing an analysis for the RFA because we have determined, and the Secretary certifies, that this IFC will not have a significant economic impact on a substantial number of small entities.

In addition, section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital as a hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined, and the Secretary certifies, that this IFC will not have a significant impact on the operations of a substantial number of small rural hospitals.

Section 202 of the Unfunded Mandates Reform Act of 1995 also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2019, that threshold is approximately $154 million. This rule will have no consequential effect on state, local, or tribal governments or on the private sector.

Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirement costs on State and local governments, preempts state law, or otherwise has federalism implications. Since this regulation does not impose any costs on state or local governments, the requirements of Executive Order 13132 are not applicable.

Executive Order 13771 (January 30, 2017) requires that the costs associated with significant new regulations “to the extent permitted by law, be offset by the elimination of existing costs associated with at least two prior regulations.” This interim final rule's designation under E.O. 13771 will be informed by public comments received.

In accordance with the provisions of Executive Order 12866, this regulation was reviewed by the Office of Management and Budget.

For the reasons set forth in the preamble, the Centers for Medicare & Medicaid Services amends 42 CFR chapter IV as set forth below: