The FCIC serves America's agricultural producers through effective, market-based risk management tools to strengthen the economic stability of agricultural producers and rural communities. FCIC is committed to increasing the availability and effectiveness of Federal crop insurance as a risk management tool. Approved Insurance Providers (AIP) sell and service Federal crop insurance policies in every state and in Puerto Rico through a public-private partnership. FCIC reinsures the AIPs who share the risks associated with catastrophic losses due to major weather events. FCIC's vision is to secure the future of agriculture by providing world class risk management tools to rural America.

Federal crop insurance policies typically consist of the Basic Provisions, the Crop Provisions, the Special Provisions, the Commodity Exchange Price Provisions, if applicable, other applicable endorsements or options, the actuarial documents for the insured agricultural commodity, the Catastrophic Risk Protection Endorsement, if applicable, and the applicable regulations published in 7 CFR chapter IV.

FCIC amends the Common Crop Insurance Regulations (7 CFR part 457) by revising 7 CFR 457.113 Coarse Grains Crop Insurance Provisions to be effective for the 2020 and succeeding crop years.

The changes to 7 CFR 457.113 Coarse Grains Crop Insurance Provisions are as follows:

1. Section 1—FCIC is adding the terms “Following another crop (FAC)” and “Not following another crop (NFAC)” to accommodate the changes in section 2. These terms are currently defined in the Special Provisions and vary depending on the county. FCIC is adding these terms to the Crop Provisions because the terms are now referenced in a newly-added section 2.

2. Section 2—FCIC is redesignating sections 2 through 12 as section 3 through 13, respectively, and adding a new section 2. FCIC is adding a section 2 to allow enterprise units and optional units by the cropping practices Following Another Crop (FAC) and Not Following Another Crop (NFAC). The new language allows separate enterprise units and optional units for FAC acreage of the crop or NFAC acreage of the crop.

The cropping practices FAC and NFAC have different risks of loss. For example, soil conditions for crops following another crop on the same acreage in the same crop year are likely to have different moisture and nutrient availability than crops not following another crop which could impact crop yields and losses. Producers have raised concerns that when the two cropping practices are combined in a single unit, the losses from one of these cropping practices may be offset by gains on the other. By contrast, this offset would likely not occur if all insurable acreage was insured as a single practice, or if the acreage is insurable by separate practice at the enterprise or optional unit level, which is the change this rule seeks to make effective. This change allows producers to better manage the unique risks of each practice by separating FAC and NFAC units.

If the insured elects enterprise or optional units for these cropping practices, additional enterprise or optional units by irrigation practices are not allowed. The insured may elect one enterprise unit for all FAC cropping practices, all NFAC cropping practices, or separate enterprise units for both. Additionally, both the FAC and NFAC acreage must each separately qualify for enterprise units and will be subject to the current requirements in the Basic Provisions. The insured is only eligible if both FAC and NFAC cropping practices are allowed by the actuarial documents for each irrigation practice the insured uses. For example, if the non-irrigated practice for the insured's county allows both FAC and NFAC cropping practices in the actuarial documents, but the irrigated practice does not specify either FAC or NFAC, enterprise units are available as follows:

• If the insured uses the irrigated practice, separate enterprise units for FAC and NFAC cropping practices are not available because they are not specified as separate cropping practices in the actuarial documents for the irrigated practice;

• If the insured uses only the non-irrigated practice, with FAC and NFAC cropping practices, separate enterprise units for non-irrigated FAC and NFAC cropping practices are available, because they are specified as separate cropping practices in the actuarial documents for the non-irrigated practice.

If an insured does not qualify for separate FAC and NFAC enterprise units, there are two options based on the timing of the discovery: (1) If the AIP discovers the insured does not qualify on or before the acreage reporting date, the insured may have one enterprise unit comprised of all FAC and NFAC acreage in the county of the crop, or basic or optional units depending on which unit structure the insured reported on the acreage report; or (2) if the AIP discovers the insured does not qualify after acreage reporting date, the insured may have one enterprise unit comprised of all FAC and NFAC acreage combined in the county of the crop, or the AIP will assign a basic unit structure.

If an insured does not qualify for a separate enterprise unit on one cropping practice when a different unit structure is on the other cropping practice, there are two options based on the timing of the discovery:

(1) If the AIP discovers the insured does not qualify on or before the acreage reporting date, the insured may have basic or optional units depending on which unit structure the insured reported on the acreage report; or

(2) If the AIP discovers the insured does not qualify after the acreage reporting date, the AIP will assign a basic unit structure.

In general, the Administrative Procedure Act (APA, 5 U.S.C. 553) requires that a notice of proposed rulemaking be published in the Federal Register for interested persons to be given an opportunity to participate in the rulemaking through submission of written data, views, or arguments with or without opportunity for oral presentation and requires a 30-day delay in the effective date of rules, except when the rule involves a matter relating to public property, loans, grants, benefits, or contracts. This rule involves matters relating to contracts and therefore the requirements in section 553 do not apply. Although not required by APA, FCIC has chosen to request comments on this rule.

The Office of Management and Budget (OMB) designated this rule as not major under the Congressional Review Act, as defined by 5 U.S.C. 804(2). This rule is not major under the Congressional Review Act, as defined by 5 U.S.C. 804(2). Therefore, FCIC is not required to delay the effective date for 60 days from the date of publication to allow for Congressional review.

This final rule is effective November 30, 2019.

Executive Order 12866, “Regulatory Planning and Review,” and Executive Order 13563, “Improving Regulation and Regulatory Review,” 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 emphasized the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” established a federal policy to alleviate unnecessary regulatory burdens on the American people.

The Office of Management and Budget (OMB) designated this rule as not significant under Executive Order 12866, “Regulatory Planning and Review,” and therefore, OMB has not reviewed this rule.

Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs,” requires that in order to manage the private costs required to comply with Federal regulations that for every new significant or economically significant regulation issued, the new costs must be offset by the elimination of at least two prior regulations. As this rule is designated as not significant, it is not subject to Executive Order 13771.

Executive Order 12866, as supplemented by Executive Order 13563, requires each agency to write all rules in plain language. In addition to your substantive comments on this rule, we invite your comments on how to make the rule easier to understand. For example:

• Are the requirements in the rule clearly stated? Are the scope and intent of the rule clear?

• Does the rule contain technical language or jargon that is not clear?

• Is the material logically organized?

• Would changing the grouping or order of sections or adding headings make the rule easier to understand?

• Could we improve clarity by adding tables, lists, or diagrams?

• Would more, but shorter, sections be better? Are there specific sections that are too long or confusing?

• What else could we do to make the rule easier to understand?

The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by SBREFA, generally requires an agency to prepare a regulatory analysis of any rule whenever an agency is required by APA or any other law to publish a proposed rule, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This rule is not subject to the Regulatory Flexibility Act because as noted above, this rule is exempt from APA and no other law requires that a proposed rule be published for this rulemaking initiative.

In general, the environmental impacts of rules are to be considered in a manner consistent with the provisions of the National Environmental Policy Act (NEPA, 42 U.S.C. 4321-4347) and the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508). FCIC conducts programs and activities that have been determined to have no individual or cumulative effect on the human environment. As specified in 7 CFR 1b.4, FCIC is categorically excluded from the preparation of an Environmental Analysis or Environmental Impact Statement unless the FCIC Manager (agency head) determines that an action may have a significant environmental effect. The FCIC Manager has determined this rule will not have a significant environmental effect. Therefore, FCIC will not prepare an environmental assessment or environmental impact statement for this action and this rule serves as documentation of the programmatic environmental compliance decision.

Executive Order 12372, “Intergovernmental Review of Federal Programs,” requires consultation with State and local officials that would be directly affected by proposed Federal financial assistance. The objectives of the Executive Order are to foster an intergovernmental partnership and a strengthened Federalism, by relying on State and local processes for State and local government coordination and review of proposed Federal financial assistance and direct Federal development. For reasons specified in the final rule related notice regarding 7 CFR part 3015, subpart V (48 FR 29115, June 24, 1983), the programs and activities in this rule are excluded from the scope of Executive Order 12372.

This rule has been reviewed under Executive Order 12988, “Civil Justice Reform.” This rule will not preempt State or local laws, regulations, or policies unless they represent an irreconcilable conflict with this rule. Before any judicial actions may be brought regarding the provisions of this rule, the administrative appeal provisions of 7 CFR part 11 are to be exhausted.

This rule has been reviewed under Executive Order 13132, “Federalism.” The policies contained in this rule do not have any substantial direct effect on 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, except as required by law. Nor does this rule impose substantial direct compliance costs on State and local governments. Therefore, consultation with the States is not required.

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

FCIC has assessed the impact of this rule on Indian Tribes and determined that this rule does not, to our knowledge, have Tribal implications that require Tribal consultation under E.O. 13175. The regulation changes do not have Tribal implications that preempt Tribal law and are not expected have a substantial direct effect on one or more Indian Tribes. If a Tribe requests consultation, FCIC will work with the USDA Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions and modifications identified in this rule are not expressly mandated by Congress.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA, Pub. L. 104-4) requires Federal agencies to assess the effects of their regulatory actions of State, local, and Tribal governments or the private sector. Agencies generally must prepare a written statement, including cost benefits analysis, for proposed and final rules with Federal mandates that may result in expenditures of $100 million or more in any 1 year for State, local or Tribal governments, in the aggregate, or to the private sector. UMRA generally requires agencies to consider alternatives and adopt the more cost effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates, as defined in Title II of UMRA, for State, local, and Tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

The title and number of the Federal Domestic Assistance Program listed in the Catalog of Federal Domestic Assistance to which this rule applies is No. 10.450—Crop Insurance.

In accordance with the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35, subchapter I), the rule does not change the information collection approved by OMB under control numbers 0563-0053.

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

For the reasons discussed above, FCIC amends 7 CFR part 457, effective for the 2020 and succeeding crop years, as follows:

This action, pursuant to 5 U.S.C. 553, amends regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This final rule is issued under Marketing Order No. 923, as amended (7 CFR part 923), regulating the handling of sweet cherries grown in designated counties of Washington. Part 923 (referred to as the “Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Committee locally administers the Order and is comprised of sweet cherry growers and handlers operating within the area of production.

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

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order now in effect, Washington sweet cherry handlers are subject to assessments. Funds to administer the marketing order are derived from such assessments. The assessment rate will be applicable to all assessable Washington sweet cherries for the 2019-2020 fiscal period, and continue until amended, suspended, or terminated.

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

The Order authorizes the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. Committee members are familiar with the Committee's needs and with the costs of goods and services in their local area and can formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting where all directly affected persons have an opportunity to participate and provide input.

This final rule decreases the assessment rate from $0.25 to $0.20 per ton of Washington sweet cherries handled for the 2019-2020 and subsequent fiscal periods. The lower rate is necessary to fund the Committee's 2019-2020 fiscal period budgeted expenditures while maintaining the Committee's financial reserve fund at an amount not exceeding approximately one fiscal period's operational expenses. Based on input received from growers at an annual meeting, the 2019 crop of Washington sweet cherries is expected to be similar in volume compared to the 2018 crop. The Committee believes that decreasing the continuing assessment rate will allow the Committee to fully fund its 2019-2020 budgeted expenses and maintain its financial reserve within the limits established in the Order.

The Committee held a well-publicized meeting May 8, 2019, where all interested parties were encouraged to participate in the discussions. However, the Order's quorum requirement was not met, and the Committee was not able to conduct official business. The following day, the Committee conducted the vote by email and, with a vote of 15-1, recommended 2019-2020 fiscal period budgeted expenditures of $56,250 and an assessment rate of $0.20 per ton of sweet cherries handled. In comparison, last year's budgeted expenditures were $55,750. The assessment rate of $0.20 is $0.05 lower than the $0.25 per ton rate currently in effect. The Committee recommended the assessment rate decrease because of a normal size crop estimate and a financial reserve fund balance that was higher than the Committee believes is responsible. At the recommended assessment rate and budgeted expenditures, the Committee expects its financial reserve to be $55,093 at the end of the 2019-2020 fiscal period, which would be within the limits set in the Order.

The major expenditures recommended by the Committee for the 2019-2020 fiscal period include $25,000 for program management contract services provided by the Washington State Fruit Commission, $7,250 for administrative expenses, $7,000 for regulation proceedings, $5,000 for data management, $5,000 for research, $4,000 for an annual audit, and $3,000 for travel. In comparison, these major expense categories budgeted for the 2018-2019 fiscal period were $25,000, $6,950, $7,000, $5,000, $5,000, $3,800, and $3,000, respectively.

The assessment rate recommended by the Committee was derived by considering anticipated expenses, expected sweet cherry sales, and the amount of funds available in the authorized reserve. Expected income derived from handler assessments of $40,000 (200,000 tons of sweet cherries at $0.20 per ton), plus $5 interest income and $16,245 from the reserve would be adequate to cover budgeted expenses of $56,250. Funds from the reserve (estimated to be $71,338 at the beginning of the 2019-2020 fiscal period) will be used to supply part of the Committee's 2019-2020 expenses in an effort to keep the reserve within the maximum permitted by § 923.142(a).

The assessment rate established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate will be in effect for an indefinite period, the Committee will continue to meet prior to or during each fiscal period to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's budget for subsequent fiscal periods would be reviewed and, as appropriate, approved by USDA.

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

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

There are approximately 1,450 growers and 37 handlers of sweet cherries in the regulated production area subject to regulation under the Order. Small agricultural service firms are defined by the Small Business Administration (SBA) as those having annual receipts of less than $30,000,000, and small agricultural producers are defined as those having annual receipts of less than $1,000,000 (13 CFR 121.201).

According to data from USDA Market News, the 2018 season average f.o.b. price for Washington sweet cherries was approximately $35.14 per 15-pound carton. The Committee reported that the industry shipped 3,964 tons for the season, which equals approximately 27,394,133 cartons (204,456 tons at a net weight of 15 pounds per carton). Using the number of handlers, and assuming a normal distribution, most handlers would have average annual receipts of more than $30,000,000 ($35.14 times 27,394,133 cartons equals $962,629,845 divided by 37 handlers equals $26,017,022 per handler).

In addition, based on USDA National Agricultural Statistics Service data, the weighted average grower price for the 2018 season was $1,900 per ton of sweet cherries. Based on grower price, shipment data, and the total number of Washington sweet cherry growers, and assuming a normal distribution, the average annual grower revenue is below $1,000,000 ($1,900 times 205,456 tons equals $390,366,400 divided by 1,450 growers equals $269,218 per grower). Thus, most growers of Washington sweet cherries may be classified as small entities, but most of their handlers may be classified as large entities.

This final rule decreases the assessment rate collected from handlers for the 2019-2020 and subsequent fiscal periods from $0.25 to $0.20 per ton of Washington sweet cherries handled. The Committee recommended 2019-2020 fiscal period expenditures of $56,250 and the $0.20 per ton assessment rate with an affirmative vote of 15-1. The one dissenting voter gave no reason for their opposition. The assessment rate of $0.20 is $0.05 lower than the rate for the 2018-2019 fiscal period.

The Committee estimates that the industry will handle 200,000 tons of fresh, Washington sweet cherries during the 2019-2020 fiscal period. Thus, the $0.20 per ton rate should provide $40,000 in assessment income. Income derived from handler assessments, along with $5 interest income and $16,245 from the reserve, will cover all budgeted expenses.

The major expenditures recommended by the Committee for the 2019-2020 fiscal period include $25,000 for program management contract services provided by the Washington State Fruit Commission, $7,250 for administrative expenses, $7,000 for regulation proceedings, $5,000 for data management, $5,000 for research, $4,000 for an annual audit, and $3,000 for travel. In comparison, these major expense categories budgeted for the 2018-2019 fiscal period were $25,000, $6,950, $7,000, $5,000, $5,000, $3,800, and $3,000, respectively.

The lower assessment rate will cover most of the Committee's 2019-2020 fiscal period budgeted expenditures, with the remaining balance to come from the financial reserve. Decreasing the continuing assessment rate and using some funds from the reserve will allow the Committee to fully fund budgeted expenses and bring its financial reserve to a level that is compliant with the Order.

Prior to arriving at this budget and assessment rate, the Committee considered maintaining the current assessment rate of $0.25 per ton. However, after grower input and discussions at the May 8, 2019, meeting, the Committee projected the 2019 crop to be similar in volume to the previous year. This amount of production at the current assessment level of $0.25 per ton would generate enough assessment income to fund the Committee's operations for the 2019-2020 fiscal period, but its financial reserve would be too high and not in compliance with the Order. Based on estimated shipments, the recommended assessment rate of $0.20 per ton of sweet cherries should provide $40,000 in assessment income. The Committee determined assessment revenue will be adequate to cover most of its budgeted expenditures for the 2019-2020 fiscal period, with the remaining balance coming from its financial reserve. Reserve funds will be kept within the amount authorized in the Order.

A review of historical data and preliminary information pertaining to the upcoming fiscal period indicates that the average grower price range for the 2019-2020 season should be approximately $1,598-$3,081 per ton of Washington sweet cherries. Therefore, the estimated assessment revenue for the 2019-2020 fiscal period as a percentage of total grower revenue would be between 0.007 and 0.013 percent.

The Committee's meetings are widely publicized throughout the Washington sweet cherry industry. All interested persons are invited to attend the meetings and participate in Committee deliberations on all issues. Like all Committee meetings, the May 8, 2019, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Interested persons were invited to submit comments on this rule, including the regulatory and information collection impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by the OMB and assigned OMB No. 0581-0189, Fruit Crops. No changes in those requirements will be necessary because of this action. Should any changes become necessary, they will be submitted to OMB for approval.

This final rule will not impose any additional reporting or recordkeeping requirements on either small or large Washington sweet cherry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. As noted in the final regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this final rule.

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

A proposed rule concerning this action was published in the Federal Register on September 23, 2019 (84 PR 49682). Copies of the proposed rule were provided to all Washington sweet cherry handlers. The proposal was also made available through the internet by USDA and the Office of the Federal Register. A 30-day comment period ending October 23, 2019, was provided for interested persons to respond to the proposal. No comments were received. Accordingly, no changes will be made to the rule as proposed.

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

After consideration of all relevant material presented, including the information and recommendation submitted by the Committee and other available information, it is hereby found that this rule will tend to effectuate the declared policy of the Act.

On April 12, 2019, FSIS proposed to amend its regulations to remove lists of foreign countries eligible to export meat, poultry, or processed egg products to the United States and, instead, maintain such lists on its website (84 FR 14894). The proposal noted that it did not include any changes to the criteria FSIS uses to evaluate whether a foreign country is eligible. The proposal also described how removing the lists from the regulations would affect FSIS's process for implementing equivalence determinations. Instead of publishing proposed and final rules in the Federal Register, FSIS will now implement equivalence determinations through Federal Register notices with requests for public comment. FSIS will respond to public comments in any Federal Register notice that finalizes an equivalence determination. FSIS will also use this process when it is necessary to terminate the eligibility of a foreign country. This final rule will allow FSIS to convey more clearly information on countries' equivalence status. Once the rule is in place, the list posted on the website will not conflict with any outdated information in the Federal Register. In addition to removing the lists from the regulations, the Agency proposed to amend six parts of 9 CFR Chapter III (310, 327, 381, 424, 557, 590) to remove references to the lists.

After reviewing comments on the proposed rule, FSIS is finalizing it without changes, except for non-substantive changes, for clarity, to the regulatory language proposed for 9 CFR 327.2(b).

FSIS received 15 comments, from 13 individuals, an industry association representing egg processors, and a consumer advocacy organization. The issues raised in the comments and the Agency responses are summarized below.

Comments: FSIS received comments relating to the use of online lists. One individual questioned the use of online lists as potentially confusing or difficult to locate by stakeholders. Another recommended that FSIS ensure that the online lists are updated soon after determinations are finalized. The consumer advocacy organization believed that keeping equivalence determinations on FSIS's website could invite hacking or mistakes and expressed concern that some individuals do not have access to the internet.

Response: FSIS does not believe these concerns warrant reconsideration of the use of online lists. This rule's amendments to the Code of Federal Regulations (CFR) direct readers to the web address where FSIS maintains the list, www.fsis.usda.gov/importlibrary. FSIS will additionally publish notice of equivalence determinations in the Federal Register and include links to these determinations in its Constituent Update, which is posted weekly on FSIS's website. FSIS will ensure that its web content managers update the online lists shortly after any final determination is published in the Federal Register. FSIS's website is protected to ensure that only authorized users may gain access or make changes. The system keeps track of past versions, which may be restored if needed. Therefore, no hacking event could permanently alter the entries on the lists.

Comments: The industry group supported the proposed rule, but urged FSIS not to weaken its equivalence standards, reduce opportunities for public participation, or make any currently public aspects of the equivalence process non-public. It also urged FSIS to be more transparent in its investigations, audits, and determinations and ensure that the offices of the Under Secretary for Food Safety and the Secretary of Agriculture provide oversight for equivalence determinations. The consumer advocacy organization opposed the proposed rule as undermining the importance of equivalence determinations.

Response: Under this final rule, FSIS is not changing its equivalence standards or opportunities for public comment. FSIS will continue to maintain the same level of transparency in these determinations by publishing its on-site audit reports and allowing for public comment on preliminary equivalence determinations. The offices of the Under Secretary for Food Safety and the Secretary of Agriculture currently review every preliminary and final equivalence determination made by FSIS and will continue to do so under this final rule.

Comments: The industry group also recommended that FSIS create specific regulatory requirements establishing a comment period for Federal Register notices of equivalence determinations and a provision mandating that the Agency will respond to comments in the Federal Register. The consumer advocacy organization advocated for a 60-day comment period for all equivalence determinations, and a minimum 30-day period for any rulemaking that removes a country's equivalence.

Response: Consistent with other Federal agencies, FSIS regulations do not establish length of comment periods for any proposal rules. The Agency will retain flexibility to set and extend comment periods as needed to adequately receive and consider public feedback. Also, consistent with other Federal agencies, FSIS regulations do not state that FSIS will respond to public comments in a second Federal Register notice. That being said, after a preliminary equivalence determination, FSIS will publish a Federal Register notice, including the response to public comments, to finalize (or decline to finalize) any equivalence determination.

Comment: The industry group sought clarification with regard to the FSIS's proposal to amend the current version of the regulations at 9 CFR 590.910 to remove the list of foreign countries eligible to export processed egg products to the United States and instead refer to the list of countries eligible to export on the FSIS website. As FSIS explained in Footnote 2 of the proposed rule, FSIS already had proposed to revise § 590.910 of the regulations in an earlier proposed rule concerning egg products (83 FR 6314, February 13, 2018), but only for more consistency with the existing regulations for meat and poultry.

Response: FSIS proposed to amend the version of § 590.910 in effect at the time. Because the February 2018 proposed rule regarding egg products has not been made final, those regulations are still in effect. FSIS is thus amending those regulations, as proposed. If the February 2018 rulemaking is made final, its version of § 590.910 will incorporate the changes made by this final rule regarding the listing of foreign countries with equivalent egg products inspection systems.

Comment: The consumer advocacy organization sought clarification on the time period before a country would be listed as inactive on FSIS's website.

Response: FSIS states on its website and in instructions to Agency personnel that, after three or more years without shipping, a country will be considered “inactive” and must apply for a reinstatement of equivalence. See FSIS Directive 9770.1, Determining Initial and Reinstating the Equivalence of Foreign Food Safety Inspection Systems. Therefore, consistent with current practice, if a country does not ship for three years, FSIS will move the country to the “inactive” chart on the FSIS website.

Comment: An individual commenter asked how the rule would promote efficiency and if there were other costs to FSIS.

Response: As FSIS explained in the economic analysis, the change in publication method will not create additional costs to FSIS, which will continue to implement equivalence determinations through the Federal Register. Similarly, there will not be additional costs for industry or foreign countries seeking to export to the United States. This final rule will allow FSIS to more efficiently propose and finalize equivalence determinations without changing the substantive criteria or level of evaluation of foreign food safety systems. This will save staff time and allow FSIS's list of exporting countries to more quickly reflect changes in foreign counties' equivalence status. FSIS will also gain efficiency by maintaining a single list of exporting countries on its website, rather than maintaining one list on the website and a separate list in the codified regulations.

Comments: The industry group urged FSIS to apply stricter scrutiny to foreign food safety systems. It also expressed concern about whether the processed egg products system in the Netherlands is genuinely equivalent to the U.S. system. An individual commenter suggested that imported meat and poultry products be monitored and tested for safety by the FDA.

Response: These comments are outside the scope of this rulemaking, which focuses solely on the publication method of lists of foreign countries eligible to export meat, poultry, and egg products to the United States.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been designated as a “non-significant” regulatory action under section 3(f) of E.O. 12866. Accordingly, the rule has not been reviewed by the Office of Management and Budget under E.O. 12866.

This final rule doesn't change the requirements for importing meat, poultry, and egg products to the United States. FSIS will continue to determine whether a foreign country's food safety inspection system for meat, poultry, or egg products is equivalent to FSIS's inspection system. FSIS will announce the results of equivalence determinations through a notice with a request for comments in the Federal Register, rather than a proposed rule. In addition, FSIS will continue to assess the costs and benefits of new countries becoming eligible to ship product to the United States. This change in procedure will not alter U.S. production, imports, or consumption; therefore, FSIS does not expect a change in U.S. consumer price due to this final rule. The change in procedure is also not expected to add any additional cost to the countries applying for eligibility to import meat, poultry, and egg products to the United States, nor does it add costs to FSIS, or the U.S. meat, poultry, or egg products industries.

While there are no additional costs associated with this final rule, the benefit from the final rule is an increase in the efficient use of FSIS resources. FSIS will continue to use the Federal Register to receive and respond to public comments on equivalence determinations, but the notice process will allow FSIS to more efficiently propose and finalize equivalence determinations. FSIS expects that the notice process will take less time than the current rulemaking process. FSIS will also gain efficiency by maintaining a single list of exporting countries on its website, rather than maintaining one list on the website and separate lists in the codified regulations.

The FSIS Administrator certifies that, for the purposes of the Regulatory Flexibility Act (5 U.S.C. 601-602), this final rule will not have a significant economic impact on a substantial number of small entities in the United States. Under this final rule, the requirements for importing meat, poultry, and egg products to the United States will not change. Thus, no market effect is expected from this final rule. Small entities, therefore, will not bear additional costs, as market factors remain unchanged.

Consistent with E.O. 13771 (82 FR 9339, February 3, 2017), FSIS has estimated that this final rule will yield cost savings. Therefore, this final rule is an E.O. 13771 deregulatory action.

FSIS has reviewed the paperwork and recordkeeping requirements in this final rule in accordance with the Paperwork Reduction Act (44 U.S.C. 3501, et seq.). Foreign countries seeking to export meat, poultry, or egg products to the United States are required to provide information to FSIS certifying that their inspection systems provide standards equivalent to those of the United States, and that the legal authority for the system and their implementing regulations are equivalent to those of the United States. FSIS provides countries with questionnaires asking for detailed information about the country's inspection practices and procedures to assist that country in organizing its materials. This information collection was approved under OMB control number 0583-0094. This final rule only affects FSIS's methods of proposing and finalizing equivalence determination after the Agency has made a preliminary determination. It contains no new or expanded paperwork requirements.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under this rule: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) no administrative proceedings will be required before parties may file suit in court challenging this rule.

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

FSIS and USDA are committed to achieving the purposes of the E-Government Act (44 U.S.C. 3601, et seq.) by, among other things, promoting the use of the internet and other information technologies and providing increased opportunities for citizen access to Government information and services, and for other purposes.

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

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

No agency, officer, or employee of the USDA shall, on the grounds of race, color, national origin, religion, sex, gender identity, sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, or political beliefs, exclude from participation in, deny the benefits of, or subject to discrimination any person in the United States under any program or activity conducted by the USDA.

To file a complaint of discrimination, complete the USDA Program Discrimination Complaint Form, which may be accessed online at http://www.ocio.usda.gov/sites/default/files/docs/2012/Complain_combined_6_8_12.pdf, or write a letter signed by you or your authorized representative.

Send your completed complaint form or letter to USDA by mail, fax, or email:

Persons with disabilities who require alternative means for communication (Braille, large print, audiotape, etc.), should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).

Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this Federal Register publication on-line through the FSIS web page located at: http://www.fsis.usda.gov/federal-register.

FSIS will also announce and provide a link to it through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations, Federal Register notices, FSIS public meetings, and other types of information that could affect or would be of interest to our constituents and stakeholders. The Constituent Update is available on the FSIS web page. Through the web page, FSIS is able to provide information to a much broader, more diverse audience. In addition, FSIS offers an email subscription service which provides automatic and customized access to selected food safety news and information. This service is available at: http://www.fsis.usda.gov/subscribe. Options range from recalls to export information, regulations, directives, and notices. Customers can add or delete subscriptions themselves, and have the option to password protect their accounts.

The FDIC maintains and administers the DIF in order to assure the agency's capacity to meet its obligations as the insurer of deposits and receiver of failed IDIs.1 The FDIC considers the adequacy of the DIF in terms of the reserve ratio, which is equal to the DIF balance divided by estimated insured deposits. A higher reserve ratio reduces the risk that losses from IDI failures during an economic downturn will exhaust the DIF and also reduces the risk of large, pro-cyclical increases in deposit insurance assessments to maintain a positive DIF balance during such a downturn.

The FDIC is amending its regulations governing the use of small bank credits and OTACs.2 As originally adopted, the regulations provided that after the reserve ratio reached or exceeded 1.38 percent, and provided that it remained at or above 1.38 percent,3 the FDIC would automatically apply small bank credits up to the full amount of the IDI's credits or quarterly assessment, whichever is less.4 Under the final rule, the FDIC will continue to apply small bank credits if the reserve ratio falls below 1.38 percent, as long as it does not fall below the statutory minimum reserve ratio of 1.35 percent. The FDIC will remit the full nominal value of any remaining small bank credits after such credits have been applied for four quarterly assessment periods. At the same time that any remaining small bank credits are remitted, the FDIC will also remit the full nominal value of any remaining OTACs, issued under section 7(e)(3) of the FDI Act, to IDIs holding such credits.5

The primary objective of this rule is to make the application of small bank credits to IDIs' quarterly assessments more predictable, and to simplify the FDIC's administration of small bank credits, without materially impairing the ability of the FDIC to maintain the required minimum reserve ratio of 1.35 percent. The rule affects the timing of when small bank credits would be applied to an IDI's quarterly assessment, but it does not change the aggregate amount of credits that banks have been awarded. Based on data from Consolidated Reports of Condition and Income and quarterly Reports of Assets and Liabilities of U.S. Branches and Agencies of Foreign Banks (together, “quarterly regulatory reports”), as of June 30, 2019, the aggregate amount of small bank credits, $764.5 million, represented less than one basis point of the reserve ratio. For the initial quarter in which small bank credits were applied, and for each future quarter of application, such credits represent less than one-half of one basis point of the reserve ratio.

In the FDIC's view, these changes lessen the likelihood that application of small bank credits would be suspended due to small variations in the reserve ratio. In particular, the rule lessens the likelihood that such credits would be applied in a quarter when the reserve ratio is at or above 1.38 percent and then immediately suspended in the next quarter if the reserve ratio falls below 1.38 percent. The rule is expected to result in more stable and predictable application of credits to quarterly assessments, permitting IDIs to better budget for their assessment cash flow, and could benefit certain IDIs that might realize the full value of their credits at an earlier date.

Additionally, the final rule simplifies the FDIC's administration of the DIF from an operational perspective. While the rule affects the timing of DIF revenues by reducing the period of time during which small bank credits are applied, the long-term adequacy of the DIF is not impacted because the total amount of credits awarded does not change.

An additional objective of the rule is to establish a reasonable time period during which the FDIC will administer the application of credits for the small bank credit program and the OTAC program. The FDIC will accomplish this by remitting, after four quarterly assessment periods, any remaining small bank credits and OTACs in lump-sum payments to each IDI holding such credits in the next quarterly assessment period in which the reserve ratio is at least 1.35 percent. The FDIC will then conclude both credit programs. This change will accelerate the time at which IDIs will receive the benefit of such credits and will permit more efficient administration of the DIF on a going-forward basis.

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which raised the minimum reserve ratio for the DIF to 1.35 percent (from the former minimum of 1.15 percent), required the FDIC to “offset the effect of the increase in the minimum reserve ratio on insured depository institutions with total consolidated assets of less than $10 billion” when setting assessments.6 To offset the effect of increasing the minimum reserve ratio on IDIs with total consolidated assets of less than $10 billion (small IDIs), on March 25, 2016, the FDIC published a final rule (the 2016 final rule) that, among other things, provided assessment credits to small IDIs for the portion of their regular assessments that contributed to the growth in the reserve ratio between 1.15 percent and 1.35 percent.7 Pursuant to the 2016 final rule, upon reaching the statutory minimum reserve ratio of 1.35 percent, small IDIs were awarded small bank credits for the portion of their assessments that contributed to the growth in the reserve ratio from 1.15 percent to 1.35 percent.8 The regulations provided that these small bank credits would be applied to quarterly deposit insurance assessments when the reserve ratio is at least 1.38 percent.9

As of September 30, 2018, the DIF reserve ratio reached 1.36 percent, exceeding the statutorily required minimum reserve ratio of 1.35 percent. All IDIs that were small IDIs, including small IDI affiliates of large IDIs, at any time during the “credit calculation period” 10 were awarded a share of credits in January 2019.11 As of June 30, 2019, the DIF reserve ratio reached 1.40 percent, exceeding the 1.38 percent threshold for the first time. As a result, for the second quarter assessment period, the FDIC applied $319.7 million of small bank credits to offset IDIs' assessments. After applying credits for the second quarter of 2019, $444.8 million in small bank credits remain.12

The share of the aggregate small bank credits allocated to each IDI was proportional to its credit base, defined as the average of its regular assessment base during the credit calculation period.13 14 IDIs eligible to receive a credit were notified of their individual credit allocation in January 2019 via FDICconnect. The FDIC will provide IDIs with periodic notices to reflect adjustments that may be made as the result of credit use or acquisition of an IDI with credits through merger or consolidation.15

The policy objective of the rule is to remove unnecessary and duplicative regulations in order to simplify them and improve the public's understanding of them. Thus, the FDIC is rescinding the regulations in part 390, subpart M and reserving the subpart for future use.

Part 390, subpart M, was included in the regulations that were transferred to the FDIC from the Office of Thrift Supervision (OTS) on July 21, 2011, in connection with the implementation of applicable provisions of title III of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).1

As of July 21, 2011, the transfer date established by section 311 of the Dodd-Frank Act,2 the powers, duties, and functions formerly performed by the OTS were divided among the FDIC, as to State savings associations, the Office of the Comptroller of the Currency (OCC), as to Federal savings associations, and the Board of Governors of the Federal Reserve System (FRB), as to savings and loan holding companies. Section 316(b) of the Dodd-Frank Act 3 provides the manner of treatment for all orders, resolutions, determinations, regulations, and other advisory materials that have been issued, made, prescribed, or allowed to become effective by the OTS. The section provides that if such materials were in effect on the day before the transfer date, they continue in effect and are enforceable by or against the appropriate successor agency until they are modified, terminated, set aside, or superseded in accordance with applicable law by such successor agency, by any court of competent jurisdiction, or by operation of law.

Pursuant to section 316(c) of the Dodd-Frank Act,4 on June 14, 2011, the FDIC's Board of Directors (Board) approved a “List of OTS Regulations to be Enforced by the OCC and the FDIC Pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act.” This list was published by the FDIC and the OCC as a Joint Notice in the Federal Register on July 6, 2011.5

Although § 312(b)(2)(B)(i)(II) of the Dodd-Frank Act 6 granted the OCC rulemaking authority relating to both State and Federal savings associations, nothing in the Dodd-Frank Act affected the FDIC's existing authority to issue regulations under the Federal Deposit Insurance Act (FDI Act) 7 and other laws as the “appropriate Federal banking agency” or under similar statutory terminology. Section 312(c)(1) of the Dodd-Frank Act 8 revised the definition of “appropriate Federal banking agency” contained in § 3(q) of the FDI Act,9 to add State savings associations to the list of entities for which the FDIC is designated as the “appropriate Federal banking agency.” As a result, when the FDIC acts as the appropriate Federal banking agency (or under similar terminology) for State savings associations, as it does here, the FDIC is authorized to issue, modify, and rescind regulations involving such associations, as well as for State nonmember banks and insured State-licensed branches of foreign banks.

As noted above, on June 14, 2011, operating pursuant to this authority, the Board issued a list of regulations of the former OTS that the FDIC would enforce with respect to State savings associations. On that same date, the Board reissued and redesignated certain regulations transferred from the former OTS. These transferred OTS regulations were published as new FDIC regulations in the Federal Register on August 5, 2011.10 When the FDIC republished the transferred OTS regulations as new FDIC regulations, it specifically noted that its staff would evaluate the transferred OTS rules and might later recommend incorporating the transferred OTS regulations into other FDIC regulations, amending them, or rescinding them, as appropriate.11

One of the regulations transferred to the FDIC from the OTS was former 12 CFR 557.20, concerning the maintenance of deposit records by State savings associations.12 That provision was transferred to the FDIC and now comprises part 390, subpart M. The OTS had issued § 557.20 as part of a streamlining of its regulations in 1997.13 At that time, the OTS regulations included several specific deposit recordkeeping requirements, and the OTS sought to replace those with one provision. In the associated NPR, the OTS explained that “[a]s part of its reinvention effort, OTS is endeavoring to eliminate regulations that are outdated or micromanage thrift operations. For example, OTS proposes to replace several specific deposit-related recordkeeping requirements with a general recordkeeping regulation that is tied more closely to safety and soundness.” 14

On August 26, 2019, the FDIC published an NPR regarding the removal of part 390, subpart M (former OTS regulation 12 CFR 557.20), which addressed deposits at State savings associations.15 The former OTS rule was transferred to the FDIC with only nominal changes. The NPR proposed removing part 390, subpart M from the Code of Federal Regulations, because, after careful review and consideration, the FDIC believes it is unnecessary, redundant, and duplicative of existing statutes and regulations currently applicable to State savings associations.

The following is a description of existing statutes and regulations that provide for complete and accurate recordkeeping of deposits and account transactions at State savings associations, obviating the need for a new regulation or amendment of existing regulations upon rescission of part 390, subpart M. Accordingly, the FDIC proposed that §§ 390.230 and 390.231, part 390, subpart M, be rescinded as unnecessary, redundant of, or otherwise duplicative of the provisions of law delineated in 12 U.S.C. 1817(a)(9); 31 CFR 1020.410(c)(2); 12 CFR part 364, Appendix A II; 12 CFR 330.1(e); and 12 CFR 1005, each discussed individually below.

Section 390.230 simply states that subpart M “applies to the deposit activities of State savings associations.” There is no substantively similar provision in the FDIC's regulations, nor is one necessary. Accordingly, the FDIC proposed that section 390.230 be rescinded.

Former OTS § 557.20, as modified by the FDIC in transferred § 390.231, provided general information on what records should be maintained by State savings associations on their deposit activities. Existing statutes and regulations that are applicable to State savings associations (discussed in greater detail below) already require the maintenance of accurate records of deposits and transactions by State savings associations.

Section 7(a)(9) of the FDI Act 16 provides that “the Corporation shall take such action as may be necessary to ensure that—(A) each insured depository institution maintains; and (B) the Corporation receives on a regular basis from such institution, information on the total amount of all insured deposits, preferred deposits, and uninsured deposits at the institution.” In issuing regulations under that statutory provision, the FDIC has stated that it “has a right and a duty” under § 7(a)(9) to require the maintenance of accurate deposit account records and that “requiring covered institutions to maintain complete and accurate records regarding the ownership and insurability of deposits . . . will facilitate the FDIC's prompt payment of deposit insurance and enhance the ability to implement the least costly resolution of these institutions.” 17 Due to the requirements for accurate recordkeeping pursuant to its existing statutory authority, the FDIC takes the position that no new regulation will be needed upon the rescission of part 390, subpart M.

Section 1020.410(c)(2) of title 31, Code of Federal Regulations, requires banks (defined to include savings associations 19 ) to maintain certain records, including “[e]ach statement, ledger card or other record on each deposit or share account, showing each transaction in, or with respect to, that account.” This rule specifically requires that such records be maintained at State savings associations, rather than the merely suggestive language included in part 390, subpart M.

In 1995, the FDIC published 12 CFR 364 as a final rule with an appendix that implements section 39(a) of the FDI Act 21 regarding standards for safety and soundness (Appendix A).22 The OCC, the FRB, and the OTS also issued their versions of Appendix A.23 The FDIC's Appendix A II (Operational and Managerial Standards) provides that an institution should have internal controls and information systems that are appropriate to the size of the institution and the nature, scope, and risk of its activities and that provide for, among other things: “timely and accurate financial, operational and regulatory reports.” An Appendix B (regarding information security) was also published to implement § 39 of the FDI Act.24 Section 364.101 of part 364 provides that Appendix A and Appendix B apply to all insured State nonmember banks, State-licensed insured branches of foreign banks, and State savings associations. FDIC-supervised institutions are required to file quarterly Reports of Condition.25 In addition, the accounting principles applicable to reports or statements that insured depository institutions file with the Federal banking agencies are required to be uniform and consistent with generally accepted accounting principles.26

Taken together, part 364 and appendix A constitute the FDIC's long-standing expectations for all prudently managed insured depository institutions, but leave specific methods of achieving these objectives to each institution. These regulations provide a framework for sound corporate governance and the supervision of operations designed to prompt an institution to identify emerging problems and correct deficiencies before capital becomes impaired. Pursuant to § 39(e) of the FDI Act,27 an FDIC-supervised institution's failure to meet the standards may cause the FDIC to require the institution to submit a safety and soundness compliance plan, and if the institution does not comply with its plan, the FDIC will issue an order to correct safety and soundness deficiencies.28 Hence, in order to accurately report their financial condition, including deposit liabilities, and to meet applicable safety and soundness criteria, insured depository institutions, including State savings associations, must keep accurate and up-to-date records of account transactions and balances.

Part 330 of the FDIC's regulations governs the criteria for deposit insurance coverage at insured depository institutions, including insured State savings associations. Section 330.3(h) of part 330 states that deposit insurance coverage is “a function of the deposit account records of the insured depository institution . . . which, in the interest of uniform national rules for deposit insurance coverage, are controlling for purposes of determining deposit insurance coverage.” Further, § 330.1(e) defines the term “deposit account records” to include documents such as “account ledgers . . . and other books and records of the insured depository institution . . . which relate to the insured depository institution's deposit taking function.” This existing regulation on criteria for deposit insurance also requires State savings associations to maintain records of their deposit transactions, eliminating the need for part 390, subpart M.

Regulation E,30 issued by the Bureau of Consumer Financial Protection, relates to electronic fund transfers at financial institutions, including any savings association.31 It states that “[f]or an account to or from which electronic fund transfers can be made, a financial institution shall send a periodic statement for each monthly cycle in which an electronic fund transfer has occurred; and shall send a periodic statement at least quarterly if no transfer has occurred.” 32 Thus, in order to comply with existing Regulation E, a State savings association must be capable of generating periodic statements for each of its deposit accounts, whether or not electronic transfers are made from that account, again serving the intended purpose of part 390, subpart M.

Accordingly, as explained in the analysis above, the FDIC proposed removing §§ 390.230 and 390.231, subpart M because these sections are unnecessary, redundant of, or otherwise duplicative of the safety and soundness and other standards described above.

The FDIC issued the NPR with a 30-day comment period, which closed on September 25, 2019. The FDIC received no comments on its Proposed Rule, and consequently the final rule is adopted as proposed.

As discussed in the NPR, the requirements for State savings associations in part 390, subpart M, are duplicative of the regulations and statutes described in Section IV above. To that effect, the Final Rule removes and rescinds 12 CFR part 390, subpart M, in its entirety.

As explained in detail in Section III of this Supplemental Information section, certain OTS regulations transferred to the FDIC by the Dodd-Frank Act relating to records of deposit transactions and activities are either unnecessary or effectively duplicate existing regulations. This rule would eliminate one of those transferred OTS regulations.

As of June 30th, 2019, the FDIC supervises 3,424 insured depository institutions, of which 38 (1.1%) are State savings associations.33 The rule primarily would affect regulations that govern State savings associations.

As explained previously, the rule would remove sections §§ 390.230 and 390.231, subpart M, because these sections are unnecessary, redundant of, or otherwise duplicative of other statutes and regulations, including those relating to safety and soundness. Because these regulations are redundant, rescinding them will not have any substantive effects on FDIC-supervised institutions.

The FDIC has considered alternatives to the rule but believes that the amendments represent the most appropriate option for covered institutions. As discussed previously, the Dodd-Frank Act transferred certain powers, duties, and functions formerly performed by the OTS to the FDIC. The FDIC's Board reissued and redesignated certain transferred regulations from the OTS, but noted that it would evaluate them and might later incorporate them into other FDIC regulations, amend them, or rescind them, as appropriate. The FDIC has evaluated the existing regulations relating to the maintenance of deposit account records. The FDIC considered the status quo alternative of retaining the current regulations, but did not choose to do so. The FDIC believes it would be procedurally complex for FDIC-supervised institutions to continue to refer to these separate sets of regulations, and is therefore amending and streamlining them in accordance with this final rulemaking.

In accordance with the requirements of the Paperwork Reduction Act of 1995 (PRA),34 the FDIC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number.

The final rule rescinds and removes from FDIC regulations part 390, subpart M. The final rule will not create any new or revise any existing collections of information under the PRA. Therefore, no information collection request will be submitted to the OMB for review.

The Regulatory Flexibility Act (RFA) requires that, in connection with a final rulemaking, an agency prepare and make available for public comment a final regulatory flexibility analysis that describes the impact of the rule on small entities.35 However, a regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities, and publishes its certification and a short explanatory statement in the Federal Register, together with the rule. The Small Business Administration (SBA) has defined “small entities” to include banking organizations with total assets of less than or equal to $600 million.36 37 Generally, the FDIC considers a significant effect to be a quantified effect in excess of 5 percent of total annual salaries and benefits per institution, or 2.5 percent of total noninterest expenses. The FDIC believes that effects in excess of these thresholds typically represent significant effects for FDIC-supervised institutions. For the reasons provided below, the FDIC certifies that the final rule would not have a significant economic impact on a substantial number of small banking organizations. Accordingly, a regulatory flexibility analysis is not required.

As of June 30, 2019, the FDIC supervised 3,424 insured depository institutions, of which 2,665 are considered small banking organizations for the purposes of RFA. The proposed rule primarily affects regulations that govern State savings associations. There are 36 State savings associations considered to be small banking organizations for the purposes of the RFA.38

As explained previously, the rule would remove §§ 390.230 and 390.231, part 390, subpart M, because these sections are unnecessary, redundant of, or otherwise duplicative of other statutes and regulations, including safety and soundness standards. Therefore, rescinding subpart M would not have any substantive effects on small FDIC-supervised institutions.

Based on the information above, the FDIC certifies that the rule would not have a significant economic impact on a substantial number of small entities.

For purposes of Congressional Review Act, the OMB makes a determination as to whether a final rule constitutes a “major” rule.39 If a rule is deemed a major rule by the OMB, the Congressional Review Act generally provides that the rule may not take effect until at least 60 days following its publication.40

The Congressional Review Act defines a “major rule” as any rule that the Administrator of the Office of Information and Regulatory Affairs of the OMB finds has resulted in or is likely to result in—(A) an annual effect on the economy of $100,000,000 or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies or geographic regions, or (C) 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.41

The OMB has determined that the final rule is not a major rule for purposes of the Congressional Review Act and the FDIC will submit the final rule and other appropriate reports to Congress and the Government Accountability Office for review.

Section 722 of the Gramm-Leach-Bliley Act 42 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The FDIC has sought to present the final rule in a simple and straightforward manner and did not receive any comments on the use of plain language.

Under section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA), the FDIC is required to review all of its regulations, at least once every 10 years, in order to identify any outdated or otherwise unnecessary regulations imposed on insured institutions.43 The FDIC, along with the other Federal banking agencies, submitted a Joint Report to Congress on March 21, 2017 (“EGRPRA Report”) discussing how the review was conducted, what has been done to date to address regulatory burden, and further measures the FDIC will take to address issues that were identified.44 As noted in the EGRPRA Report, the FDIC is continuing to streamline and clarify its regulations through the OTS rule integration process. By removing outdated or unnecessary regulations, such as part 390, subpart M, this final rule complements other actions that the FDIC has taken, separately and with the other Federal banking agencies, to further the EGRPRA mandate.

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA),45 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions (IDIs), each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.46

Because the final rule does not impose additional reporting, disclosure, or other new requirements on IDIs, section 302 of the RCDRIA does not apply.

The Bureau is amending appendix O for Regulation V, which implements the FCRA, to establish the maximum allowable charge for disclosures by a consumer reporting agency to a consumer for 2020. The maximum allowable charge will remain at $12.50 for 2020.

Under section 609 of the FCRA, a consumer reporting agency must, upon a consumer's request, disclose to the consumer information in the consumer's file.1 Section 612(a) of the FCRA gives consumers the right to a free file disclosure upon request once every 12 months from the nationwide consumer reporting agencies and nationwide specialty consumer reporting agencies.2 Section 612 of the FCRA also gives consumers the right to a free file disclosure under certain other, specified circumstances.3 Where the consumer is not entitled to a free file disclosure, section 612(f)(1)(A) of the FCRA provides that a consumer reporting agency may impose a reasonable charge on a consumer for making a file disclosure. Section 612(f)(1)(A) of the FCRA provides that the charge for such a disclosure shall not exceed $8.00 and shall be indicated to the consumer before making the file disclosure.4

Section 612(f)(2) of the FCRA also states that the $8.00 maximum amount shall increase on January 1 of each year, based proportionally on changes in the Consumer Price Index, with fractional changes rounded to the nearest fifty cents.5 Such increases are based on the Consumer Price Index for All Urban Consumers (CPI-U), which is the most general Consumer Price Index and covers all urban consumers and all items.

For 2020, the ceiling on allowable charges under section 612(f) of the FCRA will be $12.50, unchanged from 2019. The Bureau is using the $8.00 amount set forth in section 612(f)(1)(A)(i) of the FCRA as the baseline for its calculation of the increase in the ceiling on reasonable charges for certain disclosures made under section 609 of the FCRA. Since the effective date of section 612(a) was September 30, 1997, the Bureau calculated the proportional increase in the CPI-U from September 1997 to September 2019. The Bureau then determined what modification, if any, from the original base of $8.00 should be made effective for 2020, given the requirement that fractional changes be rounded to the nearest fifty cents.

Between September 1997 and September 2019, the CPI-U increased by 59.28 percent from an index value of 161.2 in September 1997 to a value of 256.759 in September 2019. An increase of 59.28 percent in the $8.00 base figure would lead to a figure of $12.74. However, because the statute directs that the resulting figure be rounded to the nearest $0.50, the maximum allowable charge is $12.50. The Bureau therefore determines that the maximum allowable charge for the year 2020 will remain at $12.50.

Under the Administrative Procedure Act, notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest.6 Pursuant to this final rule, in Regulation V, appendix O, is amended to update the maximum allowable charge for 2020 under section 612(f). The amendments in this final rule are technical and non-discretionary, as they merely apply the method previously established in Regulation V for determining adjustments to the thresholds. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. The amendments therefore are adopted in final form.

I. Table of Abbreviations [Delete/add any Abbreviations not Used/Used in This Document] CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register OMB Office of Management and Budget § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard is issuing this final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because because on December 13, 2016, we published PUBLIC NOTICE 09-04-16 and mailed out an availability of public notice addressed to all adjacent ZIP codes and interested parties as part of the bridge permit public notice and comment process. The comment process was open for 30-days. We did not receive any negative comments on this rule.

We are issuing this rule under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective in less than 30 days after publication in the Federal Register. The fixed bridge is inplace and the drawbridge has been removed to the satisfaction of the District Commander. This is an administrative action to update the CFR.

The Coast Guard is issuing this rule under authority 33 U.S.C. 499.

Winneconne Highway Bridge, mile 2.4, at Winneconne, WI was a vertical lift drawbridge that provided 23 feet vertical clearance in the open position. The new Fixed Bridge provides the same 23 feet vertical clearance the drawbridge provided.

The Coast Guard is removing the operational schedule of the former drawbridge because it has been replaced by a new fixed bridge that allow vessels to pass under the bridge without the need to wait for an opening.

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

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

This regulatory action was supported by a public notice process and the public was given the opportunity to participate in the planning of the bridge replacement. We are now updating the CFR to reflect the current condition of the waterway.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. This regulatory action determination is based on the ability that vessels can still transit the bridge and that the public was engaged in this decision through the Coast Guard Bridge Permit process and public notice procedures. The Coast Guard received no comments from the Small Business Administration durring the bridge permitting process. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

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

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

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

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

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

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The public was engaged in this decision through the Coast Guard Bridge Permit process and public notice procedures.

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01, U.S. Coast Guard Environmental Planning Policy COMDTINST 5090.1 (series) and U.S. Coast Guard Environmental Planning Implementation Procedures (series) which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f). We have made a determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule is removing the operating regulations or procedures for drawbridges. This action is categorically excluded from further review, under paragraph L49, of Chapter 3, Table3-1 of the U.S. Coast Guard Environmental Planning Implementation Procedures.

Neither a Record of Environmental Consideration nor a Memorandum for the Record are required for this rule.

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 117 as follows:

Program Authority: 20 U.S.C. 1221e-3.

We published a notice of proposed priority in the Federal Register on July 29, 2019 (84 FR 36504) (NPP). The NPP contained background information and our reasons for proposing the priority.

There are no differences between the proposed priority and the final priority.

Public Comment: In response to our invitation in the NPP, 11 parties submitted comments on the proposed priority.

We group major issues according to subject. Generally, we do not address comments that raised concerns not directly related to the proposed priority.

Comment: Two commenters expressed general support for the priority, and shared information about the needs of specific Qualified Opportunity Zones. A third commenter expressed support and recommended that we revise the language to prioritize applicants who propose to strengthen the workforce talent pipeline within the Qualified Opportunity Zone, promote partnerships with other local stakeholders, and build capacity among local leaders and practitioners.

Discussion: We appreciate these comments and encourage all eligible organizations—located in or serving a Qualified Opportunity Zone—to apply for grants under competitions that use this priority in the future. This document does not solicit grants.

In addition, we appreciate the commenter's suggestion to revise the priority to include a focus on specific policy goals. We agree that the commenter's suggested policies are important but decline to revise this priority to include them. Our intent for this priority is to drive grant funds toward Qualified Opportunity Zones and to encourage applicants to think creatively about how to make use of Qualified Opportunity Funds, where possible, to support their proposed projects. The goals and content of an applicant's proposed project will depend in large part on the statute and regulations governing the grant program to which it is applying, as well as any of the Secretary's Supplemental Priorities (83 FR 9096) we may choose to include in the grant competition. For that reason, including additional requirements in this priority is neither necessary nor appropriate.

Changes: None.

Comment: Several commenters raised concerns about how the Department would practically apply the priority in a grant competition. One commenter cautioned the Department not to require applicants to be physically located in a Qualified Opportunity Zone, because many organizations provide services in a Qualified Opportunity Zone but have offices in a nearby community. Another commenter expressed concern that the priority would not require applicants to explain the work they propose to do in a Qualified Opportunity Zone, where they would conduct their work, or why. A third commenter expressed general support for the broad Opportunity Zones initiative but urged the Department to exercise caution when determining whether to use the priority as an absolute, competitive preference, or invitational priority. The commenter recommended specifically that we not use the priority as an absolute priority, and only use it as a competitive preference priority after very careful consideration of its potential impact.

Discussion: The priority's flexible structure is specifically designed to allow the Department to address, in the broader context of specific discretionary grant competitions in which the priority may be used, each of the concerns raised by the commenters. In particular, the Department may choose to use all or a subset of the provisions contained in the priority in any discretionary grant competition. For example, the Department may choose not to use paragraph (b) (for applicants that can demonstrate that they are physically located in a Qualified Opportunity Zone) in a grant competition if we determine that physical co-location of an applicant within a Qualified Opportunity Zone is not necessary for achieving the goals of that competition.

In addition, while each of the subparts do not specifically require applicants to explain the work they propose to do, and paragraph (b) does not specifically require applicants to tell us where they will conduct their projects, we remind commenters that this priority will be used in the context of our discretionary grant programs. The activities an applicant proposes to carry out, either directly or through a contract or subgrant, in response to this priority would still be limited to those permitted by that grant program's statute and regulations. In addition to any applicable statutory and regulatory requirements, we include in each notice inviting applications for new awards a set of selection criteria that applicants must address in order for peer reviewers to score their applications. We include these selection criteria to better understand the details of an applicant's proposal, including why it proposes the project in the first place. For these reasons, we do not think it is necessary to revise the priority in order to ensure that we award high-quality grants.

Finally, we agree with the commenter that the decision to include any priority—be it absolute, competitive preference, or invitational—should be made judiciously. We intend to include this priority in a grant competition only after careful consideration.

Changes: None.

Comment: One commenter expressed concerns about the general structure of Qualified Opportunity Zones and Qualified Opportunity Funds, noting that investors are more likely to create a Qualified Opportunity Fund in areas with the highest potential return on investment, not necessarily the areas that are most distressed. The commenter also cited research that indicates that States did not always designate the most economically distressed census tracts as Opportunity Zones. Finally, the commenter cautioned that the proposed priority could distort the statutory intent of programs authorized by the Elementary and Secondary Education Act, as amended (ESEA), recommending that the Department instead focus funds on existing ESEA programs as authorized by Congress.

Discussion: We recognize that some Qualified Opportunity Zones may be more attractive to investors than others. The priority includes three subparts that can be used separately or in combination, and only one of the subparts requires an applicant to demonstrate that its project will benefit from a Qualified Opportunity Fund. When deciding to use this priority in future grant competitions, we will carefully consider whether and how the priority fits appropriately within the existing statutory and regulatory framework of each program. In some cases, for example, it may be more appropriate to only focus on subpart (a) or (b) of the priority, which require that either the applicant's work is conducted in a Qualified Opportunity Zone or the applicant itself is located in a Qualified Opportunity Zone. For both subparts, whether the Qualified Opportunity Zone has received an investment from a Qualified Opportunity Fund is irrelevant.

In addition, we remind the commenter that an applicant addressing this priority in a grant competition would still need to address all statutory and regulatory requirements for the program to which it is applying. Many of the Department's discretionary programs are targeted to high-need populations in some way. Therefore, even in cases where we determine that it is appropriate to use subpart (c) (which asks applicants to demonstrate that they have received or will receive an investment from a Qualified Opportunity Fund), we believe that grant funds will still benefit communities that need them most.

We agree with the commenter that State governors had wide latitude in determining which census tracts to designate as Opportunity Zones. As a result, some Qualified Opportunity Zones are less economically distressed than others. Despite this fact, research shows that governors generally selected census tracts that are relatively disadvantaged compared to national averages and to averages among communities in eligible, non-designated census tracts. According to the Urban Institute's analysis of the 2012-2016 Census Bureau data, the average poverty rate in Qualified Opportunity Zones was 31.75 percent, compared to an average neighborhood poverty rate of 21.12 percent across all eligible non-designated census tracts and an average poverty rate of 16.6 percent nationwide. In addition, compared to all census tracts nationwide and to all eligible non-designated census tracts, Qualified Opportunity Zones had lower median household incomes, higher unemployment rates, and lower levels of educational attainment.1 Additionally, with over 8,700 census tracts designated as Qualified Opportunity Zones nationwide, significantly more distressed communities will benefit from Opportunity Zone status than under previous place-based initiatives. For example, only 22 communities received the designation of “Promise Zone,” a place-based initiative created in 2014.2

Finally, we disagree with the commenter that use of this priority would distort the statutory purpose of ESEA programs. As discussed above, applicants addressing this priority in a grant competition would still be required to meet all statutory and regulatory requirements of the program to which they are applying, including any requirements concerning the demographics or location of the population to be served by the grant. For example, if a grant program using this priority also required that funds support projects in schools with a majority of students who receive free- or reduced-price lunch, grants would only support Qualified Opportunity Zones that also met those other requirements. We believe that including this priority in grant competitions may result in more grant funds going to Qualified Opportunity Zones; however, those grant funds still must be used for purposes that meet all applicable statutory and regulatory requirements.

Changes: None.

Comment: Two commenters expressed concern that this priority is unconstitutional because it violates 20 U.S.C. 1232a, which prohibits, among other things, Federal control over the curriculum, program of instruction, administration, or personnel of any educational institution, school, or school system.

Discussion: This priority does not violate 20 U.S.C. 1232a because it does not establish any requirement involving Federal control over the curriculum, program of instruction, administration, or personnel of any educational institution, school, or school system. Moreover, any prospective applicant that does not wish to work in a Qualified Opportunity Zone, is not located in a Qualified Opportunity Zone, or does not wish to work with a Qualified Opportunity Fund, depending on how the priority is used in a given competition, may choose not to address the priority.

Changes: None.

Comment: One commenter supported the priority and suggested that the Department create and publicly post a list of elementary and secondary schools located in Qualified Opportunity Zones to aid applicants in preparing their applications.

Discussion: We appreciate this suggestion and are exploring ways to assist potential applicants in aligning their projects with Qualified Opportunity Zones. We also note that the Treasury Department has created a website of Opportunity Zones Resources that includes a searchable map: https://www.cdfifund.gov/Pages/Opportunity-Zones.aspx.

Changes: None.

Priority—Spurring Investment in Qualified Opportunity Zones.

Under this priority, an applicant must demonstrate one or more of the following:

(a) The area in which the applicant proposes to provide services overlaps with a Qualified Opportunity Zone, as designated by the Secretary of the Treasury under section 1400Z-1 of the Internal Revenue Code (IRC). An applicant must—

(i) Provide the census tract number of the Qualified Opportunity Zone(s) in which it proposes to provide services; and

(ii) Describe how the applicant will provide services in the Qualified Opportunity Zone(s).

(b) The applicant is located in a Qualified Opportunity Zone. The applicant is located in a Qualified Opportunity Zone if the applicant has multiple locations, at least one of which is within a Qualified Opportunity Zone, or if the applicant's location overlaps with a Qualified Opportunity Zone. The applicant must provide the census tract number of the Qualified Opportunity Zone in which it is located.

(c) The applicant has received, or will receive by a date specified by the Department, an investment, including access to real property, from a Qualified Opportunity Fund under section 1400Z-2 of the IRC for a purpose directly related to its proposed project. An applicant must—

(i) Identify the Qualified Opportunity Fund from which it has received or will receive an investment; and

(ii) Describe how the investment is or will be directly related to its proposed project.

When inviting applications for a competition using one or more priorities, we designate the type of each priority as absolute, competitive preference, or invitational through a notice in the Federal Register. The effect of each type of priority follows:

Absolute priority: Under an absolute priority, we consider only applications that meet the priority (34 CFR 75.105(c)(3)).

Competitive preference priority: Under a competitive preference priority, we give competitive preference to an application by (1) awarding additional points, depending on the extent to which the application meets the priority (34 CFR 75.105(c)(2)(i)); or (2) selecting an application that meets the priority over an application of comparable merit that does not meet the priority (34 CFR 75.105(c)(2)(ii)).

Invitational priority: Under an invitational priority, we are particularly interested in applications that meet the priority. However, we do not give an application that meets the priority a preference over other applications (34 CFR 75.105(c)(1)).

This document does not preclude us from proposing additional priorities, requirements, definitions, or selection criteria, subject to meeting applicable rulemaking requirements.

Under Executive Order 12866, it must be determined whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by the Office of Management and Budget (OMB). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—

(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or Tribal governments or communities in a material way (also referred to as an “economically significant” rule);

(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.

This final regulatory action is a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

Under Executive Order 13771, for each new rule that the Department proposes for notice and comment or otherwise promulgates that is a significant regulatory action under Executive Order 12866, and that imposes total costs greater than zero, it must identify two deregulatory actions. For FY 2020, any new incremental costs associated with a new regulation must be fully offset by the elimination of existing costs through deregulatory actions. Although this regulatory action is a significant regulatory action, the requirements of Executive Order 13771 do not apply because this regulatory action is a “transfer rule” not covered by the Executive order.

We have also reviewed this final regulatory action under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—

(1) Propose or adopt regulations only upon a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations;

(3) In choosing among alternative regulatory approaches, select those approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and

(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices.

Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”

We are issuing this final priority only on a reasoned determination that its benefits justify its costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that this regulatory action is consistent with the principles in Executive Order 13563.

We also have determined that this regulatory action does not unduly interfere with State, local, and Tribal governments in the exercise of their governmental functions.

In accordance with these Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities.

The Department believes that this regulatory action does not impose significant costs on eligible entities, whose participation in discretionary grant programs is voluntary. Additionally, the benefits of the priority outweigh any associated costs because it would result in the Department's discretionary grant programs selecting high-quality applications to implement activities that are designed to increase education opportunities and improve education outcomes while also targeting investment in our Nation's most economically distressed communities.

The Secretary believes that the costs imposed on applicants by the priority would be limited to paperwork burden related to preparing an application for a discretionary grant program that is using the priority in its competition. The priority would likely result in some Federal funds that would have been awarded to grantees in areas that are not designated as Qualified Opportunity Zones going instead to grantees in areas that have received that designation. We believe that the results of recently completed FY 2019 competitions provide some helpful descriptive data on the extent to which this priority may increase the number of applications from, and grantees ultimately funded in, Qualified Opportunity Zones. In FY 2019, the Department included a priority for projects in Qualified Opportunity Zones in nine competitions; five of these competitions included only an invitational priority and, in the remaining four competitions, programs created and used a program-specific absolute or competitive preference priority. In the five competitions that included only an invitational priority, 41 percent of total applications and 47 percent of funded applications addressed the priority. In the four competitions that included a competitive preference or absolute priority, 53 percent of total applications and 60 percent of funded applications addressed the priority. Of the approximately $55 million awarded to new grantees in these four competitions, over $30 million went to applicants that addressed an absolute or competitive preference priority for projects in Qualified Opportunity Zones. While these data provide some information about the impact of including the priority announced in this NFP in future competitions, it is important to note that the universe of FY 2019 competitions that used the priority is small, unrepresentative of the Department's overall grant portfolio, and includes programs that made a relatively small number of awards. Further the awards to projects in Qualified Opportunity Zones did not change the total amount of awards made by the Department under these competitions.

Regulatory Flexibility Act Certification: The Secretary certifies that the final priority will not have a significant economic impact on a substantial number of small entities. The U.S. Small Business Administration (SBA) Size Standards define proprietary institutions as small businesses if they are independently owned and operated, are not dominant in their field of operation, and have total annual revenue below $7,000,000. Nonprofit institutions are defined as small entities if they are independently owned and operated and not dominant in their field of operation. Public institutions are defined as small organizations if they are operated by a government overseeing a population below 50,000.

The Secretary certifies that this regulatory action will not have a significant economic impact on small entities. The priority will be used in a limited number of the Department's discretionary grant competitions annually, would not change the basic eligibility requirements for those competitions, was designed to minimize the paperwork burden added to the normal application process, and would not impose any costs on small entities because the decision to apply for a discretionary grant is entirely voluntary. In the case of small entities that choose to apply for funding under a discretionary grant competition that uses the priority, the increased costs would be limited to the marginally increased paperwork burden of demonstrating an applicant's relationship to a Qualified Opportunity Zone, which generally involves identifying and reporting census tract numbers. For example, we estimate that it would take an entity applying for a discretionary grant under this priority less than one hour to identify the census tract number(s) for the area they intend to serve, or for their own location. The Department expects to provide resources in the coming months to further expedite this process for applicants. Further, any marginal increase in paperwork burden associated with the regular application process for small entities would be more than offset by the benefits of the priority, including the increased likelihood that small entities in or serving Qualified Opportunity Zones will be successful in competing for Federal education funds and that funded projects will improve educational opportunities and outcomes and thereby contribute materially to the success of other small entities in our Nation's most economically distressed communities.

Intergovernmental Review: This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.

This document provides early notification of our specific plans and actions for this program.

Accessible Format: Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or compact disc) on request to the program contact person listed under FOR FURTHER INFORMATION CONTACT.

Electronic Access to This Document: The official version of this document is the document published in the Federal Register. You may access the official edition of the Federal Register and the Code of Federal Regulations at www.govinfo.gov. At this site you can view this document, as well as all other documents of the Department published in the Federal Register, in text or Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

I. Background

DoD published a proposed rule in the Federal Register at 84 FR 12179 on April 1, 2019, to implement sections 829 and 830 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017 (Pub. L. 114-328). On May 29, 2019, a document was published in the Federal Register at 84 FR 24734 to extend the comment period for 14 days until June 14, 2019.

Section 829 of the NDAA for FY 2017 requires contracting officers to first consider fixed-price contracts, including fixed-price incentive contracts, when determining contract type and to obtain approval from the head of the contracting activity (HCA) for—

○ Cost-reimbursement contracts in excess of $50 million to be awarded after October 1, 2018, and before October 1, 2019; and

○ Cost-reimbursement contracts in excess of $25 million to be awarded on or after October 1, 2019.

Section 830 provides requirements, exceptions, and waiver authority for the use of firm-fixed-price contracts for foreign military sales (FMS). It requires contracting officers to use firm fixed-price contracts, unless an exception or a waiver applies.

Seven respondents submitted public comments in response to the proposed rule.

DoD reviewed the public comments in the development of the final rule. A discussion of the comments received and changes from the proposed rule made in the final rule are provided as follows:

There is one change from the proposed rule made in the final rule in response to the public comments. In order to properly align with the Federal Acquisition Regulation (FAR) requirements for approval of the determination and findings for use of incentive- and award-fee contracts, the content of DFARS Procedures, Guidance, and Information (PGI) 216.401(e)(iii) is relocated to DFARS 216.401(d)(i).

Comment: A respondent recommended that approval requests to use other than firm-fixed-price or fixed-price incentive contracts be included in the acquisition strategy, rather than in a separate approval document.

Response: This rule does not create a requirement for a separate approval document; rather, this rule instructs contracting officers to obtain HCA approval of their decision to use a cost-reimbursement type contract when the value of the contract is in excess of $25 million (on or after October 1, 2019). In accordance with FAR 7.105(b)(3), contracting officers are already required to include in an acquisition plan a discussion of the rationale for the selection of contract type, to include details regarding the complexity of the requirements and the associated reasoning essential to support the contract type selection. Departments and agencies have the latitude to establish the internal procedures for obtaining HCA approval of the use of cost-reimbursement contracts, which may include HCA approval of the acquisition plan.

Comment: Respondents expressed concern with increased administrative burdens in the acquisition process, to include the timeliness of required approvals for contract type selection as a result of the rule. The respondents believed the rule will create difficulty for contracting officers when determining contract types based on risk.

Response: The proposed rule implements the statutory requirement to obtain higher-level approval of the use of cost- reimbursement contracts at the specified thresholds. Section 829 of the NDAA for FY 2017 does not prohibit redelegation and FAR 1.102-4(b) authorizes decision making and the accountability for the decisions made to be delegated to the lowest level. As such, this rule delegates the section 829 approval authority to the head of the contracting activity, which should reduce any perceived impacts on administrative lead times. In addition, the Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)) has already determined that the use of cost-reimbursement contracts for research and development in excess of $25 million is approved, subject to a written determination by the contracting officer, as specified at DFARS 235.006(b)(i). This upfront approval should alleviate unnecessary burden associated with research and development contracts, which are frequently and appropriately awarded as cost-reimbursement contracts.

Comment: A respondent expressed concerns that established programs may require cost-reimbursement and time-and-materials contracts when the program does not have a relevant or appropriate cost history, and that defense contractors use firm-fixed-price contracts to obtain high profits and do not disclose actual costs.

Response: The proposed rule is consistent with DoD's current policies for the selection of contract type, which should balance risk fairly between the contractor and the Government, providing the opportunity to earn a reasonable profit/fee for successful delivery of products and services. Per DFARS 216.104, contracting officers are required to consider the principles and procedures in Director, Defense Procurement and Acquisition Policy (DPAP) (now Defense Pricing and Contracting (DPC)), memorandum dated April 1, 2016, entitled “Guidance on Using Incentive and Other Contract Types,” when selecting and negotiating the most appropriate contract type for a given procurement. As stated in the memorandum, “Profit should not be targeted as a cost-cutting measure, but should instead be reflective of actual performance, with higher profit levels tied to better performance and lower levels to poorer performance.”

Comment: A respondent expressed concern that section 829 of the NDAA for FY 2017 requirements permit risks to be placed on the contractor, rather than on the Government.

Response: Section 829 specifically established a preference for fixed-price contracts, including fixed-price incentive fee contracts, in the determination of contract type, and mandated approval of the use of cost-reimbursement contracts at established thresholds and time periods.

Comment: A respondent was concerned that contracting officers would no longer have the flexibility during contract type determination to use tradeoffs (cost, schedule, and performance).

Response: DFARS 216.104, Factors in selecting contract type, requires contracting officers to follow the principles and procedures in the DPAP (now DPC) memorandum, “Guidance on Using Incentive and Other Contract Types,” dated April 1, 2016, when selecting and negotiating the most appropriate contract type for a given procurement. Section 829 requirements will in no way impede the requirement for contracting officers to consider the factors associated with cost, schedule, and performance, as required by FAR 16.104 in the determination of contract type.

Comment: A respondent recommended that all DoD approval requirements for incentive and award-fee contracts be located in the DFARS instead of the PGI for coherency.

Response: DoD agrees with the respondent's comment. In order to properly align with the FAR requirements for approval of the determination and findings for use of incentive- and award-fee contracts, the content of DFARS PGI 216.401(e)(iii) has been relocated to DFARS 216.401(d). The relocated text in DFARS 216.401(d) has been revised to reflect that approval of the HCA is required for cost-reimbursement incentive- or award-fee contracts valued in excess of $50 million or above to align with the section 829 implementation.

Comment: A respondent recommended the waiver authority be revised to the Service Acquisition Executive, Combatant Commander, or USD(A&S). The respondent also stated the Secretary of Defense justification delegating authority to the chief of contracting office should have been included in the proposed rule; to ensure only a DoD official appointed and confirmed by the Senate made the best interest determination applicable to the FMS.

Response: FAR 1.102-4(b), authorizes decision making and the accountability for the decisions made to be delegated to the lowest level. Section 830 does not prohibit redelegation. Therefore, DoD has the discretion to delegate approval authority associated with section 830 waiver approval authority to the chief of the contracting office.

Comment: A respondent recommended deletion of DFARS 225.7301-2, which requires the contracting officer to coordinate through agency channels with the Principal Director of DPC prior to issuance of an FMS solicitation exceeding $500 million. The respondent expressed concern that the requirement created an extension of the peer review process, beyond service contracts in excess of $1 billion, without any statutory basis and without public comment.

Response: The policy guidance at DFARS 225.7301-2 implements internal procedures for contracting officers negotiating sole source major system requirements for U.S. and U.S./FMS procurements contained in the DPAP (now DPC) policy memorandum, Negotiations of Sole Source Major Systems for U.S. and U.S/FMS Combined Procurements, dated June 28, 2018. Internal operating procedures of the Government are not subject to the requirements of the Office of Federal Procurement Policy statute (see section 41 U.S.C. 1707).

Comment: A respondent asked if the changes in the rule associated with FMS are indicative of a Department-wide shift for all contracting. And, if not, the respondent further asked how the proposed rule aligns with DoD's commitment to buy for the foreign customer as it would for itself.

Response: This policy requirement implements section 830 and the DPAP (now DPC) policy memorandum, Negotiations of Sole Source Major Systems for U.S. and U.S./FMS Combined Procurements, dated June 28, 2018. This policy requirement is not applicable to all DoD procurements. Section 830 does not limit DoD's use of established defense acquisition regulations and procedures for FMS.

Comment: A respondent asked if DoD will utilize firm-fixed-price contracts for FMS cases if a more effective acquisition approach is available.

Response: Section 830 specifically requires the use of firm-fixed-price contracts for FMS. This requirement may be waived if the chief of the contracting office determines, on a case-by-case basis, that a different contract type is in the best interest of the United States and American taxpayers.

Comment: A respondent asked what discretion the contracting authority will have to deviate from this default approach or advise the foreign purchaser that different contractual terms would better satisfy their requirement.

Response: The Letter of Offer and Acceptance facilitates the Government and the foreign country's agreement to specified terms and conditions on the FMS. Section 830 specifically requires the use of firm-fixed-price contracts for FMS unless an exception or a waiver applies.

The exception applies only if the foreign country (that is a counterparty to a FMS) has established a preference for a different contract type or requests in writing that a different contract type be used for a specific FMS.

The waiver is determined on a case-by-case basis that a different contract type is in the best interest of the United States and American taxpayers.

Comment: A respondent asked whether the foreign customer will no longer have access to the full DoD purchasing options, but rather just a portion of them given the default contract option being proposed.

Response: Under FMS, the foreign customer is assured that the acquisition process will be subject to DoD standards through every step of the process. DoD standards dictate the defense acquisition system process, which includes the primary guiding principle that acquisitions must be in the best interest of the Government. In accordance with DFARS 225.7301(a) and (b), the Government sells defense articles and services to foreign governments or international organizations through FMS agreements and conducts FMS acquisitions under the same acquisition and contract management procedures used for other defense acquisitions. The agreement is documented in a Letter of Offer and Acceptance as required by the Defense Security Cooperation Agency (DSCA) Security Assistance Management Manual (DSCA 5105.38-M). Section 830 requirements will in no way impede the requirement for contracting officers to consider the factors associated with the FMS requirement process required by the defense acquisition system.

Comment: Two respondents requested DoD provide clarity on the exemption language regarding the “in the best interest of the U.S. and U.S. taxpayer.”

Response: FMS procurements are funded using both foreign funds (which become appropriated funds when deposited into the Department of the Treasury) and appropriated funding for FMS requirements. In both instances they are considered Federal Government funds. This may also include funds expended for Government administrative costs associated with execution of the acquisition process. In accordance with FAR 1.102(d), Statement of guiding principles for the Federal Acquisition System, contracting officers are required to use sound business judgement as a member of the acquisition team to ensure decisions are made ensuring it is in the best interest of the Government, and ultimately the U.S. taxpayer. This rule does not remove the requirement for contracting officers to consider risk when determining the appropriate contract type for FMS. Inherently, a firm-fixed-price contract is used when the requirement is well defined, market conditions are stable, and when financial risks are otherwise insignificant; an example being commercial items. A cost-reimbursement contract is used when a requirement is unable to be adequately defined and uncertainty exists, increasing financial risks. Cost-reimbursement contracts may be used in research and development efforts, major system development, and prototype development, testing or low rate initial production efforts.

Comment: A respondent stated that the use of fixed-price incentive contracts for FMS was not in line with the intent of Congress for section 830 of the NDAA for 2017.

Response: The rule implements the section 830 requirement to use of firm-fixed-price contracts for foreign military sales, unless an exception or a waiver applies. The exception applies only if the foreign country (that is a counterparty to a foreign military sale) has established a preference for a different contract type or requests in writing that a different contract type be used for a specific FMS. The waiver is determined on a case-by-case basis that a different contract type is in the best interest of the United States and American taxpayers.

Comment: A respondent expressed concern that section 830 of the NDAA for 2017 permits risks to be placed on the contractor, rather than the Government.

Response: Section 830 specifically requires the use of firm-fixed-price contracts for foreign military sales, unless an exception or a waiver applies. Inherently, a firm-fixed-price contract is used when the requirement is well defined, market conditions are stable, and when financial risks are otherwise insignificant. Typical use would be for commercial supplies and services. The contractor is required to provide an acceptable deliverable at the time, place, and total price specified in the contract.

Comment: A respondent recommended deletion of 225.7301-2, “Solicitation approval for sole source contracts”, because contracting officers should not have to seek approval to follow the law.

Response: This internal operating procedural policy is established in accordance with the DPAP (now DPC) memorandum, “Negotiations of Sole Source Major Systems for U.S. and U.S./FMS Combined Procurements,” dated June 28, 2018.

Comment: A respondent inquired about a future legislative proposal for the potential repeal of section 830 of the NDAA for FY 2017.

Response: The respondent's inquiry regarding a potential legislative proposal is out of scope of the requirement for the implementation of section 830 of the NDAA for FY 2017.

The following additional changes from the proposed rule are made in the final rule:

1. The requirement to obtain head of contracting activity approval prior to awarding cost-reimbursement contracts in excess of $50 million awarded after October 1, 2018, and before October 1, 2019, is removed from DFARS 216.301-3. This requirement applies to contracts awarded prior to the effective date of this rule.

2. The requirement for HCA approval of cost-reimbursement incentive- or award fee contracts valued in excess of $25 million is relocated to DFARS 216.401(d)(ii).

3. The statement “for contracts entered into on or after October 1, 2014” is removed from DFARS 234.004.

This rule does not propose to create any new DFARS clauses or amend any existing DFARS clauses.

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

This final rule is not subject to E.O. 13771, because this rule is not a significant regulatory action under E.O. 12866.

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

This final rule is necessary to implement section 829 and 830 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017.

Section 829 requires contracting officers to first consider fixed-price contracts when determining contract type and to obtain approval from the head of the contracting activity (HCA) for cost-reimbursement contracts in excess of $25 million to be awarded on or after October 1, 2019. Section 830 directs DoD to prescribe regulations requiring the use of firm-fixed-price (FFP) contracts for foreign military sales (FMS).

The objective of the final rule is to implement the statutory requirements in section 829 and 830 of the NDAA for FY 2017 to: (1) Establish a preference for the use of fixed-price contracts in the determination of contract price; and (2) accelerate the contracting and pricing process of FMS by basing price reasonableness determinations on actual cost and pricing data for purchases of the same product for DoD.

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

The final rule will apply to small entities competing on cost-reimbursement contracts. According to data obtained from the Federal Procurement Data System (FPDS) for FY 2017, DoD awarded 1,674 cost-reimbursement contracts, task orders, and delivery orders, valued over $50 million. Only 58 awards, approximately five percent, were made to unique small businesses.

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

DoD has not identified any alternatives that would meet the requirements of the applicable statutes.

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

Therefore, 48 CFR parts 202, 216, 217, 225, 234, and 235 are amended as follows:

I. Background

DoD published a proposed rule in the Federal Register at 84 FR 39254 on August 9, 2019, to implement section 837 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018 (Pub. L. 115-91). Section 837 requires an amendment to the DFARS to provide for the appropriate use of the should-cost review process of a major weapon system in a manner that is transparent, objective, and provides for the efficiency of the systems acquisition process in the Department of Defense. There were no public comments submitted in response to the proposed rule. There are no changes from the proposed rule made in the final rule.

This rule create a new clause at DFARS 252.215-7015, Program Should-Cost Review, but this clause is not applicable to contracts valued at or below the simplified acquisition threshold or for the acquisition of commercial items, including commercially available off-the-shelf items. Contracts for the development and or production of a major weapon system do not include contracts valued at or below the simplified acquisition threshold and are unlikely to include contracts for commercial items.

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

This rule is not subject to E.O. 13771, because this rule is not a significant regulatory action under E.O. 12866.

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

This action is necessary to implement section 837 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2018. Section 837 requires an amendment to the DFARS to provide for the appropriate use of the should-cost review process of a major weapon system in a manner that is transparent, objective and provides for the efficiency of the systems acquisition process in the Department of Defense.

The objective of this rule is to amend the DFARS to include six elements, at a minimum, regarding the appropriate use of the should-cost review of a major weapon system: (1) A description of the features of the should-cost review process, (2) establishment of a process for communicating with the prime contractor on the program the elements of a proposed should-cost review, (3) a method for ensuring that identified should-cost savings opportunities are based on accurate, complete, and current information and can be quantified and tracked, (4) a description of the training, skills, and experience that Department of Defense and contractor officials carrying out a should-cost review should possess, (5) a method for ensuring appropriate collaboration with the contractor throughout the review process, and (6) establishment of review process requirements that provide for sufficient analysis and minimize any impact on program schedule. The legal basis for these changes is section 837 of the NDAA for FY 2018.

No public comments were received in response to the proposed rule.

This rule only applies to contracts for the development and or production of a major systems, as defined in FAR 2.101. DoD estimates that there are 150 major systems, which include major weapon systems. DoD estimates that the prime contractors for major systems are other than small business and only one program should-cost review occurs per year for major systems, so this rule will have minimal impact on small businesses.

This final rule does not include any new reporting, recordkeeping, or other compliance requirements for small businesses.

There are no known significant alternative approaches to the rule that would meet the objectives. There is no significant economic impact on small entities.

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

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

I. Background

DoD is amending the DFARS to partially implement section 812 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2019 (Pub. L. 115-232). Section 812 repealed more than 60 obsolete Defense acquisition laws, most of which have been completed, have expired, or do not impact the contracting regulations. DoD published a final rule to repeal one statute identified in section 812 at 84 FR 12137 on April 1, 2019. This rule repeals two additional statutes, section 842(b) of the NDAA for FY 2007 (Pub. L. 109-364) and section 1010 of the USA Patriot Act of 2001 (Pub. L. 107-56).

To implement section 842(b) of the NDAA for FY 2007, DoD published a final rule at 74 FR 37626 on July 29, 2009 (DFARS Case 2008-D003). The rule established a one-time waiver authority for contracts under which specialty metals were incorporated into items produced, manufactured, or assembled in the United States prior to October 17, 2006, and where final acceptance by the Government took place after that date, but before September 30, 2010.

To implement section 1010 of the USA Patriot Act of 2001, DoD published a final rule at 67 FR 55730 on August 30, 2002 (DFARS Case 2001-D018). The rule provided an exception to the prohibition on contracting for security functions at a military installation or facility. The exception authorized DoD to award contracts to proximately located local and State governments during the period of time that United States armed forces were engaged in Operation Enduring Freedom and 180 days thereafter. Operation Enduring Freedom officially ended on December 29, 2014; therefore, this authority expired on June 26, 2015.

This rule removes the obsolete language at DFARS 225.7003-4 and 237.102-70(c) that implemented sections 842(b) and 1010, respectively.

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

This rule removes expired authorities for contracted security functions at a military installation or facility at DFARS 237.102-70(c) and a one-time waiver of the specialty metals clause under certain circumstances at DFARS 225.7003-4. This rule does not create or revise any solicitation provisions or contract clauses.

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

This rule is not subject to E.O. 13771, because this rule is not a significant regulatory action under E.O. 12866.

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

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

Therefore, 48 CFR parts 225 and 237 are amended as follows:

I. Background

DoD published a proposed rule in the Federal Register at 84 FR 30986 on June 28, 2019, to modify the clause prescription at DFARS 228.370 to require that DFARS clause 252.228-7005, Accident Reporting and Investigation Involving Aircraft, Missiles, and Space Launch Vehicles, be included in all solicitations and contracts, when applicable. The rule also updates the text of the clause to follow current DFARS convention regarding the use of the word “shall” to indicate a mandatory requirement or action. One respondent provided a public comment on the proposed rule.

A discussion of the comment received and the change made to the rule as a result of the comment is provided as follows:

Comment: The respondent suggested replacing the word “accident” with “mishap” throughout the clause to align with the terminology used in DoD Instruction 6055.07, “Mishap Notification, Investigation, Reporting, and Recordkeeping.”

Response: As the use of the term “mishap” has become more prevalent throughout DoD in lieu of “accident” since the creation of the clause, and the clause is closely associated with the guidance in DoDI 6055.07, the clause title and text is updated to include the word “mishap” instead of “accident” in the final rule.

This rule does not create any new provisions or clauses, nor does it change the applicability of the affected clause to contracts at or below the simplified acquisition threshold or to the acquisition of commercial items, including those for commercially available off-the-shelf items.

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

This rule is not subject to E.O. 13771, because this rule is not a significant regulatory action under E.O. 12866.

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

The Department of Defense is amending the Defense Federal Acquisition Regulation Supplement (DFARS) to amend the clause prescription at DFARS 228.370 to require that DFARS clause 252.228-7005, Accident Reporting and Investigation Involving Aircraft, Missiles, and Space Launch Vehicles, be included in all solicitations and contracts involving the manufacture, modification, overhaul, or repair of these items; update the text of the clause to follow current DFARS convention regarding the use of the word “shall” to indicate a mandatory requirement or action; and update the clause title by removing “Accident” and replacing it with “Mishap”.

The objective of this rule is to ensure contractor cooperation: In the early reporting of accidents that involve an aircraft, missile, or space launch vehicle being manufactured, modified, repaired, or overhauled by the contractor in connection with the contract; and, with the Government investigation of such accidents. The modification of this DFARS clause supports a recommendation from the DoD Regulatory Reform Task Force. No public comments were received in response to the initial regulatory flexibility analysis.

This rule requires, instead of permits, the inclusion of the clause in all applicable contracts, and updates the text of the clause to clarify its intent. It is presumed that the clause is already being included in all applicable contracts. The rule simply clarifies the Government's expectation on the usage of the clause.

Based on fiscal year 2018 data from the Federal Procurement Data System (FPDS), the Government awarded approximately 960 noncommercial contracts and orders for services under the following product service codes:

• AC16—R&D—Defense System: Aircraft (Management/Support);

• AC26—Defense System: Missile/Space Systems (Management/Support);

• AR96—R&D—Space: Other (Management/Support);

• J014—Repair, and Rebuilding of Equipment—Guided Missiles;

• J015—Maintenance, Repair, and Rebuilding of Equipment—Aircraft and Airframe Structural Components;

• J018—Maintenance, Repair, and Rebuilding of Equipment—Space Vehicles;

• K014—Modification of Equipment—Guided Missiles;

• K015—Modification of Equipment—Aircraft and Airframe Structural Components; and,

• K018—Modification of Equipment—Space Vehicles.

Of the 960 contracts and orders awarded, approximately 16% of the awards were made to 54 unique small businesses entities. FPDS does not provide additional information on the types of support services provided under the contract, which can include manufacture, modification, overhaul, or repair work; therefore, the number of small business contractors impacted by this rule is expected to be less than the number of entities identified by the data.

This rule does not include any new reporting, recordkeeping, or other compliance requirements for small businesses. This rule does not duplicate, overlap, or conflict with any other Federal rules. There are no known significant alternative approaches to the rule that would meet the stated objectives.

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

Therefore, 48 CFR parts 228 and 252 are amended as follows:

Background Pacific Whiting

Pacific whiting (Merluccius productus) is a very productive species with highly variable recruitment (the biomass of fish that mature and enter the fishery each year) and a relatively short life span compared to other groundfish species. Pacific whiting has the largest annual allowable harvest levels (by volume) of the more than 90 groundfish species managed under the Pacific Coast Groundfish Fishery Management Plan (FMP), which governs the groundfish fishery off Washington, Oregon, and California. The coastwide Pacific whiting stock is managed jointly by the United States and Canada, and mature Pacific whiting are commonly available to vessels operating in U.S. waters from April through December. Background on the stock assessment, and the establishment of the 2019 Total Allowable Catch (TAC), for Pacific whiting was provided in the final rule for the 2019 Pacific whiting harvest specifications, published May 10, 2019 (84 FR 20578). Pacific whiting is allocated to the Pacific Coast treaty tribes (tribal fishery) and to three non-tribal commercial sectors: The catcher/processor cooperative (C/P Coop), the mothership cooperative (MS Coop), and the Shorebased Individual Fishery Quota (IFQ) Program.

This document announces the reapportionment of 40,000 metric tons (mt) of Pacific whiting from the tribal allocation to the non-tribal commercial sectors on September 13, 2019. Regulations at 50 CFR 660.131(h) contain provisions that allow the Regional Administrator to reapportion Pacific whiting from the tribal allocation, specified at 50 CFR 660.50, that will not be harvested by the end of the fishing year to other sectors.

For 2019, the Pacific Coast treaty tribes were allocated 77,251 mt of Pacific whiting. The best available information on September 13, 2019, indicated that less than 5,000 mt of the 2019 allocation had been harvested, and at least 40,000 mt of the tribal allocation would not be harvested by December 31, 2019. As required under the 2017 Endangered Species Act (ESA) Section 7(a)(2) biological opinion on the effects of the Pacific Coast Groundfish Fishery Management Plan on listed salmonids, NMFS considered the number and bycatch rate of Chinook salmon taken by the Pacific whiting fishery sectors prior to reapportionment. Based on the best available information in early September 2019, NMFS determined there was little risk that the reapportionment would cause the Pacific whiting sector fisheries to exceed the guideline limit of 11,000 Chinook salmon under current regulations and practices. In early September, incidental take of Chinook salmon by the non-tribal sector was 12 percent of the guideline limit. While the incidental take of Chinook salmon was higher compared to the same period in the previous two years, the total take this year is still well below the guideline limit.

To allow for increased utilization of the resource, on September 13, 2019, NMFS reapportioned 40,000 mt from the Tribal sector to the Shorebased IFQ Program, C/P Coop, and MS Coop in proportion to each sector's original allocation. Reapportioning this amount is expected to allow for greater attainment of the TAC while not limiting tribal harvest opportunities for the remainder of the year. NMFS provided notice of the reapportionment on September 13, 2019, via emails sent directly to fishing businesses and individuals, and postings on the NMFS West Coast Region website. Reapportionment was effective the same day as the notice.

The amounts of Pacific whiting available for 2019 before and after the reapportionment are described in the table below.

NOAA's Assistant Administrator for Fisheries (AA) finds that good cause exists for this notification to be issued without affording prior notice and opportunity for public comment pursuant to 5 U.S.C. 553(b)(B), because such notification would be impracticable and contrary to the public interest. As previously noted, NMFS provided actual notice of the reapportionment to fishery participants at the time of the action. Prior notice and opportunity for public comment on this reapportionment was impracticable because NMFS had insufficient time to provide prior notice between the time the information about the progress of the fishery needed to make this determination became available and the time at which fishery modifications had to be implemented in order to allow fishery participants access to the available fish during the remainder of the fishing season. For the same reasons, the AA also finds good cause to waive the 30-day delay in effectiveness for these actions, required under 5 U.S.C. 553(d)(3).

These actions are authorized by §§ 660.55 (i), 660.60(d), and 660.131(h) and are exempt from review under Executive Order 12866.

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

The 2019 ITAC BSAI sculpins was established as 4,250 mt, the 2019 TAC of AI Greenland turbot was established as 169 mt, the 2019 TAC of BS “other rockfish” was established as 684, the 2019 TAC of BSAI arrowtooth flounder was established as 10,200 mt, the 2019 TAC of BSAI sharks was established as 145 mt, the 2019 TAC of BSAI shortraker rockfish was established as 358 mt, and the 2019 TAC of BS/EAI blackspotted/rougheye rockfish was established as 95 mt by the final 2019 and 2020 harvest specifications for groundfish of the BSAI (84 FR 9000, March 13, 2019) and reserve releases (84 FR 49678, September 23, 2019 and 84 FR 57653, October 28, 2019). In accordance with § 679.20(a)(3) the Regional Administrator, Alaska Region, NMFS, has reviewed the most current available data and finds that the ITACs and TACS for AI Greenland turbot, BS “other rockfish”, BSAI arrowtooth flounder, BSAI sculpins, BSAI sharks, BSAI shortraker rockfish, and BS/EAI blackspotted/rougheye rockfish need to be supplemented from the non-specified reserve to promote efficiency in the utilization of fishery resources in the BSAI and allow fishing operations to continue.

Therefore, in accordance with § 679.20(b)(3), NMFS apportions from the non-specified reserve of groundfish to ITACs and TACs in the BSAI management area as follows: 10 mt to AI Greenland turbot, 100 mt to BS “other rockfish”, 1,252 mt to BSAI arrowtooth flounder, 1,358 mt to BSAI sculpins, 10 mt to BSAI sharks, 42 mt to BSAI shortraker rockfish, and 10 mt to BS/EAI blackspotted/rougheye rockfish. These apportionments are consistent with § 679.20(b)(1)(i) and do not result in overfishing of any target species because the revised ITACs and TACs are equal to or less than the specifications of the acceptable biological catch in the final 2019 and 2020 harvest specifications for groundfish in the BSAI (84 FR 9000, March 13, 2019).

The harvest specification for the 2019 ITACs and TACs included in the harvest specifications for groundfish in the BSAI are revised as follows: 179 mt for AI Greenland turbot, 784 mt for BS “other rockfish”, 11,452 mt for BSAI arrowtooth flounder, 5,608 mt for BSAI sculpins, 155 mt for BSAI sharks, 400 mt for BSAI shortraker rockfish, and 105 mt for BS/EAI blackspotted/rougheye rockfish.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA) finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) and § 679.20(b)(3)(iii)(A) as such a requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the apportionment of the non-specified reserves of groundfish to the AI Greenland turbot, BS “other rockfish”, BSAI arrowtooth flounder, BSAI sculpins, BSAI sharks, BSAI shortraker rockfish, and BS/EAI blackspotted/rougheye rockfish ITACs and TACs. Immediate notification is necessary to allow for the orderly conduct and efficient operation of this fishery, to allow the industry to plan for the fishing season, and to avoid potential disruption to the fishing fleet and processors. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of November 19, 2019.

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