Background

This rule amends changes to the Common Crop Insurance Regulations, Sugar Beet Crop Insurance Provisions that were published by FCIC on September 10, 2018, as a notice of final rule with request for comment rulemaking in the Federal Register at 83 FR 45535-45539. The public was afforded 30 days to submit written comments and opinions.

Comments were received from 15 commenters. The commenters included persons or entities from the following categories: Insurance company, insurance agent, farmer, financial, producer group, academic, trade association, and other. The public comments received regarding the final rule with request for comment and FCIC's responses to the comments are as follows:

Comment: Commenter suggested revising the definition of “Raw sugar” to “Percentage of raw sugar” since that term is frequently used.

“Percentage of raw sugar—Quantity of sugar that has not been extracted from the sugar beet crop and is determined from analytical tests of samples performed by the processor or other accredited laboratories.”

This revised definition clarifies how the percentage is determined and by whom, and includes the ability for alternative testing of samples by qualified facilities, which might be necessary in cases of unharvested appraisals where sampling and testing might not be readily performed by the processor.

Response: FCIC is adding the following definition for percentage of raw sugar, “quantity of sugar determined from analytical tests of samples performed by the processor or other laboratories approved by us.”

Comment: A commenter stated that Section 1 is revising the definition of Practical to Replant and seems to strengthen the idea of only replanting when practical to replant and will be good for the growers.

Another commenter stated that revising the definition of practical to replant to align with the practicality to replant and should be an improvement.

Response: FCIC thanks the commenter and appreciates their input.

Comment: Commenter stated that the definition of “Initially planted” can be deleted since the term is no longer used in the Sugar Beet CP (part of the “Insurance Period” details that have been removed in section 9).

Response: FCIC is deleting the definition of initially planted.

Comment: Commenter stated that definitions for “Pound” and “Ton” should be added to align with other crop provisions that use pounds as the unit of measure, and tons. This also will function in conjunction with the proposed definition of “Percentage of raw sugar” (see under “raw sugar” below) and the production's unit of measure, as indicated in other suggestions/recommendations provided in this document.

• “Pound—Sixteen ounces avoirdupois.”

• “Ton—2,000 pounds.”

Response: FCIC is adding the definition of pound and ton.

Comment: Commenter stated the definition of “Processor contract” replacing the definition of “sugar beet processor contract” in the current Sugar Beet CP, now begins: “A written agreement between you and the processor, executed on or before the acreage reporting date, which is in effect for the crop year, containing at a minimum: . . .” [highlighting indicates the changes from the “sugar beet processor contract” definition].

• As written, this could be misunderstood as having the phrase “. . . which is in effect for the crop year . . .” apply to the acreage reporting date rather than to the “written agreement” (processor contract). One way to make this clearer would be something like: “. . . executed on or before the acreage reporting date and in effect for the crop year . . .”

• Also consider if this should use a term other than “written agreement”, which generally has a different meaning for crop insurance purposes, as in section 7(a)(4) and elsewhere. [One possibility: “An agreement, in writing, between . . .”]

Response: FCIC is replacing the definition and references to the term “processor contract” with the definition/term “production agreement” which removes the requirement for the contract to include a price or formula for a price based on third party data. This better reflects sugar beet contracts because there is no third party data source for prices and not all production agreements include a price.

Comment: Commenter suggested revising the definition of “Raw sugar” to “Percentage of raw sugar” since that term is frequently used.

• “Percentage of raw sugar—Quantity of sugar that has not been extracted from the sugar beet crop and is determined from analytical tests of samples performed by the processor or other accredited laboratories.”

• This revised definition clarifies how the percentage is determined and by whom, and includes the ability for alternative testing of samples by qualified facilities, which might be necessary in cases of unharvested appraisals where sampling and testing might not be readily performed by the processor.

Response: FCIC is adding the definition for average percentage of raw sugar based on this comment to be the quantity of sugar determined from analytical tests of samples performed by the processor or other laboratories approved by the Approved Insurance Provider (AIP). FCIC is also revising section 13(d), to allow the average percentage of raw sugar to be determined by laboratories approved by the AIP, in addition to tests performed by the processor. Sections 13(d)(1) and 13(e)(1) will also clarify that raw sugar content tests may be based on the insured's previous tests performed by the processor or other laboratories approved by the AIP.

Comment: A commenter stated that a change that is not in here, but should be, is an optional unit provision based on each individual processor contract per field. With each field being separately contracted, this is an easy change to make. Units based on section lines may make sense for dryland bulk commodity crops with a low per acre value but are not appropriate for a specialty crop like sugar beets which often have many smaller fields in the same section with each exposed to different risks due to their location in that unit.

Another commenter stated that one change that the commenter has repeatedly requested but is not in here is an optional unit provision based on each individual processor contract per field. With each field being individually identified by its own contract number this should be easily implemented and should increase participation.

Response: This issue has been reviewed extensively by FCIC. In the situation the commenter outlined, their processor contracts are by field, and they want insurance by field. This would allow a producer to separate their Actual Production History (APH) by field instead of having an average production for the unit. This could add complexity to the program and significantly increase the frequency of losses, which could require significant premium rate increases to maintain actuarial soundness. Further, processors, contractors, and grower groups have been asked to supply the data to show revenue increases and benefits to the program supporting this proposed unit structure. To date, nothing has been provided.

Comment: Commenter stated that Insurance Providers have some concerns on how this change from “standardized tons” to “pounds of raw sugar” will affect the insureds' APH. The conversion from standardized tons to pounds of raw sugar is not clear at this time. Insureds will need to recertify their production history to align with the conversion from standardized tons to pounds of raw sugar.

The commenter assumes calculations are as follows:

Current procedure:

Assume that 150 tons of beets harvested on 20 acres with a 14.5% sugar content.

Sugar percentage is 17.2% in the special provisions.

14.5% / 17.2% = .843 factor.

150 tons * .843 factor = 126.4 tons.

126.4 tons / 20 acres = 6.3 standardized tons/acre that gets reported for APH.

Actual sugar content of beets would be:

150 tons * 2,000 lbs. = 300,000 lbs. of beets.

300,000 lbs. * 14.5% sugar = 43,500 lbs. of actual raw sugar in the beets.

43,500 lbs./20 acres = 2,175 lbs./acre actual raw sugar per acre.

Please clarify which of the following methods will be utilized for converting existing APH databases to pounds of raw sugar and note the difference in the APH conversion and the actual sugar content calculations in this example.

1. (6.3 tons / acre APH * 2,000 lbs.) * 17.2% = 2,167.2 lbs. raw sugar/acre APH.

Or convert total production for the 20 acres:

2. 126.4 standardized tons * 2,000 lbs. = 252,800 lbs. of beets.

252,800 lbs. * 17.2% sugar from the SP = 43,481.6 lbs. of raw sugar.

43,481.6 lbs. of raw sugar / 20 acres = 2,174 lbs. APH.

The example above is based on information included in the Evaluations and Recommended Improvements for the Sugar Beets Crop Insurance Program which was submitted by Watts and Associates, Inc.

Plant Count Method Appraisals (Weight Method not applicable until the factory accepts sugar beets) completed prior to the processor accepting beets at the factory are not based on the percent of raw sugar present in the sugar beets at the time of the appraisal. Guidance is needed in the policy to convert appraised production based on the plant count method to “pounds of raw sugar.”

Response: The conversion is based on total production, thus example number 2 is the correct calculation. Additionally, FCIC has developed and released procedures and training materials for insurance companies detailing how to apply this conversion for insured producers including the Frequently Asked Questions at https://www.rma.usda.gov/News-Room/Frequently-Asked-Questions/Sugar-Beet.

Comment: A commenter stated that section 3 is changing standardized tons to pounds of raw sugar. It is unclear to the commenter how this calculation of pounds of raw sugar is made or how well it correlates to standardized tons.

Another commenter stated the commenter broadly supports FCIC's proposal to change the basis of insurance from “standardized tons” to pounds of raw sugar, simplifying the program and better aligning it with commercial practice. The commenter did raise a concern, however, regarding the implementation of this important change. The shift from standardized tons to pounds of raw sugar will be very visible to farmer-producers and could cause considerable confusion, particularly in its first year. Insurance coverage will look different. The mathematical relationship between a producer's “old” coverage and “new” coverage may be far from obvious at first. Even traditional price elections may be confusing when now stated in the terms of pounds versus tons, as growers, agents, and other stakeholders try to make comparisons with prior-year levels.

To avoid this problem, the commenter believes a well-planned, well-coordinated public outreach and education process will be essential, including outreach to farmers so they will understand the new system, training for agents so they can effectively explain it, training for AIP loss adjustors and underwriters to minimize mistakes, and the development of simple-to-use tools or applications allowing producers quickly and easily to compare prior coverage in “standardized tons” to their new coverage in raw sugar pounds.

The commenter would be pleased to assist RMA in this process, be it in arranging outreach to the commenter's farmer members, getting producer feedback on training materials, developing Question-and-Answer sheets, providing farmer-level input for web-based applications, or in any other manner that might be helpful to the agency and the commenter's members.

Response: FCIC has developed and released procedures and training materials for insurance companies detailing how to apply this conversion for insured producers including the Frequently Asked Questions at https://www.rma.usda.gov/News-Room/Frequently-Asked-Questions/Sugar-Beet and the Sugar Beet Loss Adjustment Standards Handbook at https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Loss-Adjustment-Standards---25000/Sugar-Beet/2019-25450-1H-Sugar-Beet-Loss-Adjustment-Standards.ashx. The change in unit of measure from standardized tons to pounds of raw sugar was made to better align with the sugar industry in how producers are paid and for program consistency with sugarcane. Below is a comparison example of the new unit of measure (pounds of raw sugar), followed by previous unit of measure (standardized tons), and final example is converting standardized tons to pounds of raw sugar. The examples show the conversions and how the end guarantee should be the same or within a few pounds of their previous APH guarantee. The new APH calculation of taking net tons to pounds of raw sugar: (20 net paid tons * 2,000 lbs.) * 0.180 insured's average percent of raw sugar) = 7,200 pounds of raw sugar. The previous APH calculation of taking net tons to standardized tons: [20 net tons * (0.180 / 0.170)] = 21.2 standardized tons. The conversions from standardized tons to pounds of raw sugar is calculated: (21.2 standardized tons * 2,000 pounds) * 0.170 = 7,208 pounds of raw sugar.

Comment: Commenter stated in regard to Section 3; changing standardized tons to pounds of raw sugar. Commenter would like clarification of how this calculation will be made, and how well it will correlate to standardized tons. Also concerned as to how an unharvested portion of a field would be appraised for APH on a raw sugar basis.

Another commenter is concerned as to how an unharvested portion of a field would be appraised for APH purposes on a raw sugar basis.

Response: FCIC has developed and released procedures and training materials for insurance companies detailing how to apply this conversion for insured producers as well as how to appraise unharvested acreage.

The change in unit of measure from standardized tons to pounds of raw sugar was made to better align with the sugar industry in how producers are paid and for program consistency with sugarcane. Below is a comparison example of the new unit of measure (pounds of raw sugar), followed by previous unit of measure (standardized tons), and final example is converting standardized tons to pounds of raw sugar. The examples show the conversions and how the end guarantee should be the same or within a few pounds of their previous APH guarantee. The new APH calculation of taking net tons to pounds of raw sugar: (20 net paid tons * 2,000 lbs.) * 0.180 insured's average percent of raw sugar) = 7,200 pounds of raw sugar. The previous APH calculation of taking net tons to standardized tons: [20 net tons * (0.180 / 0.170)] = 21.2 standardized tons. The conversions from standardized tons to pounds of raw sugar is calculated: (21.2 standardized tons * 2,000 pounds) * 0.170 = 7,208 pounds of raw sugar. Additional examples of the conversion can be found in the Frequently Asked Questions at https://www.rma.usda.gov/News-Room/Frequently-Asked-Questions/Sugar-Beet.

Appraising unharvested production is located in the Sugar Beet Loss Adjustment Standards Handbook in PART 4 Appraisals. The appraisal worksheet instructions are located in Exhibit 3. This information can be found at https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Loss-Adjustment-Standards---25000/Sugar-Beet/2019-25450-1H-Sugar-Beet-Loss-Adjustment-Standards.ashx.

Comment: A commenter requested to recognize that the loads from each day of early harvest must be calculated separately.

As of now, RMA says it is going to convert databases using the sugar factor from the 2018 Special Provisions. This may be to the producer's benefit. The agent should have already adjusted the tons for percent sugar when they completed the production report. When you run the numbers, we have identified cases where the pounds of sugar production will be spot-on and other times when the pounds of sugar will increase for the producer from what would be if you multiplied tons by actual sugar.

RMA has indicated that they will distribute a draft of the Special Provisions for 2019 for industry review.

Response: FCIC is aware that each day of early harvest will have to be calculated separately. Whenever the conversion is done there are some instances where the production goes up slightly, some that stay the same, and some that go down slightly. The difference occurs because of rounding. The insured has the option to do the conversion of standardized tons to pounds of raw sugar, or they can recertify their previous years' production in pounds of raw sugar.

Comment: The commenter stated that section 3 is also removing the stage guarantees. The commenter thinks this is a good thing for their growers.

Another commenter is pleased to see the removal of stage guarantees in the new Sugar Beet Crop Insurance Provisions. Having played a lead role in urging RMA originally to institute a Sugar Beet Stage Guarantee Removal Pilot Program over a decade ago, the commenter believes the consistent high levels of participation in the program underscore the general acceptance of the concept by sugar beet producers. Sugar beets are one of the last major crops to see stage guarantees eliminated from their coverage, reflecting an updated underwriting approach, and the commenter views this as an important step forward for the program.

Response: FCIC thanks the commenters and appreciates their input.

Comment: Commenters stated in regard to 3(a): Consider deleting this subsection, which appears to be unnecessary.

• CCIP Basic Provisions section 3(b)(1)(iii) already states that the insured must select the same “Percentage of the available price election . . .” and “. . . If different prices are provided by type or variety, . . . the same price percentage will apply to all types and varieties.”

• Also, should a separate and unique price election be offered for the certified organic practice, then defaulting to the Basic Provisions will ensure that there is no conflict with the crop provisions whereby more than one price election may be applicable, albeit each at the same percentage to the maximum price offered.

Response: FCIC thanks the commenter and is deleting section 3(a).

Comment: Commenter stated in regard to 3(b) [which would be re-designated as section 3 if 3(a) is deleted]: Consider revising this to: “The unit of measure for production is pounds of raw sugar, determined by multiplying the quantity of sugar beets by the percentage of raw sugar.” This clarifies the determination of “pounds of raw sugar,” regardless of whether the production amount pertains to the guarantee or appraisal/indemnity calculations.

Response: FCIC is re-designating section 3(a) as section 3. Percentage of raw sugar is already defined and there is procedure in place referring to the calculations.

Comment: Instead of “reserving” this section, commenter suggests using it to add the following language that is similar to other crop policies that require the insured crop to be grown under a processor contract, and will facilitate the insurance provider's timely determination of proper acreage and liability/coverage:

“Report of Acreage. In addition to the requirements of section 6 of the Basic Provisions, you must provide a copy of all sugar beet processor contracts to us on or before the acreage reporting date.”

For example: If a sugar beet contract pertains to 40 acres of sugar beets and the acreage report shows 41.2 acres planted, then the insurance provider has the proactive opportunity to verify with the sugar beet processor whether or not all production from the 41.2 acres of planted sugar beets will be accepted by the processor and if an amended contract is needed.

Another commenter stated that the deleted phrase that is being moved to the “processor contract” definition states that the processor contract must be executed on or before the acreage reporting date. Please consider adding language requiring that the insured “. . . must provide a copy of all processor contracts to us [the AIP] on or before the acreage reporting date . . .” as in section 6 [Report of Acreage] in the Processing Tomato Crop Provisions [the rest of that reads: “. . . in all counties, unless otherwise specified in the Special Provisions.”].

Section 12(b) of the Sugar Beet CP requires the insured to “. . . provide a copy of your processor contract, or corporate resolution if you are the processor” as part of the insured's “Duties In The Event of Damage or Loss”, but the Sugar Beet policy does not have such a requirement when there is not a claim.

The requirement to provide a copy of the processor contract(s) whether or not there is a claim could be set up as in the Processing Tomato CP (and others), with the addition of section 6, Report of Acreage, since the current Sugar Beet section 6 is being removed.

Response: FCIC has replaced the reserved section 6 with report of acreage detailing the requirement that the insured provide a copy of all production agreements.

Comment: Commenter stated in regard to 7(a)(3): [Revised to replace “. . . a sugar beet processor contract executed before the acreage reporting date . . .” with “. . . a contract . . .”, with the deadline now included in the new definition of “processor contract”.] Commenter Suggests “. . . a processor contract . . .” to match the definition and avoid any confusion with a crop insurance “contract” as defined in the Basic Provisions.

Response: FCIC agrees and has replaced contract with production agreement in section 7(a)(3).

Comment: Commenter stated in reference to 7(b)(4): [Ed.] Consider adding quotation marks around the word “processor”, as done in 7(b)(1).

Response: FCIC revised by adding quotation marks around the word processor.

Comment: A commenter requested that sugar beets that are planted in back to back years be insurable. The commenter stated that this would be most helpful for the commenter's farm in Imperial Valley, CA where the commenter's alternate crops to plant are limited.

Another commenter is requesting sugar beets to be insurable back to back.

Another commenter stated that they are writing to request the FCIC/RMA consider allowing Sugar Beet fields to be insurable if grown on acreage that was planted in the most recent previous crop year. Currently in Imperial County, CA it is a common practice to grow Sugar Beets on the same field twice in consecutive years.

The commenter stated that this is an industry standard, and the Sugar Processor allows this, and considers this a standard farming practice. All acreage farmed on a field in the first year, and on the following crop year are of the same quality and tonnage. Therefore, any acreage farmed on back to back fields should not be excluded from the Insurance policy.

Another commenter stated to please allow for Sugar Beets to be insurable back to back years. The beet companies allow us to grow back to back because it is within proper plant health standards, and therefore we'd like to be able to be insured for each and every crop that is within reasonable health standards. If the beet company itself beliefs it's healthy and safe to grow back to back, the commenter is not sure why the insurance standards would be different.

Another commenter stated that the commenter has been growing sugar beets in California for the last 40 years. In all of those years, it has been an accepted cultural practice to grow them in back to back years. The sugar companies that the commenter contracts with do not prohibit the commenter from that practice. The commenter sees no reason why the FCIC should deny the commenter's ability to obtain crop insurance on those fields that are planted back to back.

Another commenter stated that they are requesting Sugar Beets to be insurable in back to back years. This is very important to the commenter's farming operations and planning. The commenter believes the request speaks for itself on why it is so important.

Two commenters stated that they would like to see the option for Sugar Beets to be insurable for back to back years.

Response: The Crop Provisions as written in sections 8(a)(1) and 8(a)(3) do allow for back to back planting if it is specified in the Special Provisions for the county and if it is an allowable rotation outlined in the Special Provisions. These requests have been forwarded to the regional offices for review and further consideration. Other local or county-based concerns can be addressed to the RMA regional office. Any interested person may find contact information for the applicable regional office on RMA's website at https://www.rma.usda.gov/RMALocal/Field-Offices/Regional-Offices.

Comment: The commenter stated that in regard to section 9(b) that they approve of the deletion of this language in 9(b) that dealt with the end of insurance period for all units being when production delivered equals the amount of production stated in the contract. This language was unclear, difficult to administer and the commenter was unsure what exactly it accomplished.

Another commenter stated that the commenter agrees with deleting the language currently in 9(b) stating that “. . . the insurance period ends for all units when the production delivered to the processor equals the amount of production stated in the sugar beet processor contract.” This language was difficult to administer and unclear as to what exactly it accomplished.

Response: FCIC thanks the commenter and appreciates their input.

Comment: The commenter is pleased to see the inclusion of provisions providing RMA with greater flexibility to update insurance dates and other factors. In particular, the commenter appreciates RMA's responsiveness in recent years to shifting the basis for calculating replant payments from a formula tied to annual price elections to a dollar amount based on actual costs—a process now formalized in the new policy. Such steps toward greater flexibility and responsiveness are always important and appreciated.

Response: FCIC thanks the commenter and appreciates their input.

Comment: The term “final stage” remains in the language. It should be removed. It should state “at least 90 percent (90%) of the production guarantee . . .”

Response: FCIC has removed the language “final stage”.

Comment: Commenter stated clarification is needed on how the appraisal would be calculated when being completed for a replant determination to know if the appraised production would exceed 90% of the insured's guarantee. Currently the calculation is based on tons with no conversion for pounds of raw sugar.

Response: FCIC has updated the plant count appraisal method in the procedures to be calculated in pounds of raw sugar per acre.

Comment: Commenter recommends the following edits be made to 13(d), to clarify and reference defined terms.

“Harvested production or unharvested production that is appraised after the earliest delivery date that the processor accepts harvested production and that meets the minimum acceptable standards contained in the processor contract or corporate resolution will be converted to pounds of raw sugar by multiplying the tons of such production by 2,000 and by the average percentage of raw sugar to determine the production to count. The average percentage of raw sugar will be determined from tests performed at the time of crop delivery or sample acquisition (appraisal).

(1) If individual tests of raw sugar content are not made at the time of delivery, the average percentage of raw sugar may be based on the results of previous tests performed by the processor during the crop year if it is determined that such results are representative of the total production.

(2) If not representative, the average percentage of raw sugar will equal the raw sugar content percent shown in the actuarial documents.”

Following the recommendation to recognize other institutions that may determine the `percentage of raw sugar', stating who performs the analytic tests is not necessary within this section since they are identified within the revised/recommended definition. `Unharvested' production as determined by an appraisal would not constitute crop delivery; thus clarification is added to specify the time frame associated with percentage of raw sugar determinations for samples obtained from field appraisals. This also keeps consistent usage of the term `percentage of raw sugar'. Recommend referring to the `actuarial documents' rather than the `Special Provisions' for where the county average percentage of raw sugar can be found.

Response: FCIC revised to further clarify that the average percentage of raw sugar will be determined from tests performed by the processor or other laboratories approved by us (the AIP) at the time of crop delivery or sample acquisition (appraisal).

FCIC further clarified that if individual tests of raw sugar content are not made at the time of delivery, the average percent of raw sugar may be based on the results of your (the insured's) previous tests.

Comment: The provision notes that the raw sugar percentage will be included to the extent that a raw sugar test may not be performed or deemed unacceptable. Commenter would like to have the latter scenario more clearly clarified under the rules as well. It's not readily apparent to the commenter under what circumstances it would be “deemed unacceptable” nor is it clear the extent to which such a distinction could harm the commenter's production calculations in a given year. Please clarify what you mean.

Response: FCIC thanks the commenter and appreciates their input. FCIC will not further define “deemed unacceptable” as this is not currently in the crop provisions.

Comment: Commenter stated regarding section 13(d)(2), and in particular the phrase “. . . the raw sugar content percent shown in the Special Provisions”, it will be imperative for RMA to review and update this parameter (as currently contained within the actuarial documents) for each and all sugar beet county programs. For some states, e.g., Idaho, Oregon, Washington (Pacific Northwest), Montana, North Dakota and Wyoming, their 2018 percent sugar values are established on a regional basis. A region-wide percent sugar better aligns each policyholder's determined standard tons with a single nation-wide price election. In contrast, other states, e.g., Minnesota, have variable county percent sugar values, which appear out of sync with their recent base period average. As the primary function of the `county average percent sugar' has changed from being a key component in adjusting to standard tons, to instead as a default value of `last resort', it is important for each county's percentage of raw sugar value to be current and reflective of the actual county instead of the region or district.

Response: FCIC reviews the county average percentage sugar at regional level with data based on RMA history, sugar percentage data from the sugar beet processor, and NASS data. Regional Offices also consider APH and loss implications in order to ensure this percentage is actuarially sound. Additionally, FCIC only will use this percentage in total loss determinations.

Comment: A commenter stated that in regard to section 13(d)(1) and 13(e)(1): Both state based on previous tests performed by the processor during the crop year. The commenter questions if that is based on all beets delivered to processor from all producers (in the county or otherwise) or just from the producer in question. Although this language was in the previous provisions it still seems unclear what basis is to be used to ascertain the percent of raw sugar that should be used in these situations.

Another commenter stated in regard to 13(d)(1) & (e)(1): These both include the statement “. . . based on the results of previous tests performed by the processor during the crop year . . .” It is unclear if that is based on all beets delivered to processor from all producers (in the county or otherwise) or just from the producer in question. Although this language was in the previous crop provisions, it still seems unclear what basis is to be used to ascertain the percent of raw sugar that should be used in these situations.

Response: FCIC is revising the Crop Provisions to specify that the previous tests are based on the previous tests from the insured producer.

Comment: Commenter stated in regard to section 13, adding an early harvest adjustment, it appears to apply a penalty to the farmer when they are required by the processor to harvest a portion of a crop early, especially when damage has occurred from an insurable event. There is not clear enough guidance to insurance providers to have even application of these provisions, too much left to the discretion of the insurers could weaken coverage and participation.

Another commenter stated that section 13 is adding an early harvest adjustment. This change seems to apply a penalty to the commenters' growers when the growers are required by the processor to harvest some beets early, especially when there is damage from an insurable loss. An argument can easily be made that this provision will provide less clear guidance to insurance providers rather than clearer guidance resulting in uneven application of the provisions. It seems this is a blatant attempt to limit the loss payments to growers.

Another commenter stated in reference to 13(f)(3): It is unclear if the early harvest adjusted production should be limited to APH. If the producer is having a good year, he/she will not be happy with that. If part of the unit is early harvested, the early harvested acres could be capped at the APH of the remaining harvested acres. If all of the unit is early harvested, the sugar content from previous tests performed by the processor could be used. This may not include lost tonnage, however. Maybe capping at APH is ok.

Another commenter stated that while “early harvest factor” allows producers to add a one-percent-per-day adjustment to their “production to count” for crops harvested prior to “full maturity,” it cannot result in an annual “production to count” in excess of the insured crop's current APH. The commenter suggests that this APH cap be removed or adjusted.

The commenter's principal concern is that an APH cap fails to account for the fact that sugar beet yields, measured both in tonnage and sugar content, have been rising sharply in recent years due to adoption of new technologies, principally new bioengineered seeds and seed treatments. As a result, sugar beet APHs, which generally reflect a ten-year average of yields, often lag well behind current crop potentials. For instance, according to USDA's National Agricultural Statistical Service (NASS), over the past dozen years, sugar beet yields have grown (a) from a national average 25.5 to 32.8 tons per acre of beets and (b) from 3.79 to 4.87 tons per acre of actual sugar, increases of over 28 percent overall and of over 2.3 percent per year. In some regions, the growth has been even sharper.

This lag in APHs behind production trends has been recognized by FCIC though its approval of the privately-developed Trend-Adjusted APH Yield program for a number of crops.

Capping the impact of an early harvest adjustment at a farmer's current APH thus creates an unintended penalty. It creates a ceiling below a crop's actual potential, and it hinders the ability of a farmers yield history to catch up with rising yield trendlines. In regions where early-harvest has occurred over the years without the benefit of an early-harvest factor, this lag of APHs behind current trendlines is especially pronounced. Given that the one-percent-per-day formula itself is based on sound underwriting data reflecting real-world experience, the commenter suggests either eliminating the APH cap entirely as unneeded or adjusting it to a more reasonable level of 125 percent of APH.

Another commenter stated that Insurance Providers have concerns about capping the production after the early harvest adjustment is applied to the APH. Capping the production would not allow the insured to capture the true production potential of the crop given the new seed technology that has become available. Some APH databases still have conventional seed use included when now Roundup Ready seed is the primary use.

Response: The rule added an early harvest adjustment in response to sugar beet processors requesting a portion of contracted acres be harvested early. Early harvested beets are often lower in weight and sugar content, resulting in what could appear to be a production loss that would lower the producer's future Actual Production History (APH). A solution was requested to prevent an early harvest from reducing a producer's future guarantee. The rule added an early harvest adjustment, which increases the producer's yield(s) on their early harvested acreage for that year's harvest, preventing a decline in the producer's future insurable yield due to early harvest. However, the early harvest adjustment was limited to not exceed the unit's approved APH. Additionally, FCIC had developed and released procedures detailing guidance for applying the early harvest adjustment including the Frequently Asked Questions at https://www.rma.usda.gov/News-Room/Frequently-Asked-Questions/Sugar-Beet and the Sugar Beet Loss Adjustment Handbook at https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Loss-Adjustment-Standards-25000/Sugar-Beet/2019-25450-1H-Sugar-Beet-Loss-Adjustment-Standards.ashx.

After further analysis, FCIC determined that due to upward trending yields, the maximum adjustment could be overly punitive. Therefore, FCIC is revising the limit for the early harvest adjustment to not result in a yield greater than the higher of the producer's approved APH yield or the actual yield of the sugar beets harvested after full maturity from the unit. This change will better reflect the unit's production capabilities, especially in instances of a bumper crop because it uses the actual yield from the unit if that yield is higher than the approved APH yield.

Comment: A commenter stated that in reference to 13(f)(3): This provision indicates that the early dig adjustment cannot result in production to count in excess of the insured's actual production history. Should “actual production history” be replaced by “approved yield” as this is the defined term found in the CCIP Basic Provisions as well as the basis for establishing coverage under this policy? Also, what happens if you have a scenario where this occurs? Do you not use the early dig adjustment at all or do you limit the production to count to the approved yield? The commenter would recommend that this provision be further clarified so that there is no misunderstanding for how this should be handled when this situation occurs.

Response: FCIC is revising the limit for the early harvest adjustment to not result in a yield greater than the higher of the producer's approved APH yield or the actual yield of the sugar beets harvested after full maturity from the unit. This change will better reflect the unit's production capabilities, especially in instances of a bumper crop because it uses the actual yield from the unit if that yield is higher than the approved APH yield. Regarding the scenario the commenter outlined, the adjustment will still be made, but it will be limited to the higher of the approved actual production history yield or the actual yield of the sugar beets harvest after full maturity from the unit.

Comment: Is this `capping' clause referring to the insured's actual yield of “full maturity” beets for the current crop year or the highest value within the insured's APH database history?

Response: The “capping clause” refers to the insured's approved actual production history yield, but after further analysis, FCIC determined that due to upward trending yields, the maximum adjustment could be overly punitive. Therefore, FCIC is revising the limit for the early harvest adjustment to not result in a yield greater than the higher of the producer's approved APH yield or the actual yield of the sugar beets harvested after full maturity from the unit. This change will better reflect the unit's production capabilities, especially in instances of a bumper crop because it uses the actual yield from the unit if that yield is higher than the approved APH yield.

Comment: The commenter stated on 13(f) that the Risk Management Agency (RMA) has proposed adding an early dig factor to increase the production to count for both claims and APH purposes once a certain threshold has been reached as indicated in the actuarial documents. The commenter does agree that this type of production adjustment is needed for sugar beets when the crop is harvested early. It would be beneficial for everyone reviewing these provisions to know what these thresholds are as a part of this published rule so that the commenter would be able to review and comment on the proposed threshold as a part of these comments.

Another commenter stated in regard to 13(f), RMA has proposed adding an early dig factor to increase the production to count for both claims and APH purposes once a certain threshold has been reached as indicated in the actuarial documents. Commenter agrees that this type of production adjustment is needed for sugar beets when the crop is harvested early. It would be beneficial for everyone reviewing these provisions to know what these thresholds are as a part of this published rule so that we would be able to review and comment on the proposed threshold as a part of these comments. It would also be helpful to know what the proposed calendar dates for the end of the insurance period for the different states are in order to be able to adequately comment on the full maturity date derived using the 45-day period used for the early dig factor.

Response: FCIC thanks the commenter and appreciates their input. The threshold and calendar dates for the end of insurance period have been made publicly available in the actuarial documents. FCIC does not produce actuarial documents as part of the rule making process and therefore did not provide the threshold or calendar dates for the end of insurance period in the rule. These requests have been forwarded to the regional offices for review and further consideration. Other local or county-based concerns can be addressed to the RMA regional office. Any interested person may find contact information for the applicable regional office on RMA's website at https://www.rma.usda.gov/RMALocal/Field-Offices/Regional-Offices.

Comment: The commenter stated as framed in the new Crop Insurance Provisions, the “early harvest factor” adjustment will apply only if the percentage of insured acreage harvested before full maturity exceeds a threshold level specified in the FCICs annual actuarial documents. The concern behind this provision, as the commenter understands it, is that applying the factor to very small fractions of a field could complicate its implementation, raising costs. The commenter appreciates RMA's decision to place the actual threshold level in its actuarial documents—rather than freezing it in policy terms—since this will make it easier to adjust in the future as experience is gained over time.

If a threshold is to be imposed, however, the commenter believes it must be set initially at a level that reflects farm-level realities. The commenter discussed this issue with members from various regions of the country and found that early harvest practices vary widely. For instance, some processors that require early harvest deliveries will spread the burden among large numbers of members to minimize the impact on each one. This could result in early harvests quotas of, say, 10 percent or so on each farm. In other situations, growers will be encouraged to harvest “openings” or small portions of fields during the early harvest. In other cases, early harvest can include entire fields or larger portions. In addition, the commenter understands that much of this data burden for implementing the new process will rest on sugar beet processing companies who record deliveries on a regular basis, and that crop insurance industry professionals, including agents and AIP staff, generally have access to automated systems to facilitate reporting.

Given these factors, particularly the wide range of farming practices, the commenter urges RMA initially to set the threshold at a relatively low level, 5 percent. This would allow RMA, AIPs, processors, and producers to gain experience on how the early harvest adjustment operates in a wide range of conditions. The commenter also urges RMA to review its experience after the first two years to see if any adjustment in the threshold is justified.

Another commenter stated in regard to 13(f), commenter agrees with the changes allowed when harvesting prior to full maturity. However, due to the workload involved when a small acreage is involved or a small fraction of a unit, consider establishing the percentage of the unit entered in the Special Provisions to be more than 25% and maybe up to 50% of unit acreage before this increase factor would be allowed.

Since most of the time the early harvested acreage is minimal with only end rows or point rows harvested early, the overall impact to the production to count is minimal in relation to the whole unit (and to the extra work involved to adjust each load by each date). However, when the acreage exceeds 25% of the unit it starts to become relevant, and as the acreage approaches 50% it can become very significant. Perhaps 33% of a unit's acreage would be a good place to begin increasing production. If so, suggest that if more than one-third of the unit's acreage is harvested prior to full maturity, then the production from those acres could be increased; if less than one-third was harvested early, no adjustment would be allowed.

Another commenter stated in regard to 13(f), going with a percentage of acreage before applying an early harvest adjustment might be a good idea in theory, but when a notice of claim is submitted in the middle or after harvest, there really is no way to determine the acres harvested early, other than taking the farmer's word for it. Early harvest tickets will reflect the tons per truckload and the date, but there is no way to ascertain early harvested acreage.

Another commenter stated that clarification is needed on how to track the early harvested acres. The current settlement and summary sheets available do not show the individual loads with the delivery dates. The actual weight tickets would have to be requested. These receipts are prone to fading, are misplaced during harvest, and can be difficult to read. Additional time may be needed by the processors to allow them to include the additional information needed to the settlement and summary sheets.

Another commenter stated regarding the reference in (f) to “. . . exceeds the threshold specified in the actuarial documents . . .” and the language in (f)(1) & (3): What is the tentative/proposed threshold amount which is to be specified in the actuarial documents? Is it to be a percentage of the unit's total planted acreage, or a percentage of the unit's total insured acreage, i.e., planted and prevented planted? And what will the percentage be: 5%, 10%, or something else?

Another commenter stated that in reference to section 13(f) that the commenter agrees with the changes allowed when harvesting prior to full maturity. However due to the workload involved (agents, insured's, AIP's) when dealing with small acreages or small fractions of a unit, the commenter would like to see the percentage of the unit entered in the Special Provisions to be more than 25% and maybe up to 50% of unit acreage before this increase factor would be implemented. Since most of the time the early harvested acreage is minimal with only end rows or point rows harvested early, the overall impact to the production to count is minimal in relation to the whole unit (and to the extra work involved to adjust each load by each date). However, when the acreage exceeds 25% of the unit, it starts to become relevant. As the acreage approaches 50% it can become very significant. Perhaps 33% (one third) of a unit's acreage would be a good place to begin increasing production. So, a suggestion the commenter has is, if more than one third of the unit acreage is harvested prior to full maturity, then production from those acres could be increased using the factor provided. If less than 1/3 of a unit's acreage was harvested early, no adjustment would be allowed.

Response: FCIC thanks the commenters and appreciates their input. The threshold was initially set low (at 10 percent), as suggested by one of the commenters. FCIC will continually monitor this threshold and update as needed. Additionally, the amount of production harvested early will be determined from processor production records obtained by the insured. It is the insureds' responsibility to provide acceptable production records to the AIP.

Comment: The commenter stated in 13(f)(1): That the commenter predicated on what the commenter believes the calendar date for the end of insurance period will be based on prior years. The commenter does not believe that 45 days prior to the end of the insurance period for the date of full maturity is accurate for all areas where sugar beets are grown. The commenter suggests that 30 days prior to the end of the insurance period would be more appropriate in Colorado, Nebraska and Wyoming. Using 45 days in these states would result in a September 16 full maturity date. The beets will continue to mature past this date and sugar content increases dramatically after a hard freeze. The average frost date for western Nebraska is September 20 and probably a few days later in Colorado. Using 30 days prior to the end of the insurance period date would be October 1. Early harvest started on September 5 this year. An 11% production adjustment (1% per day from harvest beginning to September 16) would not make this production whole by the full maturity date. This could also be an issue for Idaho as the local sugar beet company in this region requires some growers to start digging early to help get the factories up and running, which usually begins after September 1. Most growers finish harvest by October 31st and there is a penalty by the local sugar beet company if they harvest beets after November 5th. The commenter would recommend that RMA further review the full maturity dates for each state and consider increasing the production by 2% per day (rather than 1% per day) if the producer digs early, which would be similar to the factor used in the potato policy.

Another commenter stated that regarding the interaction between section 9 calendar date of the end of insurance (EOI) and the early harvest dates derived according to 13(f)(1), please refer to the attached Excel file for detailed information. The `NASS harvest dates' tab tallies the beginning, most active, and ending harvest dates for each state, and are representative of the 2009-time period. The `4 state progress' tab tallies the NASS weekly harvest progress reports from the four major sugar beet states, representing each state's average percent harvested during crop years 2012 through 2016; these dates and percentages corroborate the harvest dates for the 2009-time period remain applicable to current years' activities.

If the November 15 calendar EOI date is to remain unchanged (for 2019) then the 45-day default works quite well in capturing the `early harvest' phase for the states of Minnesota and North Dakota. However, for the other states (not withstanding California) the 45-day default significantly misses `early harvest' activities in states like Idaho and Michigan. <<Refer to cells C72 to K73 within the `NASS harvest dates' sheet >>

If the calendar EOI dates are re-established for 2019, and if October 31 is used for Minnesota and North Dakota, then a 35-day time window may be more appropriate for these two states. If a November 10 EOI were established for Idaho, Michigan and Colorado, then a 35-day window would seem to function reasonably as well.

Additional challenges are foreseen for the states of Oregon, Montana, Nebraska, and Wyoming. Their `Beginning to Active Beginning' harvest phases are relatively short in duration and could represent minimal if any harvest before full maturity based on the county's location or district differences (e.g., Wyoming's Big Horn Basin versus its Southeast region).

Without knowing what EOI dates are changing for 2019, and which counties will have variance to the 45-day default, it is essentially impossible to properly evaluate these interacting policy components.

Another commenter stated there also are concerns about how to determine the early dig factor. The policy changes do not address the definition or date for early harvest. The definition and date could be different based on location. This may have to be addressed in the county special provisions. Early harvest is mandatory per the processor contract and not voluntary. The insured can choose which acres to harvest during early dig.

Another commenter stated that depending on what the calendar date for the end of insurance period will be, commenter questions if 45 days prior to the end of the insurance period for the date of full maturity is accurate for all areas where sugar beets are grown. Commenter would recommend that RMA further review the full maturity dates for each state and consider increasing the production by 2% per day (rather than 1% per day) if the producer digs early, which would be similar to the factor used in the potato policy.

As an example, in Colorado, Nebraska, and Wyoming, with an EOI of 11/15, the language in section 13(f) might be ok. That is 1% per day starting with 10/1. That means a producer would get 25% for beets harvested on September 5, the beginning of early harvest. Also, subsection 13(f)(1) allows for a number of days prior to EOI other than 45. It states “unless otherwise specified in the SP.”

Another commenter stated, as this whole subsection is new procedure for the crop, what are the proposed variances that will be noted in the Special Provisions? Which states and counties? Can the number of days be less than or greater than the default of 45 days?

Another commenter stated regarding the slated change to remove the calendar date for the EOI period from section 9 and display that information solely within the actuarial documents (AIB Date Table), this has significant impacts particularly with respect to the new element within section 13(f), i.e., early harvest production adjustments. Are there to be revisions to the EOI date for select regions? Notwithstanding California's Imperial County, essentially all remaining states or regions with active sugar beet processing facilities have a November 15th date as their EOI date. Comparing this November 15 date with the most current NASS `Usual Planting and Harvesting dates' for sugar beets [October 2010] suggests significant adjustments are warranted for the calendar EOI dates. Example: Minnesota and North Dakota typically conclude harvest during the last week of October; this constitutes approximately three weeks of extended coverage after harvest is routinely complete.

The final rule notes the administrative advantages to establishing and displaying the calendar EOI date within the actuarial documents, but without being informed of what date changes are to be made for 2019 it is impossible for policyholders and insurance providers to evaluate the impact on potential early harvest adjustments.

Response: The Crop Provisions as written in section 13(f)(1) states that the Special Provisions can specify exceptions for the 45 days prior to the calendar date for the end of insurance provision. These requests have been forwarded to the regional offices for review and further consideration. Other local or county-based concerns can be addressed to the RMA regional office. Any interested person may find contact information for the applicable regional office on RMA's website at https://www.rma.usda.gov/RMALocal/Field-Offices/Regional-Offices.

Additionally, FCIC set the increasing production rate to 1% per day by gathering data from multiples stakeholders and continues to collect more data from implementation of the Crop Provisions.

Comment: The commenter appreciates RMA's intent that the early harvest adjustment not apply where a grower experiences actual damage resulting in a claim from rain, flood, drought, freeze, or some other covered hazard. Hence, the provision specifies that “an adjustment will not be made if the sugar beets are damaged by an insurance cause of loss and leaving the crop in the field would reduce production.” The inclusion of that final clause—“leaving the crop in the field would reduce production”—raises a question, however, whether the factor might inadvertently limit or annul a producer's legitimate insurance claim in some cases.

For instance, one serious problem faced by sugar beet producers is root rot, a condition caused by excess moisture. Root rot not only damages beets in the field, but also continues to damage surrounding beets after they are delivered to a processor. As a result, these beets cannot be effectively stored for extended periods, and processors often ask that they be delivered early to avoid later problems. Nevertheless, if left in the field, beets affected by root rot do not necessarily continue to deteriorate and may bounce back to some extent.

If a field is affected by root rot early in the growing season, reducing yields below the crop's insurance guarantee, and the crop is subsequently delivered early because of a requirement of the processor, it appears the early harvest adjustment could reduce the size of a farmers claim, or potentially raise “production to count” above the deductible. Similarly, the existence of the factor could act as a disincentive for growers to deliver the affected beets early, creating damage during storage. Clarification of the provision is needed to avoid such unintended results.

Response: FCIC will not further specify the causes of loss in the crop provisions as specifying the causes of loss could have unintended consequences since impacts could differ by region and event. Loss adjusters will determine, on a case-by-case basis, the insurable cause of loss and if the early harvest adjustment is to be applied. FCIC is aware that there may be some disagreements between AIPs and the insured or inconsistencies between AIPs. Controversial claims procedure is already in place if an insured does not agree with the AIP's final loss adjustment determination. This procedure allows the claim to be referred from the loss adjuster to the AIP in order to resolve the claim, when the insured disagrees with the loss adjuster. Additionally, the Common Crop Insurance Policy, Basic Provisions provides a process for insureds and AIPs to settle disputes, including disputes with loss adjustment determinations, such as mediation and arbitration.

Additionally, depending on situations that develop around harvest time, bulletins may be issued to address specific situations that arise. FCIC will continue to monitor the performance of this provision and can address additional program changes that may be needed in future crop provision and procedural revisions.

Comment: Commenter stated in reference to 13(f)(3): Change the semicolon at the end to a period.

Response: FCIC changed the semicolon at the end of the section to a period.

Comment: Commenter stated about 13(e): Much more has changed in this section than just the correction to show raw sugar instead of standardized tons.

This paragraph is for production that did not meet the specifications in the contract and was damaged by an insured cause of loss. The production will be based on the tons delivered times the average sugar. Any damage should result in lower tons and/or sugar. Since the production did not meet the terms of the contract, presumably the processor will not accept it. Therefore, there should be a way to put a salvage value on it. (The LMP definition has been removed.)

If the production is damaged by an uninsured cause of loss, then it is presumed that an appraisal for uninsured causes would be done for unharvested production and a determination would be made for harvested production. See section 13(c)(1)(ii).

The instructions for appraising sugar beets for replant qualifications (Exhibit 7 in the LASH) appear to be adequate. Nothing should change here except APH will now be expressed in pounds of raw sugar instead of tons. The calculation was APH/Plant population (for 1/100 of an acre). The appraisal then multiplied this by the remaining population and compared it to 90% of the APH × coverage level. (One could actually take APH out of this equation and it would still be valid.)

Another commenter stated in regards to 13(e)(1): The way this currently reads, if due to an insurable cause of loss the beets will not meet the minimum acceptable standards in the processor contract, then the AIP would count ALL of the production (“by multiplying the tons of such damaged beets by 2000 and by the average percent of raw sugar . . .”). That does not seem to be fair to an insured. If the beets are damaged to the point that the processor will not accept them and the beets are destroyed, then there should be no production to count. Additionally, the wording in the previous sugar beet policy contained what might be called a “salvage value” in that, if such damaged beets could not meet the terms of the processor contract, but did have some value, then that value should be used by converting it back to production to count.

Recommend retaining this “salvage value” language, although reworded slightly to accommodate the change from standardized tons to pounds of raw sugar. Also revise the language to reflect zero production to count in situations where it does not meet the standards and is destroyed.

Additionally, the 2018 Sugar Beet Loss Adjustment Standards Handbook has several examples of these types of situations and those examples should also be retained (with changes to pounds of raw sugar).

Another commenter believes the language needs to be adjusted to reflect zero production to count in situations where it does not meet the standards and is destroyed. Additionally, the 2018 Sugar Beet Loss Adjustment Standards Handbook has several examples of these types of situations and those examples should also be retained (with changes to pounds of raw sugar).

Another commenter stated that in regard to section 13(e): Much more has changed in this section than just the correction to show raw sugar instead of standardized tons, as summarized in the regulations. The way this currently reads, if due to an insurable cause of loss the beets will not meet the minimum acceptable standards in the processor contract then the insurance provider would still count ALL of them (by multiplying the tons of such damaged beets by 2000 and by the average percent of raw sugar). That does not seem to be fair to an insured. If the beets are damaged so that the processor will not accept and the beets are destroyed, then there should be no production to count.

Another commenter stated that the wording in the previous sugar beet policy contained what the commenter might call a salvage value in that, if such damaged beets could not meet the terms of the processor contract but did have some value—then that value should be used by converting it back to production to count. The commenter believes this salvage value language should remain although reworded slightly to accommodate the change from standardized tons to pounds of raw sugar.

Response: Section 13(e) is to address sugar beets that are damaged but are still accepted by the processor. FCIC agrees that the salvage value language should be maintained in the crop provisions and is adding language back into the provisions as outlined in 13(g) to provide that if harvested production is damaged due to an insurable cause of loss and is rejected by the processor, but is sold to a salvage buyer at a reduced price: Compute the pounds of raw sugar of the sold production by dividing the gross dollar amount paid by the salvage buyer by the established price.

FCIC is also adding the following language in section 13(h) to address the zero production to count scenarios, providing that if production is damaged due to an insurable cause of loss to the extent that the processor will not accept the production, such as the production did not meet the standards contained in the production agreement; and there are no salvage markets for the production, then there would be no value for production and there would be no production to count provided the production is destroyed in a manner acceptable to us.

Additionally, salvage value and zero production to count language has been maintained in the Sugar Beet Loss Adjustment Standards Handbook to address both situations at https://www.rma.usda.gov/-/media/RMAweb/Handbooks/Loss-Adjustment-Standards---25000/Sugar-Beet/2019-25450-1H-Sugar-Beet-Loss-Adjustment-Standards.ashx.

Comment: The commenter supports the addition of a new “early harvest factor” adjustment to the Sugar Beet Crop Insurance Provisions. Sugar beets differ from other major crops in that they are grown almost exclusively under contract to regionally-based grower-owned processing companies. Producers deliver their harvested beets to the processor, which then refines them into pure sugar. The timing of each farmer's delivery of their raw beets to the processing factory is critical to its efficient operation. As a result, producers are often required to harvest and deliver portions of a crop prior to its full maturity, before the crop's tonnage and sugar content have reached normal peak levels. The result can be an unintended penalty, through no fault of the individual farmer, against the annual yield (called “production to count”) that the farmer can count toward his or her historical APH, the basis for determining future coverage.

The “early harvest factor” adjustment addresses this problem by allowing a producer, if required to harvest early, to adjust the “production to count” for that portion of the crop for purposes of calculating their future APH. The adjustment is equal to 1 percent per day for each day prior to full maturity, and “full maturity” is defined as 45 days before the end of the insurance period. The size of the adjustment is based on an extensive set of data assembled by outside counsel for ASGA from each of the grower owned processing companies, showing the precise amount by which tonnage and sugar content vary during the early-harvest period.

The commenter believes this new process will benefit many sugar beet producers while protecting the underwriting soundness of the FCIC program. That said, the commenter wishes to comment on three operational points that could have a significant effect on its performance.

Response: FCIC thanks the commenter and appreciates their input.

Comment: The changes being implemented by the 2019 Sugar Beet Crop Provisions rewrite have several significant elements that are not fully disclosed in the final rule as many are now to be solely contained in the actuarial documents (of which no drafts are provided), e.g., calendar date for EOI, variances to the Early Harvest default date, updated percentages of raw sugar, etc. Without knowing what changes will be made it is impossible to adequately review and comment. For the reasons outlined above, it is recommended that this CFR rule change be delayed until the 2020 crop year and tentative actuarial document references are available for review.

Postponing the proposed changes until the 2020 crop year would allow time for:

• The Special Provisions, CIH, and LASH to be updated;

• The AIPs to receive the clarification needed to convert the APH from standardized tons to pounds of raw sugar; and

• The sugar beet processors to update the software to capture any additional information that may be needed for claims to be processed when the early dig factor needs to be applied.

Response: FCIC thanks the commenter and appreciates their input.

Comment: Commenter is frustrated that the commenter is unable to see any comments on this at all. If insurance regulators or sugar beet farmers are supposed to take an active role in the rule-making process, comments should be made public. This may be one of many rules being promulgated, but there is no reason to treat this any differently than another rule. You should re-open the notice and comment section again and allow comments to be made public.

Response: FCIC is summarizing public comments received and addressing those comments in this final rule and is opening the rule for further public comment.

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). Therefore, FCIC is not required to delay the effective date for 60 days from the date of publication to allow for Congressional review. Accordingly, this 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.

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.

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?

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 in states with a November 30 contract change date and for the 2021 and succeeding crop years in all other states, as follows:

I. Introduction

The NRC is amending its regulations in parts 1, 2, 37, 40, 50, 51, 52, 55, 71, 72, 73, 74, 100, 140, and 150 of title 10 of the Code of Federal Regulations (10 CFR) to reflect internal organizational changes and conforming amendments. These changes include removing all references to the Office of New Reactors because that office has merged with the Office of Nuclear Reactor Regulation, changing the names of divisions that are affected by the reorganization of the Office of Nuclear Material Safety and Safeguards, and making conforming amendments throughout the regulations to reflect the office merger and the office reorganization. This document is necessary to inform the public of these non-substantive amendments to the NRC's regulations.

Remove Section. Section 1.44 is removed in its entirety because the Office of New Reactors has merged with the Office of Nuclear Reactor Regulation.

Remove Office Name. In §§ 1.32(b), 2.101, 2.102, 2.103, 2.105(e)(1), 2.106(a), 2.107(c), 2.108, 2.110, 2.318(b), 2.337(g), 2.340, 2.403, 2.603, 2.621, 2.629(a), 2.811(c), 37.7(a), 50.30(a), 50.55a(z), 50.61, 50.70(b), and 50.75(h), appendices G, H, and J to 10 CFR part 50, §§ 51.4, 51.40(c)(1), 51.58, 51.105(a)(5), 51.105a, 51.107(a)(5), 51.121(a), 52.15(a), 52.35, 52.75(a), 55.5, 73.4(a), 100.4, 140.5, and 140.6(a), this final rule removes all references to the Office of New Reactors and its director, because that office has merged with the Office of Nuclear Reactor Regulation.

Correct Title Name and Division. In § 2.4, this final rule updates the definition of “Commission adjudicatory employee” by replacing the title Associate General Counsel for Licensing and Regulation to read as the Deputy General Counsel for Rulemaking and Policy Support. This title and division were renamed to reflect the reorganization of the Office of Nuclear Material Safety and Safeguards and the merger of the Office of New Reactors with the Office of Nuclear Reactor Regulation.

Remove Word and Phrases That Are No Longer Applicable. In §§ 2.101 and 2.340, this final rule removes the word “appropriate” and various iterations of the phrase “or as appropriate” when referring to the Director, because the reference is now to only one Director.

Correct Division Name. In § 2.802(b), this final rule corrects the title Division of Rulemaking to read as the Division of Rulemaking, Environmental, and Financial Support. The division was renamed during the reorganization of the Office of Nuclear Material Safety and Safeguards.

Correct Division Name. In § 2.811(e), this final rule corrects the title Division of New Reactor Licensing to read as the Division of New and Renewed Licenses. The division was renamed when the Office of New Reactors merged with the Office of Nuclear Reactor Regulation.

Remove Office Name. In §§ 2.643(a), 50.10(e)(1), 51.107(d), 52.1(a), 52.91(a), and 52.155(a), this final rule removes all references to the Director of New Reactors (an erroneous version of the Director of the Office of New Reactors) because that office has now merged with the Office of Nuclear Reactor Regulation.

Correct Branch, Division, and Office Names. In §§ 2.811(e) and 51.121(d), this final rule corrects the titles Rules, Announcements, and Directives Branch and Rules, Announcements, and Directives Branch, Office of Administration, to read as the Regulatory Analysis and Rulemaking Support Branch, Division of Rulemaking, Environmental, and Financial Support, Office of Nuclear Material Safety and Safeguards. The division was renamed during the reorganization of the Office of Nuclear Material Safety and Safeguards, the branch was relocated, and the branch name was not corrected following an earlier reorganization.

Correct Division Name. In §§ 40.64(a) and (b)(2), 72.76(a), 72.78(a), 73.46(i)(1), 74.13(a), 74.15(a), 150.16(a)(1), and 150.17(a), this final rule corrects the titles Division of Fuel Cycle Safety, Safeguards, and Environmental Review and Division of Fuel Cycle Safety Safeguards, and Environmental Review to read as the Division of Fuel Management. These two divisions were merged during the reorganization of the Office of Nuclear Material Safety and Safeguards.

Correct Branch, Division, and Office Names. In § 51.40(c)(4), this final rule updates contact information and corrects the title Rules and Directives Branch, Office of Administration, to read as the Regulatory Analysis and Rulemaking Support Branch, Division of Rulemaking, Environmental, and Financial Support, Office of Nuclear Material Safety and Safeguards. The division was renamed during the reorganization of the Office of Nuclear Material Safety and Safeguards, the branch was relocated, and the branch name was not corrected following an earlier reorganization.

Correct Division Name. In § 55.5(b)(3), this final rule corrects the title Division of Policy and Rulemaking to read as the Division of Advanced Reactors and Non-Power Production and Utilization Facilities. The division was renamed when the Office of New Reactors merged with the Office of Nuclear Reactor Regulation.

Correct Division Name. In § 71.17(c)(3), this final rule corrects the title Division of Spent Fuel Storage and Transportation to read as the Division of Fuel Management. The division was renamed during the reorganization of the Office of Nuclear Material Safety and Safeguards.

Correct Division Name. In §§ 71.1(a), 71.95(c), 71.101(c)(1), 72.4, 72.16(a), and 72.44(f), this final rule corrects the title Division of Spent Fuel Management to read as the Division of Fuel Management. The division was renamed during the reorganization of the Office of Nuclear Material Safety and Safeguards.

Correct Division Name. In §§ 150.16(a)(2) and 150.17(b)(2), this final rule corrects the title Division of Fuel Cycle Safety and Safeguards to read as the Division of Fuel Management. The division was renamed during the reorganization of the Office of Nuclear Material Safety and Safeguards.

Under section 553(b) of the Administrative Procedure Act (5 U.S.C. 553(b)), an agency may waive the requirements for publication in the Federal Register of a notice of proposed rulemaking and opportunity for comment if it finds, for good cause, that it is impracticable, unnecessary, or contrary to the public interest. As authorized by 5 U.S.C. 553(b)(3)(B), the NRC finds good cause to waive notice and opportunity for comment on these amendments because notice and opportunity for comment are unnecessary. The amendments will have no substantive impact and are of a minor and administrative nature dealing with corrections to certain CFR sections or are related only to management, organization, procedure, and practice. These changes include removing all references to the Office of New Reactors because that office has merged with the Office of Nuclear Reactor Regulation, changing the names of divisions that are affected by the reorganization of the Office of Nuclear Material Safety and Safeguards, and making conforming amendments throughout the regulations to reflect the office merger and the office reorganization. The NRC is exercising its authority under 5 U.S.C. 553(b) to publish these amendments as a final rule. The amendments are effective on December 30, 2019. These amendments do not require action by any person or entity regulated by the NRC and do not change the substantive responsibilities of any person or entity regulated by the NRC.

The NRC has determined that this final rule is the type of action described in 10 CFR 51.22(c)(2), which categorically excludes from environmental review rules that are corrective or of a minor, nonpolicy nature and do not substantially modify existing regulations. Therefore, neither an environmental impact statement nor an environmental assessment has been prepared for this rule.

This final rule does not contain a collection of information as defined in the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) and, therefore, is not subject to the requirements of the Paperwork Reduction Act of 1995.

The NRC may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the document requesting or requiring the collection displays a currently valid Office of Management and Budget control number.

The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal agencies to write documents in a clear, concise, and well-organized manner. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31883).

The NRC has determined that the organizational changes and conforming amendments in this final rule do not constitute backfitting and are not inconsistent with any of the issue finality provisions in 10 CFR part 52. The changes and amendments are non-substantive in nature, including removing all references to the Office of New Reactors because that office has merged with the Office of Nuclear Reactor Regulation, changing the names of divisions that are affected by the reorganization of the Office of Nuclear Material Safety and Safeguards, and making conforming amendments throughout the regulations to reflect the office merger and the office reorganization. The organizational changes and conforming amendments impose no new requirements and make no substantive changes to the regulations. The organizational changes and conforming amendments do not involve any provisions that would impose backfits, as defined in 10 CFR chapter I, or would be inconsistent with the issue finality provisions in 10 CFR part 52. For these reasons, the issuance of the rule in final form would not constitute backfitting or represent a violation of any of the issue finality provisions in 10 CFR part 52. Therefore, the NRC has not prepared any additional documentation for this rulemaking addressing backfitting or issue finality.

This final rule is not a rule as defined in the Congressional Review Act (5 U.S.C. 801-808).

Under the “Agreement State Program Policy Statement” approved by the Commission on October 2, 2017, and published in the Federal Register on October 18, 2017 (82 FR 48535), NRC program elements (including regulations) are placed into Compatibility Categories A, B, C, D, NRC, or Adequacy Category Health and Safety (H&S). Compatibility Category A program elements are those program elements that are basic radiation protection standards and scientific terms and definitions that are necessary to understand radiation protection concepts. An Agreement State should adopt Category A program elements in an essentially identical manner in order to provide uniformity in the regulation of agreement material on a nationwide basis. Compatibility Category B program elements are those program elements that apply to activities that have direct and significant effects in multiple jurisdictions. An Agreement State should adopt Category B program elements in an essentially identical manner. Compatibility Category C program elements are those program elements that do not meet the criteria of Category A or B but contain the essential objectives that an Agreement State should adopt to avoid conflict, duplication, gaps, or other conditions that would jeopardize an orderly pattern in the regulation of agreement material on a national basis. An Agreement State should adopt the essential objectives of the Category C program elements. Compatibility Category D program elements are those program elements that do not meet any of the criteria of Category A, B, or C and, therefore, do not need to be adopted by Agreement States for purposes of compatibility. Compatibility Category NRC program elements are those program elements that address areas of regulation that cannot be relinquished to the Agreement States under the Atomic Energy Act of 1954, as amended, or provisions of title 10 of the Code of Federal Regulations. These program elements should not be adopted by the Agreement States. Adequacy Category H&S program elements are program elements that are required because of a particular health and safety role in the regulation of agreement material within the State and should be adopted in a manner that embodies the essential objectives of the NRC program.

The final rule is a matter of compatibility between the NRC and the Agreement States, thereby providing consistency among Agreement State and NRC requirements. The compatibility categories are designated in the following table.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; and 5 U.S.C. 552 and 553, the NRC is adopting the following amendments to 10 CFR chapter I:

The revision reads as follows:

The Bureau is issuing this document to correct an error in one of the amendments to the official interpretation for Regulation Z. The Bureau finds that there is good cause to publish this correction without seeking public comment.1 Public comment is unnecessary because the Bureau is correcting an inadvertent, technical error about which there is minimal, if any, basis for substantive disagreement. Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis.2 The Bureau has determined that these corrections do not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements on covered entities or members of the public that would be collections of information requiring OMB approval under the Paperwork Reduction Act.3

In FR Doc. 2019-16300 appearing on page 37565 in the Federal Register of Thursday, August 1, 2019, the following correction is made:

SBA published a proposed rule regarding these changes in the Federal Register on December 4, 2018 (83 FR 62516), inviting the public to submit comments on or before February 4, 2019. SBA received extensive responses on the proposed rule from 38 entities, which comprised almost 250 specific comments. One commenter requested additional time to submit comments. SBA declined to provide an extension of the comment period on grounds of administrative efficiency, since this rule implements statutory requirements and makes other changes of critical importance to small businesses. SBA's discussion below summarizes the proposed rule, the comments related to each section of the proposed rule, and SBA's responses.

Section 863 of the NDAA of 2016 amended section 15(e)(3) of the Small Business Act (15 U.S.C. 644(e)(3)) to provide that if the head of a contracting agency determines that an acquisition plan involves a substantial bundling of contract requirements, the head of the contracting agency shall publish a notice of such determination on a public website within 7 days of making such determination. Section 863 also amended section 44(c)(2) of the Small Business Act (15 U.S.C. 657q(c)(2)) to provide that upon determining that a consolidation of contract requirements is necessary and justified, the Senior Procurement Executive (SPE) or Chief Acquisition Officer (CAO) shall publish a notice on a public website that such determination has been made. An agency may not issue the solicitation any earlier than 7 days after publication of the notice. The SPE or CAO must also publish the justification along with the solicitation. The requirement may be delegated. SBA proposed to amend § 125.2(d) by adding new paragraphs (d)(1)(v) and (d)(7) to implement these changes. Specifically, SBA proposed that the notice be published on the contracting agency's website. SBA received three comments on these proposed new paragraphs and all three supported the proposal to require public notification of a consolidation determination. Based on agency comments, SBA is adopting a final rule that requires publication of the notice on the Government Point of Entry website because this will be a more efficient and effective mechanism to notify the public. Notice provided through one Government website, which already serves as the means for most procurement-related notices, will likely be viewed by a larger portion of the public than through an individual agency website.

Section 1811 of the NDAA of 2017 amended section 15(l) of the Small Business Act (15 U.S.C. 644(l)) to provide that PCRs may review any acquisition, even those where the acquisition is set aside, partially set aside, or reserved for small business. SBA's current rules provide that PCRs will review all acquisitions that are not set aside or reserved for small business. These rules were intended to focus limited resources on acquisitions that were not already going to small business, but were not intended to prohibit a PCR from reviewing any acquisition as part of the PCR's role as an advocate for small business. SBA proposed to amend § 125.2(b)(1)(i) to provide that PCRs may review any acquisition regardless of whether it is set aside, partially set aside, or reserved for small business or other socioeconomic categories. SBA believes that this change will enable PCRs to advocate for total set-asides or partial set-asides when appropriate and necessary. This provision merely gives to the SBA PCR the authority to review set-aside actions where he or she deems it appropriate. It is not the intent that this will be done in every case. In fact, SBA believes that such a review will not generally be done. Where a PCR seeks to review a set-aside action, the PCR will notify the contracting officer. SBA expects its review to generally be limited to the issue presented, and SBA does not believe this will adversely affect the acquisition timeline. SBA received two comments on this proposed change. One supported the change and one opposed it. The commenter who opposed the proposed rule based his opposition on the perception that PCRs favor 8(a) firms over other small businesses. SBA deduced from this comment that the commenter was concerned that a PCR looking at all acquisitions will not assess whether a particular acquisition is appropriate for all of SBA's government contracting programs, but will instead default to assuming it should be awarded to an 8(a) firm. SBA disagrees that PCRs favor one small business program over another. PCRs seek to ensure that contracting officers consider all of SBA's small business programs, and that the market research performed supports the contracting officer's decision to use a particular program. This final rule adopts the proposed change, as it clarifies SBA's current position that PCRs may review any acquisition, which promotes more awards to small businesses.

Section 1811 of the NDAA of 2017 also amended section 15(l) of the Small Business Act to limit the scope of PCR review of solicitations for contracts or orders by or for the Department of Defense if the acquisition is conducted pursuant to the Arms Control Export Act (22 U.S.C. 2762), is a humanitarian operation as defined in 10 U.S.C. 401(e), is for a contingency operation as defined in 10 U.S.C. 101(a)(13), is to be awarded pursuant to an agreement with the government of a foreign country in which Armed Forces of the United States are deployed, or where both the place of award and place of performance are outside of the United States and its territories. SBA proposed to amend § 125.2(b)(1)(i) to implement these amendments. Under the proposed rule, PCRs would still be able to review acquisitions awarded in the United States and its territories but performed outside of the United States and its territories, or awarded outside of the United States and its territories for performance in the United States or its territories, if the acquisition is not a foreign military sales, or in connection with a contingency operation, humanitarian and civic assistance provided in conjunction with military operations, or status of forces agreement. The proposed rule clarified that SBA considers performance to be outside of the United States and its territories if the acquisition is awarded and performed or delivered outside of the United States and its territories. If the acquisition is awarded in the United States and its territories or some performance or delivery occurs in the United States and its territories, SBA considers that to be performed in the United States and its territories. SBA received one comment in support of the proposed change. SBA continues to believe that the proposed language properly captures the intent of the statutory provision. As such, SBA adopts the proposed change in this final rule.

Section 1821 of the NDAA of 2017 amended section 8(d)(9) of the Small Business Act (15 U.S.C. 637(d)(9)) to provide that it shall be a material breach of a contract or subcontract when the contractor or subcontractor with a subcontracting plan fails to comply in good faith with the requirement to provide assurances that the offeror shall submit such periodic reports or cooperate in any studies or surveys as may be required by the Federal agency or the Administration in order to determine the extent of compliance by the offeror with the subcontracting plan. Such a breach may be considered in any past performance evaluation of the contractor. SBA proposed to revise § 125.3(d) to implement this provision.

SBA also proposed revising § 125.3(d) to reflect Section 1821's requirement that SBA must provide examples of activities that would be considered a failure to make a good faith effort to comply with a small business subcontracting plan. Good faith effort considers a totality of the contractor's actions to provide the maximum practicable opportunity to small businesses to participate as subcontractors (including those in the socio-economic small business areas), consistent with the information and assurances provided in the subcontracting plan. A failure to exert good faith effort is predicated upon evidence that an other than small Federal prime contractor, required to have a subcontracting plan with negotiated small business concern goals approved by a Federal contracting officer, has failed to attain these goals as outlined in the plan, and that this failure may be attributable to a lack of good faith effort by the other than small prime contractor. The term SBC for purposes of this rule includes all categories of small business, including small disadvantaged businesses, veteran-owned small businesses, service-disabled veteran-owned small businesses, women-owned small businesses, small businesses in historically underutilized business zones, Historically Black Colleges and Universities (HBCU/Minority Institutions (MI)) (NASA only) and any successor small business designations. A failure to exert good faith efforts must take into account all actions, or lack thereof, the contractor took to promote subcontracting opportunities to small businesses to the extent agreed upon in the approved subcontracting plan. SBA also proposed to reorganize this section to reflect these new examples in § 125.3(d)(3)(ii).

SBA received eight comments regarding the proposed changes to clarify what good faith means. Six comments supported the proposed change and two comments opposed it. The six comments in support expressed appreciation for SBA's attempt to implement the statutory requirement as clearly and thoroughly as possible. Additionally, commenters noted that the proposed changes will provide greater protection to small businesses by outlining explicitly what they can expect from a large business that is making a good faith effort to comply with a small business subcontracting plan. Commenters also noted that the proposed changes will help agencies hold large business prime contractors accountable if they breach their small business subcontracting plans.

The two commenters opposing the proposed change expressed wariness about holding contractors to a precise definition of good faith because other factors, besides those outlined in the proposed language, may affect a contractor's ability to meet its goals. While SBA understands these concerns, Congress's clear intent was that SBA implement a more robust and detailed definition of compliance. SBA does not intend, nor believe, that the expanded definition of good faith will be overly burdensome for contractors. In addition, the examples set forth in the rule are not intended to be inclusive. Factors beyond those identified in the rule may be considered in determining whether good faith efforts were made. One commenter specifically expressed concern that the examples would allow contractors to be found to have acted in bad faith without due process. SBA does not believe the proposed changes put contractors at risk of specious or capricious findings of bad faith. Contractors have the opportunity to correct substantiated findings of subcontracting compliance reviews, per the new § 125.3(d)(3)(ii)(F). Further, contractors retain their right to rebut and appeal determinations of non-compliance that would result in liquidated damages, a breach of contract finding, or an adverse past performance assessment. Both commenters in opposition suggested that SBA use the FAR language on good faith rather than drafting their own regulations. SBA's proposed changes mirror the FAR's language but primarily seek to implement Congress's intent.

SBA is making one change to the proposed rule in response to a comment noting that § 125.3(d)(3)(ii)(H) incorrectly states that a failure of good faith may be found if a contractor does not get a contracting officer's approval prior to changing small business subcontractors. Prime contractors must provide contracting officers with a written explanation of why they are changing a small business subcontractor, but the regulations do not require a contracting officer's prior approval. SBA has revised the regulation to reflect this correction.

The rule renumbers current § 125.3(d)(3)(i-iii) as § 125.3(d)(3)(i)(A-C) to better organize this section for clarity and ease of understanding. The final rule includes examples of good faith in the revised § 125.3(d)(3)(i), while examples of activities that would be considered a failure to make a good faith effort are included in the revised § 125.3(d)(3)(ii).

Section 2108 of the RISE Act authorizes SBA to establish contracting preferences for small business concerns located in disaster areas and provide agencies with double credit for awards to small business concerns located in disaster areas. To implement the changes made by section 2108 of the RISE Act, SBA proposed to add a new part 129 to title 13 of the Code of Federal Regulations. SBA will implement section 2105, “Use of Federal surplus property in disaster areas,” in a separate rulemaking.

Section 2108 of the RISE Act amends section 15 of the Small Business Act (15 U.S.C. 644) by adding a subsection (f), which authorizes procuring agencies to provide contracting preferences for small business concerns located in areas for which the President has declared a major disaster, during the period of the declaration. Section 2108 provides that this contracting preference shall be available for small business concerns located in disaster areas if the small business will perform the work required under the contract in the disaster area. Under § 6.208 of Federal Acquisition Regulation (FAR), contracting officers may set aside solicitations to allow only offerors residing or doing business in the area affected by a major disaster. Under existing FAR 26.202-1, such local area set-asides may be further set aside for small business concerns. SBA proposed to use the existing FAR definitions to provide that an agency will receive credit for an “emergency response contract” awarded to a “local firm” that qualifies as a small business concern under the applicable size standard for a “Major disaster or emergency area.” FAR 26.201.

Section 2108 also provides that if an agency awards a contract to a small business located in a disaster area through a contracting preference, the value of the contract shall be doubled for purposes of determining compliance with the small business contracting goals described in section 15(g)(1)(A) of the Small Business Act. Proposed § 129.300 provided that agencies would receive double credit for awarding a contract through the use of a local small business or socioeconomic set-aside authorized by § 129.200 (i.e., a set-aside restricted to SBCs, 8(a) Business Development (BD) Program Participants, Women-Owned Small Business (WOSB), Service-Disabled Veteran-Owned (SDVO) or HUBZone SBCs located in a disaster area). SBA believes that agencies will enter accurate data into the Federal Procurement Data System (FPDS). SBA will provide the extra credit through the agency scorecard process. Local area set-aside and small business contract designations already exist in FPDS, and implementation has already occurred in FY 2017.

SBA received nine comments regarding the proposed addition of part 129. Eight of the comments support the proposed amendments. They supported Congress's intent to encourage small business contracting in areas adversely affected by disasters and believed that SBA's proposed part 129 accomplished Congress's intent. One commenter stated that it would be confusing to discern which type of procurement goal credit is subject to double credit, especially if the information provided in the SBA Procurement Scorecard differs from that in the Federal Procurement Database System (FPDS) or from the information on https://www.usaspending.gov, which tracks Federal procurement spending. While the amount of procurement goal credit for such awards will differ in the SBA Procurement Scorecard as compared to FPDS, the same contract identification information will be present. FPDS will identify those awards that are subject to double credit because they were awarded to firms in a disaster area. Although SBA understands the commenter's concern that implementing this double credit may be confusing, SBA believes that it is constrained by the statue which requires this double credit. As such, the final rule adopts part 129 as proposed.

On September 10, 2014, SBA proposed to eliminate the information technology value added reseller (ITVAR) exception to NAICS 541519, which had a size standard of 150 employees. 79 FR 53646. In the proposed rule, SBA specifically noted that elimination of the exception would result in these acquisitions, which are primarily for supplies, being subject to the non-manufacturer rule (NMR), which has a size standard of 500 employees. As a result of public comment, SBA altered the language in the ITVAR exception (13 CFR 121.201, footnote 18) to make it clear that the manufacturing performance or limitations on subcontracting requirements and the NMR apply to acquisitions under the ITVAR exception, but retained the 150 employee size standard. 81 FR 4436 (January 26, 2016). By definition, contractors under the ITVAR exception are non-manufacturers, and it would make no sense for SBA to retain a 150-employee size standard if concerns could also qualify under the NMR 500 employee size standard. In a size appeal before the SBA Office of Hearings and Appeals, a firm tried to argue that the size standard under the ITVAR exception was the 500 employee non-manufacturer size standard. Size Appeal of York Telecom Corporation, SBA No. SIZ-5742 (May 18, 2016). The appeal was denied. Id. In response, SBA proposed to amend § 121.406(b)(1)(i) to clarify that the NMR size standard of 500 employees does not apply to acquisitions that have been assigned the ITVAR NAICS code 541519 exception, footnote 18. The size standard for any acquisition under 541519, footnote 18, is 150 employees for all offerors. SBA received six comments related to this proposed amendment: Five supported the clarification and one opposed it. The commenter opposed to the change suggested that SBA should increase the size standard for NAICS code 541519 from 150 to 500 employees because an increased number of ITVARs would lead to cost savings and a reduction of the Federal deficit. SBA does not agree with this analysis and is adopting the amendment as proposed. SBA does not believe that a non-manufacturer with close to 500 employees should be considered small.

On October 2, 2013, SBA published a final rule implementing 15 U.S.C. 644(r). 78 FR 61114. In that rule, SBA contemplated the set aside of orders for certain types of SBCs, such as HUBZone SBCs, 8(a) BD Program Participants, SDVO SBCs, or WOSBs. 78 FR 61114, 61124. SBA noted that at the time, the small business programs had major differences with respect to the application of the limitations on subcontracting and NMR requirements, and therefore it would be difficult for SBCs and agencies to determine the rules that applied to a particular order. SBA was also concerned about the possibility that SBCs could be deprived of an opportunity to compete for orders under a set-aside contract if an agency repeatedly set aside orders for other socioeconomic categories. Since that time, SBA has attempted to harmonize the application of the limitations on subcontracting and NMR requirements for each of the various types of small business contracts. The concerns identified in the 2013 final rule have since been addressed to enable fair and proper implementation of order set-asides. Specifically, on May 31, 2016, SBA published a final rule to standardize the limitations on subcontracting and NMR requirements across socioeconomic programs. 81 FR 34243. In addition, some agencies have pursued the strategy of allowing order set-asides against set-aside multiple award contracts (MACs), including notification and incorporation of the clause at FAR 52.219-13, and agencies have reported that they have not encountered any industry concerns. In connection with this rule, SBA requested comment on whether SBA should allow agencies to set aside orders for a socioeconomic small business program (8(a), HUBZone, SDVO, WOSB) under a MAC that was awarded under a total small business set-aside. Because SBA believes that a change is appropriate at this time, SBA proposed to remove the term “Full and Open” from § 125.2(e)(6) to specifically afford discretion to an agency to set-aside one or more particular orders for HUBZone SBCs, 8(a) BD SBCs, SDVO SBCs or WOSBs, as appropriate, where the underlying MAC was initially set aside for small business. Set-asides under multiple award set-aside contracts may be implemented by agencies in different ways, including: (1) Establishing set-asides to socioeconomic programs at the order solicitation level under multiple award small business set-aside contracts, and (2) establishing socioeconomic set-aside pools at the master contract solicitation level for a multiple award small business set-aside contract. SBA requested comments on any burden or adverse impact associated with each of these two approaches. In addition, SBA was specifically interested in whether these two approaches could impact the ability for all types of small businesses (e.g., 8(a), HUBZone, WOSB, SDVOSB) to compete and receive orders.

SBA received twenty-two comments regarding this proposed change. Twelve of the comments support the proposed change and ten oppose the change. The comments that oppose the proposed amendment note that it is unfair to the original small business awardees of a MAC to allow socioeconomic small business program set-asides under those contracts where it was not originally contemplated. Additionally, those who oppose this proposed change note that allowing such set-asides under small business MACs will reduce the number of offerors for the orders that are set-aside for socioeconomic small business program participants. The comments in opposition also note that small businesses would be discouraged from bidding on MACs because they would have no way of knowing if any future orders would be set aside for their socioeconomic status. SBA believes these concerns should be assuaged by the fact that the rule would not affect already-awarded MACs, unless set-asides were already contemplated in the solicitation. Going forward, small businesses would know at the time of offer what kind of set-asides, if any, were available at the time of award and on future orders. SBA believes this type of forecasting and notification to offerors would also address the concerns of commenters opposed to the proposed change because they do not believe it is fair to the “original” small businesses that submit offers on a MAC. The rule would apply only to future contracts and thus potential offerors will know in advance if it is worthwhile to submit an offer.

SBA received one comment requesting clarification on whether a contracting officer can set aside orders for a contract if the contract was not set aside for small businesses. SBA's current regulation at § 125.2(e)(6)(i) provides that contracting officers can “set-aside orders against Multiple Award Contracts that were competed on a full and open basis.” The proposed rule revised this provision to say that contracting officers can “set aside orders against Multiple Award Contracts, including contracts that were set aside for small businesses.” SBA is adopting the amendment as proposed.

SBA received one comment regarding the two alternative approaches discussed in the proposed rule for implementing this change: Using small business pools or small business set-asides at the order level. The commenter supports both proposed approaches but notes that category management has a negative impact on small businesses. No comments were received which identify any burdens associated with either approach. SBA is adopting the amendment as proposed.

SBA's rules require recertification of size and status for all long-term (over 5 years) contracts. This includes indefinite delivery contracts under which orders will be placed at a future date and contracts that had not been set aside for small business but were awarded to a small business. Thus, SBA proposed to amend §§ 125.18(f), 126.601(i), and 127.503(h) to clarify that a concern must recertify its status on full and open contracts. In addition, SBA added a new paragraph to §§ 124.521 and 124.1015 to reflect the status eligibility and recertification requirements for 8(a) participants and SDB concerns, which are already present in the SDVO, HUBZone, and WOSB regulations. This change provides greater consistency among the status recertification requirements for small business program contracts. One result of these changes is that a prime contractor relying on similarly situated entities (an SDVOSB prime with an SDVOSB subcontractor, for example) to meet the applicable performance requirements may not count the subcontractor towards its performance requirements if the subcontractor recertifies as an entity other than that which it had previously certified.

SBA received 32 comments on the proposed change to certification requirements. Twenty-five opposed, three supported, and four sought clarification. Many of the comments that opposed this provision expressed concerns that the requirement would be overly burdensome and would add “complexities to an already difficult compliance system.” Several commenters specifically disagreed with the proposed change to the 8(a) and SDB certification requirements. One commenter noted it takes firms up to four years to demonstrate satisfactory past performance and thus by the time they were eligible for a contract, they would not be able to perform on any options. Several others pointed out that the 8(a) program is different from SBA's other government contracting programs. SBA recognizes these concerns but does not believe that this provision fails to acknowledge the unique features of the 8(a) program. Congress intended that 8(a) program participation be limited to nine years. SBA already permits long-term contracts to extend for up to five years past the completion of a Participant's program term in the 8(a) program. Allowing firms to work on options indefinitely would conflict with Congress's clear desire for 8(a) Participants to leave the program and go on to successfully and independently participate in the government contracting arena. Further, SBA did not contemplate the proposed rules as a forced attempt to bring the 8(a) program requirements into alignment with the other programs, but rather as an opportunity to consider all the programs holistically. SBA respectfully disagrees with commenters who do not believe consistency between programs is a worthy goal. Consistency better enables small businesses and contracting officers to understand and comply with SBA's requirements, ensuring that eligible small businesses are equipped to bid on contracts that have been appropriately set aside. SBA is adopting the proposed changes as final.

Other than small business concerns that have a commercial subcontracting plan report on performance through a summary subcontract report (SSR), and SBA's rules currently require that a contractor using a commercial subcontracting plan must include all indirect costs in its SSR. However, SBA's rules do not require contractors to include indirect costs in their commercial subcontracting plan goals, which leads to inconsistencies when comparing the SSR to the commercial subcontracting plan. SBA proposed to revise § 125.3(c)(1)(iv) to require that prime contractors with commercial subcontracting plans must include indirect costs in the commercial subcontracting plan goals. This will allow agencies to negotiate more realistic commercial subcontracting plans and monitor performance through the SSR. SBA received one comment in support of this change and is adopting the proposed rule as final.

SBA proposed revisions to the nomenclature it uses regarding subcontracting compliance reviews in order to better align title 13 of the CFR with the FAR. Currently, the rating terminology differs between SBA's rating system under § 125.3(f)(3) (for an SBA Compliance Review) and that used pursuant to FAR 42.1503 (for a past performance evaluation including small business subcontracting under FAR 52.219-9). SBA believes the difference in terminology leads to confusion for Government personnel and industry partners attempting to ascertain the value of a rating. As such, in § 125.3(f)(3), SBA proposed to revise the terms used to rate firms from “Outstanding,” “Highly Successful,” or “Acceptable” to “Exceptional,” “Very Good,” and “Satisfactory,” respectively. SBA received three comments in support of this change and, therefore, is adopting the proposed revisions as final.

SBA's size regulations provide that SBA considers “all individuals employed on a full-time, part-time, or other basis” to be employees of the firm whose size is at issue. 13 CFR 121.106(a). “This includes employees obtained from a temporary employee agency, professional employee organization, or leasing concern.” Id. Further, “SBA will consider the totality of the circumstances, including criteria used by the IRS for Federal income tax purposes, in determining whether individuals are employees of a concern.” Id. In determining what it means to be employed on an “other” basis, SBA issued Size Policy Statement No. 1. 51 FR 6099 (February 20, 1986). The Size Policy Statement sets forth 11 criteria SBA will consider in determining whether an individual should be treated as an employee. If an individual meets one or more of the criteria, he or she may be treated as an employee. Pursuant to this guidance, an individual contractor paid through a 1099 may be properly treated as an employee for purposes of SBA's regulations (including SBA's regulations governing performance of work or limitations on subcontracting requirements). The reason for such treatment was to prevent a firm that exceeded an applicable employee-based size standard from “firing” a specific number of employees in order to get below the size standard, but to then hire them back or “subcontract” to them as independent contractors. SBA did not want to encourage firms to attempt to evade SBA's size regulations.

Historically, SBA has said that if an individual qualifies as an “employee” under part 121 of SBA's regulations for purposes of determining size, then SBA should consider that individual to be an employee of the firm for the performance of work (or now limitations on subcontracting) requirements of 13 CFR 125.6 (or 124.510). It would not be equitable to say that a given individual counts against a firm in determining size (because he/she is considered an “employee” of the firm) and then to say that that same individual also counts against the firm for the limitations on subcontracting requirements (because he/she is not considered an “employee” of the firm). Thus, for a contract that is assigned a NAICS code having an employee-based size standard, an independent contractor could be deemed an “employee” of the concern for which he/she is doing work. If such an individual is considered an employee for size purposes, he/she would also be considered an employee for limitations on subcontracting purposes.

SBA's regulation at 13 CFR 125.6(e)(3) has caused some confusion as to how to properly treat independent contractors for purposes of the limitations on subcontracting provisions. That provision provides that, “Work performed by an independent contractor shall be considered a subcontract, and may count toward meeting the applicable limitations on subcontracting where the independent contractor qualifies as a similarly situated entity.” (Emphasis added). This provision was meant to apply to service or construction contracts. For service contracts, work performed by an independent contractor would be considered a subcontract, so that a service contractor could not claim that a non-similarly situated entity independent contractor should be considered an employee of the service contractor. For example, for a WOSB service contract, SBA did not want a WOSB prime contractor to pass performance of the contract to one or more independent contractors that would not themselves qualify as WOSBs. The provision identifies that an independent contractor could qualify as a “similarly situated entity” and meet the limitations on subcontracting that way, but would not permit a service contractor to effectively avoid meeting the limitations on subcontracting by claiming that independent contractors were in fact employees of the firm.

The proposed rule revised § 125.6(e)(3) to clarify SBA's intent regarding both contracts assigned a NAICS code with an employee-based size standard and those assigned a NAICS code with a receipts-based size standard. Under the proposed rule, where a contract is assigned a NAICS code with an employee-based size standard, an independent contractor would be deemed an employee of the firm under the terms of the Size Policy Statement. Where a contract is assigned a NAICS code with a receipts-based size standard, an independent contractor could not be considered an employee of the firm for which he or she is performing work, but, rather, would be deemed a subcontractor. In either case, as a subcontractor, an independent contractor may be considered a “similarly situated entity” and work performed by the independent contractor would then count toward meeting the applicable limitation on subcontracting.

SBA received thirteen comments on the proposed change. Ten opposed, two sought clarification, and one was supportive. The comments in opposition all expressed concern that the proposed rule was confusing, and that SBA's intent was unclear and could be viewed as contradictory. Several pointed out that small businesses would need to devote unnecessary time and effort towards assessing whether an independent contractor counted as an employee or a subcontractor for a procurement. One commenter pointed out the difficulty for businesses performing contracts under both employee-based and revenue-based NAICS codes. SBA recognizes these concerns and concludes that it would be needlessly time-consuming and difficult for small businesses, especially those performing under multiple NAICS codes, to apply the rule consistently. SBA agrees with the commenters who pointed out that looking to § 121.106(a), which lays out the analysis of whether an individual is an employee or a sub-contractor, makes sense for all NAICS codes and contracts. As such, SBA has revised the proposed rule to clarify that contractors should apply the analysis in § 121.106(a) to determine whether independent contractors are employees or subcontractors, and that in situations where the independent contractor is a subcontractor, their work may be counted toward the applicable limitation on subcontracting if they are a similarly situated entity.

Congress has expressed its strong support for small business government contracting, and has provided agencies with numerous tools to set aside acquisitions for exclusive competition among, or in some cases award contracts on a sole source basis to, SBCs, 8(a) BD Program Participants, HUBZone SBCs, WOSBs, Economically Disadvantaged Women-Owned (EDWOSB) SBCs, and SDVO SBCs. 15 U.S.C. 631(a), 637(a), (m), 644(a), (j), 657a, 657f. As a condition of these preferences, small businesses are limited in their ability to subcontract to other than small business concerns, so that small businesses perform a certain percentage of the work. These limitations on subcontracting appear in solicitations and contract clauses for small business set-aside and sole-source awards. As with all contract administration, it is the responsibility of the contracting officer to monitor compliance with the terms and conditions of a contract. (FAR 1.602-2, including the limitations on subcontracting clause). SBA proposed language to clarify that contracting officers have the discretion to request information from contractors to demonstrate compliance with limitations on subcontracting clauses. The Government Accountability Office (GAO) has noted in reports that contracting officers have not been monitoring compliance with the limitations on subcontracting. “Contract Management: Increased Use of Alaska Native Corporations' Special 8(a) Provisions Calls for Tailored Oversight,” GAO-06-399, April 2006; “8(a) Subcontracting Limitations: Continued Noncompliance with Monitoring Requirements Signals Need for Regulatory Change,” GAO-14-706, September 2014; and “Federal Contracting: Monitoring and Oversight of Tribal 8(a) Firms Need Attention,” GAO-12-84, January 2012. The type of information that small business prime contractors may be requested to provide to demonstrate compliance with the limitations on subcontracting could be copies of subcontracts for a particular procurement or an email that lists the amount that the prime contractor has paid to its subcontractors for a particular procurement and whether those subcontractors are similarly situated entities. In addition, SBA proposed to require information demonstrating compliance with the applicable limitations on subcontracting from all prime contractors performing set-aside and sole source contracts awarded through SBA's small business programs when the prime contractor intends to rely on similarly situated subcontractors to comply with the limitations on subcontracting. 79 FR 77955 (December 29, 2014). SBA did not adopt such a requirement in the final rule but indicated that it intended to seek comment on this issue. 81 FR 34243 (May 31, 2016).

SBA proposed adding new § 125.6(e)(4) to clarify that contracting officers may request information regarding limitations on subcontracting compliance, and to clarify that it is not required for every contract. SBA requested comment on whether all small business prime contractors performing set-aside or sole source contracts should be required to demonstrate compliance with limitations on subcontracting to the contracting officer, and if so, how often should this be required, such as annually or quarterly.

SBA received 17 comments with a range of suggestions. Nine commenters opposed regular mandatory reporting requirements. Five comments supported a requirement that contractors must demonstrate limitations on subcontracting compliance annually. One commenter thought compliance should be demonstrated once per base period. Another suggested once during the base period, once during each subsequent option period, and at completion. A third suggested that contracting officers should ask for evidence of compliance if they believe “there is reason for additional evidence to be submitted.” Comments about what type of evidence would suffice similarly ranged among several options. Two commenters suggested using the same type of evidence required for mentor-protégé joint venture performance of work requirements. Two others suggested copies of subcontracting agreements or a list of subcontractors paid that note which subcontractors are similarly situated. Several commenters, both those in favor of a mandatory reporting rule and those opposed, thought if and when such evidence was required, contracting officers should have discretion to request the documents they deem relevant. On balance, SBA agrees that contracting officers are best positioned to assess if, how, and when additional scrutiny of contractors' limitations on subcontracting compliance would be helpful. As such, the final rule does not require limitations on subcontracting compliance reporting but, rather, indicates that contracting officers have the discretion to request demonstration of compliance at any point during performance or upon completion of a contract. The rule includes examples of what documentation could adequately demonstrate compliance but is not intended to be an exhaustive list.

SBA's limitations on subcontracting regulations provide that for a set-aside service contract, the prime contractor must agree that it will not pay more than 50% of the amount paid from the Government to firms that are not similarly situated. 13 CFR 125.6(a)(1). Unlike supply and construction contracts, where materials are excluded, no costs are specifically excluded under a service contract, other than for mixed contracts where the non-service portion, such as incidental supplies, are excluded. SBA has received several requests from industry for exclusions related to specific types of contracts, and one related to all industries. Some have advocated that certain other direct costs, such as airline tickets and hotel costs, be excluded from the calculation of the amount paid under the contract. In addition, in certain types of contracts or industries, there are factors that may complicate compliance with the limitations on subcontracting, potentially hindering agencies from setting aside acquisitions for small business concerns.

For example, for certain contracts performed outside of the United States, contractors must use non-U.S. local organizations or independent contractors to perform consulting services regarding a particular foreign country. These individuals are not located in the United States, do not reside in the United States, and are not likely to be employees of a United States small business concern. SBA proposed to clarify how to determine whether work performed by certain required contractors should be considered. Specifically, SBA proposed that work performed by an independent contractor under a contract that was awarded pursuant to the Foreign Assistance Act of 1961 could be excluded from determining limitations on subcontracting compliance. 22 U.S.C. 2151 et seq. SBA received one comment on this provision. The commenter disagreed with the proposed language in § 125.6(a)(1) because it allowed but did not mandate that work performed by individuals on contracts outside the United States pursuant to the Foreign Assistance Act of 1961 could be excluded from determining limitations on subcontracting compliance. The commenter suggested using language indicating that such exclusion is mandatory. In addition, the commenter noted that not all work performed outside the United States for which some portion of local performance is required is done under the Foreign Assistance Act of 1961. SBA agrees that any work required to be done by local foreign contractors should be excluded from any limitations on subcontracting determination (i.e., should be excluded from the “total value of the contract” in determining whether a small business did not subcontract more than the limitations on subcontracting percentage) and has changed the text of § 125.6(a)(1) to reflect that.

In the environmental remediation industry (NAICS 562910), a large part of the cost of the contract is tied to the transportation and disposal of hazardous, toxic, and radiological waste. According to some SBCs in this industry that have contacted SBA, given the fact that these services are highly regulated and capital intensive, these particular transportation services can generally be performed only by other than small business concerns. For example, all the disposal facilities in the United States are large businesses, and most railroads and shipping companies that transport hazardous waste are other than small business concerns. This rule proposed to exclude transportation and disposal services from the limitations on subcontracting compliance determination where small business concerns cannot provide the disposal or transportation services. Similarly, where the Government acquires media services from small business concerns, the placement of the content in the media may require large payments to the other than small business concerns, even though that is not the principal purpose of the acquisition. SBA proposed to exclude these media purchases from the limitations on subcontracting determination.

In a prior rulemaking, SBA determined that remote hosting on servers or networks, or cloud computing, should be considered a service and therefore the NMR would not apply. 13 CFR 121.1203(d)(3). Due to the costs and scale involved, cloud computing is generally provided by other than small business concerns. SBA proposed to exclude cloud computing from the limitations on subcontracting calculation, where the small business concern will perform other services that are the primary purpose of the acquisition. Of course, where cloud computing itself is the primary purpose of the procurement, the limitations on subcontracting could not be met by a small business, and, therefore, such a procurement should not be set aside or reserved for small business.

Of the 17 comments received regarding excluding direct costs to the extent they are not the principal purpose of the acquisition, nearly all supported SBA's intent behind the proposed rule. Eleven commenters supported the proposed language without additional change. Four commenters supported the categories SBA included in the proposed rule, but opposed the rule on the basis that it was not broad enough and requested that SBA exclude all other direct costs from limitations on subcontracting compliance calculations. SBA does not believe that all direct costs should be excluded from the limitations on subcontracting determination. In addition, SBA does not believe that the statutory language would support such a change.

Based on the positive feedback from industry, the final rule at 125.6(a)(1) adopts the language that specifies that the above-mentioned industries are excluded from limitations on subcontracting compliance calculations. The regulatory text provides that direct costs may be excluded to the extent they are not the principal purpose of the acquisition and small business concerns do not provide the service, “such as” in the four identified industries (airline travel, work performed by a transportation or disposal entity under a contract assigned the environmental remediation NAICS code (562910), cloud computing services, or mass media purchases). The regulatory text is not meant to be inclusive. It allows a small business in another industry in a similar situation to the four identified to also demonstrate that certain direct costs should be excluded because they are not the principal purpose of the acquisition and small business concerns do not provide the service.

One commenter requested clarification as to whether SBA intended for only services to be excluded. As discussed, supply and construction contracts already have industry-specific exclusions, so this provision is intended to bridge a gap that SBA saw regarding service contracts.

In the context of socioeconomic set-aside or sole-source service contracts, the ostensible subcontractor rule applies when a small business is unduly reliant on an other than small business subcontractor, or when the other than small subcontractor will perform primary and vital parts of the contract. In such cases, assuming that an exception to joint venture affiliation does not apply, SBA will treat the small business prime contractor and its subcontractor as joint venturers. If the subcontractor is other than small, the prime contractor is ineligible for award due to this affiliation. SBA has become aware of service contract set-asides for the SDVO, HUBZone, 8(a) or WOSB programs where the prime contractor subcontracts most or all of the actual performance to a small business that is small for the applicable NAICS code but not eligible to compete for award of the prime contract and thus not a similarly situated entity as that term is defined at § 125.1.

Under SBA's joint venture rules, 13 CFR 121.103(h)(3)(i)), a joint venture can qualify as small if each member of the joint venture is small. In the scenario described above, the size regulation would not prevent the joint venture from being eligible for the contract (i.e., where both parties to a joint venture are small, the joint venture itself is small). There is no existing regulatory mechanism for an unsuccessful offeror, the SBA, or a contracting officer to protest a socioeconomic set-aside or sole-source award to a prime contractor that is unduly reliant on a small, but not similarly situated entity, subcontractor. The underlying premise that ostensible subcontractors and their prime contractors should be treated as joint ventures is still SBA's policy. Firms that are performing contracts in a manner more consistent with a joint venture than a prime/sub relationship should follow the requirements of SBA's regulations regarding socioeconomic joint ventures.

The performance of a set-aside or sole source service contract by a small business concern that is not eligible to compete for the prime contract is contrary to the intent and purpose of the statutory authorities for socioeconomic category set-aside and sole source procurements. Thus, SBA proposed language at §§ 124.503(c)(1)(v), 124.507(b)(2), 125.18(f), 125.29(c), 126.601(i), 126.801(a), 127.504(c), and 127.602 to allow SBA to make a determination concerning a small business program participant's overreliance on a non-similarly situated subcontractor as part of an eligibility or status protest determination. SBA's intent was to evaluate these contractor relationships under the established ostensible subcontractor test. If SBA finds that the subcontractor is an ostensible subcontractor, SBA will treat the arrangement between the contractors as a joint venture that does not comply with the formal requirements necessary to receive and perform the socioeconomic program set-aside or sole-source award as a joint venture.

SBA received 32 comments on the proposed change to the rules on subcontracting to a small business under a socioeconomic set-aside. Several commenters opposed the change because they believed that subcontracting to a small business, even if it is not a similarly situated entity, still benefits the small business community. While SBA encourages benefits that accrue to the small business community as a whole, Congress's clear intent in authorizing separate and distinct Government contracting programs was to bolster specific socioeconomic groups' ability to successfully compete for and perform on Government contracts. SBA would be subverting Congress's intent if it focused on rules that benefit the overall small business community at the expense of the groups identified by Congress as meriting focus. As such, SBA continues to believe that it is constrained by statute to ensure that the eligible prime contractor together with one or more other similarly situated small businesses is performing the primary and vital requirements of a contract by meeting the applicable limitation of subcontracting percentage.

Other commenters protested on the basis that requiring small business prime contractors to ensure that their subcontractors are similarly situated entities would be overly burdensome. Again, SBA appreciates this concern, but it does not outweigh SBA's mandate to protect the interests of participants in its Government contracting programs.

Another commenter recommended that instead of applying the ostensible subcontractor standard in this context, SBA should merely require that the 8(a)/HUBZone/WOSB/SDVOSB contractor be able to demonstrate that it, together with any similarly situated entity, will meet the limitations on subcontracting provisions. SBA agrees that if the awardee together with similarly situated entities will meet the limitations on subcontracting provisions, SBA would not have to look further to determine who is doing the primary and vital parts of a contract. The final rule adopts the proposed language recognizing that where a subcontractor that is not similarly situated performs primary and vital requirements of a set-aside or sole-source service contract or order, or where a prime contractor is unduly reliant on a small business that is not similarly situated to perform the set-aside service or sole-source contract or order, the prime contractor is not eligible for award of an SDVO, WOSB, HUBZone or 8(a) contract. However, the final rule also specifies that SBA will not find that a prime contractor is unduly reliant on one or more non-similarly situated subcontracts where the prime contractor can demonstrate that it, together with any similarly situated entity, will meet the limitations on subcontracting provisions set forth in § 125.6.

Finally, one commenter recommended a comparable change to § 134.1003 with respect to protests of SDVO eligibility for contracts awarded by the Department of Veterans Affairs (VA). Specifically, the commenter believed that similar treatment should be afforded to a firm that was verified as an SDVO small business by VA's Center for Verification and Evaluation (CVE), received a VA contract that was restricted to CVE-verified SDVO small business concerns, and then subcontracted primary and vital portions of the contract to a non-CVE-verified business concern, whether or not small. SBA agrees, and has added a new paragraph to § 134.1003 that would authorize a protest challenging whether the prime contractor is unusually reliant on a subcontractor that is not CVE verified, or a protest alleging that such subcontractor is performing the primary and vital requirements of a VA procurement contract.

SBA proposed to remove specific rules related to kit assemblers and the NMR, which are currently contained at 13 CFR 121.406(c). The existing kit assembler rule requires that 50 percent of the total value of the items in the kit must be manufactured by small business concerns, but excludes items manufactured by other than small business concerns if the contracting officer specifies the item for the kit. This rule has led to confusion concerning how to calculate total value, and whether a waiver of the non-manufacturer rule can or must be requested in order to supply items manufactured by other than small concerns. If the majority of items in a kit are made by small business concerns, then the acquisition can be set aside for small business without the need to request a waiver. If the majority of items in a kit are not made by small business concerns, then an individual or class waiver of one or more of the items is necessary for the acquisition to be set aside for small business concerns for acquisitions above the simplified acquisition threshold or for all other socioeconomic set-asides, regardless of value. In connection with this rule, SBA proposed to delete the kit assembler exception and instead apply the multiple item rule in § 121.406(e) to kit assembler acquisitions. Like all other acquisitions, the NMR will not apply to small business set-asides with a value at or below the simplified acquisition threshold. SBA received four comments on this proposed change, evenly split between those opposed and those in support. The comments opposed did so because they believe kit assemblers should be excluded from the limitations on subcontracting compliance calculation, along with the other identified groups in the proposed rule at § 125.6. The proposed rule did not contemplate exclusions beyond those already identified. The commenters supporting the change believe that applying the multiple item rule in § 121.406(e) to kit assemblers makes sense and makes a separate rule for kit assemblers unnecessary. The rule adopts the proposed language as final.

SBA proposed to remove language that has caused confusion on when size is determined. The general rule is that size is determined at the time of initial offer including price, with the understanding that there are some exceptions such as architecture and engineering procurements, and certain unpriced indefinite delivery indefinite quantity (IDIQ) contracts. However, § 121.404(a) also contains the parenthetical, “(or other formal response to the solicitation).” Some parties have misread this to mean formal responses that are after the initial offer, such as final proposal revisions. The clear intent of SBA's general rule is to give both firms and the Government certainty that size will be determined at the time of the initial response, including price. Offer covers bids and proposals, and SBA recognizes that in simplified acquisitions the initial response may be acceptance of the Government's offer. Thus, SBA proposed adding a paragraph at § 121.404(a)(1)(iv), to articulate an exception to the general rule for when size is determined. When an agency uses an IDIQ multiple award contract that does not require offers for the contract to include price, size will be determined on the date of initial offer for the IDIQ contract, which may not include price. This proposed change reflects the statutory change found at section 825 of the National Defense Authorization Act for Fiscal Year 2017, 114 Public Law 328, (December 23, 2016), and section 876 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, 115 Public Law 232, (August 13, 2018). SBA also amended 121.404(g)(5) to reflect the proposed change to 121.103(h)(4) (removing “and therefore affiliates”).

SBA received 13 comments on the proposed changes to § 121.404. Three of these opposed the changes, but all three referenced SBA's current rule requiring recertification at the time of a merger or acquisition at § 121.404(g)(2)(i). SBA did not propose to revise that provision. Of the ten comments that pertained to the proposed changes, all ten were supportive of the changes. Commenters appreciated the clarification and believe that the proposed language will reduce confusion and uncertainty for small businesses. SBA is adopting the proposed language as final.

SBA proposed to amend § 121.103(h)(4) to clarify that when two or more small businesses either form a joint venture or are treated as joint venturers due to their relationship as prime and subcontractor, the joint venture exception to affiliation found at § 121.103(h)(3)(i) applies if both firms are considered small for the size standard associated with the procurement. SBA proposed to remove the phrase “and therefore affiliates” from the ostensible subcontractor rule at § 121.103(h)(4) to clarify this point. To allow affiliation between firms that are considered joint venturers because of their ostensible subcontracting relationship, even when each firm is individually small for the size standard associated with the procurement, would negate the purpose of § 121.103(h)(3)(i), which explicitly provides an exception to affiliation for such joint ventures.

The purpose of the ostensible subcontractor rule is to treat the relationship between a prime contractor and its subcontractor as a joint venture where the subcontractor performs primary and vital work for the procurement. SBA's current joint venture rules do not aggregate the partners to a joint venture in determining the size of the joint venture, but rather permit a joint venture to qualify as small as long as each partner to the joint venture is individually small. Thus, a rule that equates a prime-sub relationship to that of a joint venture because the subcontractor is performing primary and vital work and then affiliates the two parties (i.e., requiring them to aggregate their revenues or employees) is inconsistent with the joint venture size rules themselves. The phrase “and therefore affiliates” that SBA proposed to delete was a holdover from previous regulations that aggregated the receipts or employees of joint venture partners when determining whether a joint venture qualified as a small business. When SBA changed its size regulations to broaden the exclusion from affiliation for small business to allow two or more small businesses to joint venture for any procurement without being affiliated (i.e., the joint venture would be considered small provided each of the joint venture partners individually qualified as small and SBA would not aggregate the receipts or employees of joint venture partners), SBA amended § 121.103(h)(3), but did not make a correspondingly similar change in § 121.103(h)(4). See 81 FR 34243, 34258 (May 31, 2016).

All 12 comments on § 121.103(h)(4) expressed confusion at the current disconnect between the ostensible subcontractor rule at § 121.103(h)(4) and the exception to affiliation for joint venture language at § 121.103(h)(3)(i). Commenters supported a clarification. SBA believes removing “and therefore affiliates” from § 121.103(h)(4) will clear up this confusion and is adopting the proposed change as final.

SBA proposed to add new § 125.2(a)(2) to clarify that a contracting officer may make an award under a small business or socioeconomic set-aside where only one acceptable offer is received. The decision to conduct a set-aside is grounded in the contracting officer's expectation based on market research that he or she will obtain two or more fair market price offers from capable small business concerns. Pursuant to the FAR, the contracting officer must perform market research before issuing a solicitation to determine whether there are small businesses (including 8(a), HUBZone, SDVO SBCs, WOSBs) that can perform the requirement. 48 CFR 10.001(a)(2); 19.202-2. A contracting officer's “rule of two” determination is prospective. Whether there appear to be at least two small businesses that can perform a procurement at a fair price is an analysis that is done during acquisition planning and prior to the issuance of a solicitation. As long as the market research leads a contracting officer to conclude that the agency will receive acceptable offers from at least two small business concerns and award will be made at a fair market price, the “rule of two” is satisfied, no matter how many offers are actually received or how many offers remain after evaluations are conducted, a competitive range is established, or offerors are eliminated in some other fashion.

The FAR currently addresses small business set-asides below $150,000, and provides, “If the contracting officer receives only one acceptable offer from a responsible small business concern in response to a set-aside, the contracting officer should make an award to that firm.” FAR 19.502-2(a). There is no reason this policy should not apply to all set-asides above or below $150,000. The contracting officer must determine that an offeror is responsible, and price is fair and reasonable before awarding any contract. FAR 9.103(a); 9.104-1; 14.408-2; and 15.304(c)(1). It would be inefficient and detrimental to the Government and offerors to arbitrarily prevent an award where a competition was conducted but only one offer was received. Such a policy would unreasonably prolong the procurement process, requiring a procuring agency to cancel one solicitation and re-procure using another where only one small business offer is received, and could cause contracting officers to limit the use of set-asides. SBA received no comments opposing this proposed change and adopts it as final in this rule.

The Office of Management and Budget (OMB) has determined that this rule is a “significant” regulatory action for purposes of Executive Order 12866. The benefits to small business from this rule far outweigh any associated costs. The rule makes several other changes needed to clarify ambiguities in or remedy perceived problems with the current regulations. These changes should make SBA's regulations easier for SBCs to use and understand. The change to § 121.404 clarifies when size for a Government contract is determined, which will reduce confusion for small business concerns. The change to § 121.406 clarifies that the size standard for information technology value added resellers is 150 employees, again to eliminate confusion among small business concerns. The changes to § 125.2(a) will benefit small business by clarifying that a contracting officer can award a contract to a small business under a set-aside if only one offer is received. The changes to § 125.2(b) implement section 1811 of the NDAA of 2017 and govern what acquisitions PCRs can review and would not impact small business concerns. The changes to § 125.2(d) implement section 863 of the NDAA of 2016 and direct contracting officers on how to notify the public about consolidation and substantial bundling and will not impact small business concerns. The changes to § 125.2(e) authorize agencies to set aside orders for socioeconomic programs where the contract was set aside for small business and will benefit firms that qualify for those set-asides. The changes to § 125.3 implement section 1821 of the NDAA of 2017 by providing examples of a failure to make a good faith effort to comply with small business subcontracting plans, and will benefit small businesses by providing such examples so that contracting officers can hold other than small prime contractors accountable for failing to make a good faith effort to comply with their small business subcontracting plan. The changes to § 125.3 also implement section 1821 by providing that the contracting officer should evaluate whether an other than small business complied with the requirement to report on small business subcontracting plan performance. The changes to § 125.6(a) will benefit small business concerns by allowing small businesses to exclude certain costs from the calculation of the limitations on subcontracting. Without these changes, some agencies will not be able to set contracts aside for small business, because certain costs attributable to other than small concerns are too high. The changes to § 125.6 also help small businesses by clarifying the difference between an employee and an independent contractor. The changes to § 125.6 will impose some requirements on small business concerns to demonstrate compliance with the limitations on subcontracting, but only to the extent the information is not already in the possession of the government. Contractors may have this information readily available since it pertains to contract performance and subcontracting of that performance. These information requests are not mandatory, as the contracting officer simply has the discretion to request such information. Contracting officers already have the authority to request information on performance, and this change simply clarifies that the authority exists. Finally, the benefits to small business concerns of this rule substantially outweigh any minor costs imposed by the exercise of existing contracting authority. The addition of part 129 implements section 2108 of the RISE Act and benefits small businesses by providing agencies with an incentive to set aside contracts for small business concerns located in a disaster area. Accordingly, the next section contains SBA's Regulatory Impact Analysis. However, this is not a major rule under the Congressional Review Act, 5 U.S.C. 801, et seq.

The rule implements section 863 of the National Defense Authorization Act of 2016, Public Law 114-92, 129 Stat. 726 (15 U.S.C. 644(e)(3)); section 2108 of the Recovery Improvements for Small Entities After Disaster Act of 2015 (RISE Act), Public Law 114-88, 129 Stat. 686 (15 U.S.C. 644(f)); and sections 1811 and 1821 of the National Defense Authorization Act of 2017, Public Law 114-328, 130 Stat. 2000 (15 U.S.C. 637(d), 644(l)). In addition, it makes several other changes needed to clarify ambiguities in or remedy perceived problems with the current regulations. These changes should make SBA's regulations easier to use and understand. With respect to contractors demonstrating compliance with the limitations on subcontracting, for decades the general rule has been that on a set-aside contract, a small business or socioeconomic small business must generally perform some of the work (services, construction, or manufacturing). This helps ensure that the benefits of a small business set-aside contract flow to the recipients whom Congress intends to help by creating the set-aside authority. If performance of a set-aside contract is passed through to other than small business concerns, there may not be a need for set-asides in the first place, and the Government may be paying more for a good or service without any value added. These limitations on subcontracting appear as a clause in a set-aside contract and help to ensure that the intended beneficiaries of set-aside contracts are receiving those benefits. The contracting officer is responsible for monitoring compliance with clauses in a contract. FAR 1.602. Nothing in SBA's regulations or the FAR prohibits a contracting officer from requesting documents demonstrating compliance with the limitations on subcontracting clause. It is SBA's view that such authority exists, but that the authority is not clear or express. Without clarifying the authority or process, some contracting officers simply are not monitoring compliance. The result is that there may be increased fraud, waste, and abuse in the performance of contracts that are set aside for small business concerns, because subcontractors that are not eligible to receive the prime contract may be performing more work than section 46 of the Small Business Act (15 U.S.C. 657s), SBA regulations at 13 CFR 125.6, and FAR clause 52.219-14 permit. This type of fraud frustrates the policy goals associated with awarding contracts set aside for small business concerns.

In this rule, SBA clarifies that the contracting officer may request information to demonstrate a contractor's compliance with the limitations on subcontracting clause. SBA also clarifies that it is within the contracting officer's discretion to request such a showing of compliance, because in some cases it will not be necessary, such as when a small business performs the contract itself without the use of subcontractors or when information regarding compliance is already available to the Government. Through this rule, SBA intends to deter and reduce potential fraud, waste, and abuse, due to noncompliance with the limitations on subcontracting. Additionally, clarifying a contracting officer's authority to request that a small business concern demonstrate compliance with the limitations on subcontracting is consistent with recommendations made by the U.S. Government Accountability Office (GAO) in several reports: “Contract Management: Increased Use of Alaska Native Corporations' Special 8(a) Provisions Calls for Tailored Oversight,” GAO-06-399, April 2006; “8(a) Subcontracting Limitations: Continued Noncompliance with Monitoring Requirements Signals Need for Regulatory Change,” GAO-14-706, September 2014; and “Federal Contracting: Monitoring and Oversight of Tribal 8(a) Firms Need Attention,” GAO-12-84, January 2012.

The majority of the changes in this rule will have de minimis costs and qualitative benefits that are difficult to quantity: Protecting the integrity of the small business procurement system. The rule will provide exceptions to the limitations on subcontracting in certain service contracts where small businesses must use the services of other than small subcontractors in substantial amounts in order to fully perform a set-aside service contract. This will help small business by making acquisitions available for small business set-asides that would not otherwise be available. Many of the other clarifications in this rule will benefit small businesses by reducing confusion in the marketplace, but this benefit is difficult to quantify. The provision allowing agencies to receive double credit toward their small business procurement goals for awards to local small business concerns in the event of a disaster is intended to benefit local small businesses and provide employment and revenue to concerns located in an area devastated by a disaster. While the authority for contracting preferences for businesses located in a disaster area already exists in FAR subpart 26.2, small businesses located in these areas may receive a greater benefit under this rule due to the incentive for the procuring agency to receive double credit toward its small business procurement goals by utilizing this authority.

We believe that, pursuant to FAR 1.602-2, contracting officers already possess the authority to request information from a contractor concerning compliance with a clause in the contract at issue. In addition, on some contracts, compliance can already be reviewed or monitored by reviewing invoices. This rule clarifies that contracting officers have the authority to request information in connection with a contractor's compliance with applicable limitations on subcontracting clauses. Approximately 53,000 firms received approximately 185,000 sole-source or set-aside awards in FY 2018. SBA is clarifying that a contracting officer may request information regarding compliance with prime contractors' limitations on subcontracting. In some cases, this information may not be necessary based on the nature of the contract and the invoices submitted. SBA estimates that less than ten percent of small business concerns and contracts will be subject to a request for this information (5,300 small business concerns and 18,500 contracts), and compliance should take on average less than an hour. Small businesses that do not issue subcontracts will not have anything to report. Small businesses may be able to easily report on any subcontracts, as information on subcontracting and paying subcontractors is routinely compiled as part of the normal accounting procedures for any business concern. Accounting or contract management personnel should be able to determine whether the firm issued any subcontracts in connection with the prime contract. SBA estimates an overall annual cost of approximately $815,110 for small businesses to provide information on compliance with the limitations on subcontracting, as requested by the contracting officer. The difference between this figure and the $600,120 figure cited in the rule reflects an adjustment in the hourly wage rate included as part of the calculation of the overall annual cost. After adding approximately 30% to the hourly wage rate to account for the cost of benefits, SBA arrived at $815,110 as more accurately reflecting the estimated overall annual cost.

This rule will require an other than small prime contractor with a commercial subcontracting plan to include indirect costs in its subcontracting goals. Based on data from the Electronic Subcontracting Reporting System (eSRS), in FY 2018, approximately 1200 firms had commercial subcontracting plans. SBA estimates that approximately 95% of those 1200 firms include indirect costs in their subcontracting goals. Thus, this rule will impact approximately 60 firms. The burden will be de minimis, as the accounting or contract manager will know the firm's indirect costs. The benefit of requiring that indirect costs be included in subcontracting goals where a commercial subcontracting plan is utilized, is that it will increase the small business subcontracting goal and thus increase the amount of funds the prime contractor will subcontract to small business concerns. Increasing the value and number of awards to small business concerns provides financial benefits to those firms, who may hire more staff and invest in more resources to support the increased demand. Furthermore, increasing the number and value of awards to small business concerns has macroeconomic and qualitative benefits to the national economy because small businesses are the foundation of the country's economic success.

This rule will establish that failure to provide timely subcontracting reports may constitute a material breach of the contract. These reports are already required by law at 13 CFR 125.3(a). This rule will make failure to provide the report a material breach of the contract, which could subject other than small business concerns to liquidated damages. SBA is not aware of any case where a firm has been subject to liquidated damages for failure to comply with a subcontracting plan. Thus, any costs will be de minimis. The benefit of this rule is that it will assist SBA and contracting officers with oversight of prime contractor compliance with subcontracting plans and should result in increased compliance with subcontracting plans.

This final rule requires recertification of status on full and open contracts. SBA intended for recertification to occur whenever an agency receives credit for an award towards it goals, and this rule is merely a clarification that socioeconomic recertification is required on all contracts, including full and open contracts. We estimate that approximately 150 firms a year recertify on full and open contracts. This will only impact firms that are acquired, merged, or where there is a novation or the firm grows to be other than small on a long-term contract. Agencies have goals for the award of prime contractor dollars to small and socioeconomic concerns. The purpose of recertification is to ensure that an agency does not receive small business credit for an award to an other than small concern.

This rule will limit the scope of PCR reviews of Department of Defense acquisitions performed outside of the United States and its territories. This applies to the Government and will not impose costs or burdens on the public.

This rule will remove the kit assembler exception to the non-manufacturer rule. This clarification requires agencies to request a waiver of the non-manufacturer rule for kits, in accordance with existing regulations. This will reduce confusion by having only one non-manufacturer rule procedure for purposes of multi-item procurements.

Many of the provisions contained in this rule are required to implement statutory provisions, thus there are no apparent alternatives for these regulations. With respect to the provision clarifying that contracting officers may request information on compliance with the limitations on subcontracting, SBA considered whether prime contractors should be required to provide this information on compliance with the limitations on subcontracting on all set-aside or sole source contracts. However, SBA believed that would unnecessarily burden small businesses, if compliance is already readily apparent to the contracting officer based on the type of contract, invoicing, or observation. We estimate the alternative considered, having all small businesses provide information on compliance, would have an annual cost of $1,867,040. SBA decided to clarify instead that the contracting officer has the discretion to request such information to the extent such information is not already available. This will enable the contracting officer to request this information as he or she sees fit, to ensure that the benefits of the small business programs are flowing to the intended recipients.

As far as practicable or relevant, SBA considered the requirements below in developing this rule.

To the extent possible, the Agency utilized the most recent data available in the Federal Procurement Data System—Next Generation, System for Award Management and Electronic Subcontracting Reporting System.

SBA published a proposed rule with a 60-day comment period, and the proposed rulemaking was posted on www.regulations.gov to allow the public to comment meaningfully on its provisions. In addition, the proposed rule was discussed with the Small Business Procurement Advisory Council, which consists of the Directors of the Office of Small and Disadvantaged Business Utilization. SBA also submitted the rule to multiple agencies with representatives on the FAR Acquisition Small Business Team prior to submitting the rule to OMB for interagency review. SBA received almost 250 specific comments to the proposed rule, which SBA considered in drafting this final rule.

Yes, this rule implements statutory provisions and clarifies certain SBA regulations, as requested by agencies and stakeholders. In addition, SBA clarifies that contracting officers may request information from their contractors to determine whether the contractor is complying with the limitations on subcontracting. This information may already be provided as part of invoicing under certain contracts, and in any event, the information should be readily provided by the contractor, as it simply pertains to what extent the prime contractor is subcontracting work under the contract. Clarifying that the contracting officer has the authority to request this information, instead of requiring all small businesses to submit reports, significantly reduces cost and burden.

This action meets applicable standards set forth in section 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. This action does not have any retroactive or preemptive effect.

SBA has determined that this rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.

This rule is expected to be an Executive Order 13771 regulatory action. Details on the estimated costs of this rule can be found in the rule's regulatory impact analysis.

This rule will not result in an unfunded mandate that will result in expenditures by State governments of $100 million or more (adjusted annually for inflation since 1995).

Small businesses, such as 8(a) BD Program Participants, HUBZone SBCs, WOSBs, Economically Disadvantaged Women-Owned (EDWOSBCs), and SDVO SBCs, are eligible to receive set-aside or sole source contracts. 15 U.S.C. 631(a), 637(a), (m), 644(a), (j), 657a, 657f. As a condition of these preferences, and to help ensure that small businesses actually perform a certain percentage of the work on a contract, the recipients of set-aside or sole source contracts are limited in their ability to subcontract to other than small business concerns by the limitations on subcontracting clauses in the particular contract. See, 48 CFR 52.219-3, 52.219-4, 52.219-7, 52.219-14, 52.219-18, 52.219-27, 52.219-29, 52.219-30. Contracting officers are responsible for ensuring contractor compliance with the terms of a contract (FAR 1.602-2). This rule will provide express authority for contracting officers to request information on contractors' compliance with the limitations on subcontracting requirements. SBA did not receive any comments on this information collection.

SBA sought review and approval from OMB for this information collection, as discussed in the proposed rule. SBA received a Notice of Office of Management and Budget Action on June 10, 2019, certifying OMB pre-approval of the information collection. SBA is not making any substantive changes to the information collection described in the proposed rule and submitted to OMB. The information collection is titled “Compliance with the Limitations on Subcontracting” and has been assigned OMB Control Number 3245-400.

A summary description of the reporting requirement, description of respondents, and estimate of the annual burden is provided below. Included in the estimate is the time for reviewing requirements, gathering and maintaining the data needed, and submitting the report to the contracting officer.

Title: Compliance with the Limitations on Subcontracting.

OMB Control Number: 3245-0400.

Summary Description of Compliance Information: In order to show that it is in compliance with the limitations on subcontracting terms that are included in its set-aside or sole source contract, a small business concern may be required to submit certain information to the contracting officer. The specific information relevant to a particular contract will be identified by the contracting officer but could include, where applicable, identification of subcontractor, dollar amount of subcontract, and costs to be excluded from the limitations on subcontracting calculation (e.g., for contracts for supplies, materials).

Description of and Estimated Number of Respondents: Small business concerns that are awarded set-aside or sole source contracts. Based on FPDS data, SBA estimates that approximately 53,000 concerns receive approximately 185,000 small business sole source or set-aside awards in a fiscal year and that no more than ten percent (5,300) of concerns will be asked to provide information on compliance with the limitations on subcontracting for no more than ten percent (18,500) of the awards that have been received.

Estimated Annual Responses: 18,500.

Estimated Response Time per Respondent: 1 hour.

Total Estimated Annual Hour Burden: 18,500.

Estimated Costs Based on Respondent's Salary: $44.06/hour (based on 2018 Median Pay for accountants and auditors, Bureau of Labor Statistics, plus an additional 30% to account for cost of benefits, as discussed in the Regulatory Impact Assessment).

Total Estimated Hour Annual Cost Burden: 18,500 hours × $44.06/hour = $815,110.

Under the Regulatory Flexibility Act (RFA), this rule may have a significant on a substantial number of small businesses. Immediately below, SBA sets forth a final regulatory flexibility analysis (FRFA) addressing the impact of the rule in accordance with section 603, title 5, of the United States Code. The FRFA examines the objectives and legal basis for this rule; the kind and number of small entities that may be affected; the projected recordkeeping, reporting, and other requirements; whether there are any Federal rules that may duplicate, overlap, or conflict with this final rule; and whether there are any significant alternatives to this final rule.

The rule implements section 863 of the National Defense Authorization Act of 2016, Public Law 114-92, 129 Stat. 726 (15 U.S.C. 644(e)(3)); section 2108 of the Recovery Improvements for Small Entities After Disaster Act of 2015 (RISE Act), Public Law 114-88, 129 Stat. 686 (15 U.S.C. 644(f)); and sections 1811 and 1821 of the National Defense Authorization Act of 2017, Public Law 114-328, 130 Stat. 2000 (15 U.S.C. 637(d), 644(l)). In addition, the rule makes several other changes needed to clarify ambiguities in or remedy perceived problems with the current regulations. These changes should make SBA's regulations easier to use and understand. The rule will make it easier for agencies to award set-aside contracts to SBCs. Failure to promulgate this rule could result in a loss of set-aside opportunities for SBCs.

The change to § 121.404 clarifies when size for a Government contract is determined, which will reduce confusion for small business concerns. The change to § 121.406 clarifies that the size standard for information technology value added resellers is 150 employees, again to eliminate confusion among small business concerns. The changes to § 125.2(a) will benefit small business by clarifying that a contracting officer can award a contract to a small business under a set-aside if only one offer is received. The changes to § 125.2(b) implement section 1811 of the NDAA 2017 and govern what acquisitions PCRs can review and would not impact small business concerns. The changes to § 125.2(d) implement section 863 of the NDAA of 2016 and direct contracting officers on how to notify the public about consolidation and substantial bundling and will not impact small business concerns. The changes to § 125.2(e) authorize agencies to set aside orders for socioeconomic programs where the contract was set aside for small business and will benefit firms that qualify for those set-asides. The changes to § 125.3 implement section 1821 of the NDAA of 2017 by providing examples of a failure to make a good faith effort to comply with small business subcontracting plans, and will benefit small businesses by providing such examples so that contracting officers can hold other than small prime contractors accountable for failing to make a good faith effort to comply with their small business subcontracting plan. The changes to § 125.3 also implement section 1821 by providing that the contracting officer should evaluate whether an other than small business complied with the requirement to report on small business subcontracting plan performance. The changes to § 125.6(a) will benefit small business concerns by allowing small businesses to exclude certain costs from the calculation of the limitations on subcontracting. Without these changes, some agencies will not be able to set contracts aside for small business, because certain costs attributable to other than small concerns are too high. The changes to § 125.6 also help small businesses by clarifying the difference between an employee and an independent contractor. The changes to § 125.6 will impose some information production requirements on small business concerns, but only to the extent the information is not already in the possession of the Government. Further, this information is readily available since it pertains to contract performance and subcontracting of that performance. These reports are not mandatory, as the contracting officer simply has the discretion to request such reports. Contracting officers already have the authority to request information demonstrating performance, and this change simply clarifies that the authority exists. Finally, the benefits to small business concerns of this rule substantially outweigh any minor costs imposed by the reporting authority. The addition of part 129 implements section 2108 of the RISE Act and benefits small businesses by providing agencies with an incentive to set aside contracts for small business concerns located in a disaster area.

With respect to the limitation on subcontracting to an ineligible small business under a socioeconomic set-aside (the new 13 CFR 124.507(b)(2)(vi), 125.29(c), 126.601(i), and 127.504(c)), the rule will impact very few firms. The vast majority of small business prime contractors self-perform the required percentage of work, or will subcontract to a similarly situated entity, as is allowed under FAR 52.219-3 (Notice of HUBZone Set-Aside or Sole Source Award), 52-219-27 (Notice of Service-Disabled Veteran-Owned Small Business Set-Aside), and as will be allowed when SBA's rules on similarly situated entities (13 CFR 125.6) are implemented in the FAR. The benefits that will flow to the intended beneficiaries of a socio-economic set-aside far outweigh any impact on firms that have no intention of performing the contract or are not eligible to bid on that contract.

The rule will be applicable to all small business concerns participating in the Federal procurement market that seek to perform Government prime contracts or to perform subcontracts awarded by other than small concerns. SBA estimates that there are approximately 320,000 firms identified as small business concerns in the Dynamic Small Business Search database.

The rule does not impose new recordkeeping requirements. Contractors already keep records on contract performance and subcontracting. Information may be required, but only to the extent the information is not available through invoices or existing progress reports. The rule clarifies that contracting officers may request access to information in connection with a contractor's compliance with applicable limitations on subcontracting clauses. Approximately 53,000 firms received sole source or set-aside awards in FY 2018. SBA is clarifying that a contracting officer may request information to ensure compliance with the limitations on subcontracting clause, and in some cases this information may not be necessary based on the nature of the contract and the invoices submitted. We estimate that less than ten percent of contracts would be subject to a request to provide this information (18,500), and compliance should take less than an hour for each of those contracts. Accounting or contract management personnel should be able to determine whether the firm issued any subcontracts in connection with the prime contract. We estimate an overall annual cost of approximately $815,110. As discussed above in the Regulatory Impact Analysis, this figure differs from the figure included in the IRFA to reflect the increased hourly rate that is included as part of the cost analysis.

We are not aware of any rules that duplicate, overlap or conflict with this rule. The FAR will have to be amended to implement portions of this rule. That will be done through a separate rulemaking.

Many of the changes are required to implement statute and impose requirements on contracting personnel, agencies or other than small concerns, and do not impact small business concerns. Further, many of the changes will benefit small business concerns by clarifying areas where there is confusion and by making it easier for agencies to set aside contracts and orders for small business and small socioeconomic concerns. As an alternative, SBA considered whether prime contractors should be required to provide information on compliance with the limitations on subcontracting on all set-aside or sole source contracts. However, that may unnecessarily burden small businesses, if compliance is already readily apparent to the contracting officer based on the type of contract, invoicing, or observation.

Accordingly, for the reasons stated in the preamble, SBA amends 13 CFR parts 121, 124, 125, 126, and 127 and adds 13 CFR part 129 as follows:

Discussion

The FAA received reports of approximately 21 failures of the affected LPT 3rd-stage blades from 2017 through June 2019. These failures appear to be caused by impact damage occurring when debris passes through the engine. The manufacturer has determined the need to replace any affected LPT 3rd-stage blades with LPT blades made of a different material that is more resistant to impact damage.

In response to these events, the FAA issued a Notice of Proposed Rulemaking (NPRM), Product Identifier 2019-NE-31-AD (84 FR 64441, November 22, 2019), proposing to adopt a new AD to address LPT 3rd-stage blade failures on certain IAE LLC PW1122G-JM, PW1124G-JM, PW1124G1-JM, PW1127G1-JM, PW1127GA-JM, PW1127G-JM, PW1129G-JM, PW1130G-JM, PW1133GA-JM, PW1133G-JM model turbofan engines. This NPRM AD proposes removal from service of affected LPT 3rd-stage blades at the next engine shop visit.

Since June 2019, and prior to the publication of NPRM Product Identifier 2019-NE-31-AD, 20 additional failures of the affected LPT 3rd-stage blades have occurred. The investigation of these failures is on-going. These additional failures have occurred primarily on engines operated by certain airlines. This AD requires an accelerated timeframe for replacement of the affected LPT 3rd-stage blades on certain serial-numbered engines being operated by these airlines. Based on publication of NPRM Product Identifier 2019-NE-31-AD, the FAA would still require replacement of the affected LPT 3rd-stage blades on the remaining affected engines at the next engine shop visit.

This condition, if not addressed, could result in failure of the LPT 3rd-stage blades, failure of one or more engines, loss of thrust control, and loss of the airplane. The FAA is issuing this AD to address the unsafe condition on these products.

The FAA reviewed Pratt & Whitney Service Bulletin PW1000G-C-72-00-0111-00A-930A-D, Issue No. 002, dated October 18, 2019. The service information describes procedures for removal of the affected LPT 3rd-stage blades and their replacement with parts eligible for installation.

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

This AD requires, within the times specified in the compliance section of this AD, removal from service of LPT 3rd-stage blades part number (P/N) 5387343, 5387493, 5387473, or 5387503, and their replacement with parts eligible for installation.

An unsafe condition exists that requires the immediate adoption of this AD. The FAA has found the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because no domestic operators use this product. It is unlikely that the FAA will receive any adverse comments or useful information about this AD from U.S. operators. Therefore, the FAA finds good cause that notice and opportunity for prior public comment are unnecessary. In addition, for the reason stated above, the FAA finds that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety and was not preceded by notice and an opportunity for public comment. However, the FAA invites you to send any written data, views, or arguments about this final rule. Send your comments to an address listed under the ADDRESSES section. Include the docket number FAA-2019-0995 and Product Identifier AD-2019-00113-E at the beginning of your comments. The FAA specifically invites comments on the overall regulatory, economic, environmental, and energy aspects of this final rule. The FAA will consider all comments received by the closing date and may amend this final rule because of those comments.

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

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

The FAA estimates that this AD affects 0 engines installed on airplanes of U.S. registry.

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

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

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

This AD is issued in accordance with authority delegated by the Executive Director, Aircraft Certification Service, as authorized by FAA Order 8000.51C. In accordance with that order, issuance of ADs is normally a function of the Compliance and Airworthiness Division, but during this transition period, the Executive Director has delegated the authority to issue ADs applicable to engines, propellers, and associated appliances to the Manager, Engine and Propeller Standards Branch, Policy and Innovation Division.

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

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

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

(2) Will not affect intrastate aviation in Alaska.

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

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends the Class E airspace extending upward from 700 feet above the surface at Madera Municipal Airport, Madera, CA, and updates the airspace lateral dimensions to meet current requirements, to support IFR operations at the airport.

The FAA published a notice of proposed rulemaking in the Federal Register (84 FR 25205; May 31, 2019) DOCKET NO. FAA-2018-1002, to modify Class E airspace extending upward from 700 feet above the surface at Madera Municipal Airport, Madera, CA, and to update the airspace lateral dimensions to meet current requirements. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. The FAA received a single anonymous comment asking “[h]ow will this effect (sic) global warming?” The FAA does not find this a substantive comment to the proposal. The airspace does not control where aircraft fly but defines the area within which all aircraft operators are subject to operating rules and equipment requirements.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11D, dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in that Order. FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

This document amends FAA Order 7400.11D, Airspace Designations and Reporting Points, dated August 8, 2019, and effective September 15, 2019. FAA Order 7400.11D is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11D lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying the Class E airspace extending upward from 700 feet above the surface at Madera Municipal Airport, Madera, CA, eliminating references to the Clovis and Friant Very High Frequency Omni-Directional Range/Tactical Air Navigation Aids (VORTAC) from the legal description, as they are no longer needed. This action also updates the airport's geographic coordinates to match the FAA's aeronautical database. Finally, this action updates the lateral dimensions to meet current airspace requirements by removing 4.4 miles of airspace extending to the southeast, adding 0.4 miles to the radius around the Airport Reference Point and adding a portion that extends 1 mile each side of the 316° bearing from the 4.4 mile radius to 1.5 miles northwest. This action supports the operation of Instrument Flight Rules (IFR) under standard instrument approach and departure procedures in the National Airspace System.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

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

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends the Class D legal description for Los Angeles International Airport, Los Angeles, CA, in support of IFR operations at the airport.

The FAA published a notice of proposed rulemaking in the Federal Register (84 FR 36502; July 29, 2019) for Docket No. FAA-2019-0535 to amend the legal description of the LAX Class D. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. The FAA received a single comment. The commenter stated in full “I recommend keeping the language as part time and reducing light air traffic for public health and sound scape enhancements.” The FAA does not find this to be a substantive comment about the proposal. The specified airspace does not control where aircraft fly but defines the area within which all aircraft operators are subject to operating rules and equipment requirements.

Class D airspace designations are published in paragraph 5000 of FAA Order 7400.11D, dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR 71.1. The Class D airspace designation listed in this document will be published subsequently in the Order. FAA Order 7400.11, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

This document amends FAA Order 7400.11D dated August 8, 2019, and effective September 15, 2019, which is incorporated by reference in 14 CFR part 71.1. FAA Order 7400.11D is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11D lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

The FAA is amending Title 14, Code of Federal Regulations (14 CFR) part 71 by removing the language establishing the airspace as part time. NBAA informed the FAA that the LAX Class D legal description, the related chart supplement entry, and notes included on the VFR Sectional contained information that did not clearly identify when the airspace was in effect. The FAA concurs. The legal description contains language that implied the Class D airspace was part-time, inconsistent with the original intent of the airspace. The Chart Supplement does not include information indicating when the airspace is effective and directs users to the VFR Terminal Area Chart. The VFR Terminal Area Chart directs users to the Chart Supplement or NOTAMS for information and NOTAMS are not appropriate for this use. The original intent was to establish the Class D airspace as full time. In 2009, as a result of a mid-air collision in New York and in response to NTSB Recommendation A-09- 86, Congress requested the FAA evaluate low-level flight around heavy-use airspace. The FAA committed to evaluations of flight operations in and around Class Bravo Airspace in New York, Los Angeles, Chicago, and Houston. The LAX VFR Airspace Taskforce was convened and made recommendations to modify the airspace around LAX in a two-step process. Step one was to establish full-time Class D airspace at LAX. Step two was to incorporate the Class D airspace into the LAX Class B at a later date.

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

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

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

This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained on FAA form documents is unnecessary.

This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.

The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.

Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866;(2) is not a “significant rule” under DOT regulatory Policies and Procedures (44 FR 11034; February 26, 1979) ; and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, Part 97, (14 CFR part 97), is amended by amending Standard Instrument Approach Procedures and Takeoff Minimums and ODPs, effective at 0901 UTC on the dates specified, as follows:

This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or removes SIAPS, Takeoff Minimums and/or ODPS. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA form documents is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAPs, Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure, and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPS, Takeoff Minimums and/or ODPS as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as Amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.

Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C 553(d), good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:

Background

The final regulations and removal of temporary regulations (T.D. 9623) that is the subject of this correction are under section 108(i) of the Internal Revenue Code.

As published July 3, 2013 (78 FR 39973), the final regulations and removal of temporary regulations (T.D. 9623) contain an error that may prove to be misleading and needs clarification.

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register OMB Office of Management and Budget NPRM Notice of Proposed Rulemaking (Advance, Supplemental) § Section U.S.C. United States Code II. Background Information and Regulatory History

On June 17, 2018, we published a notice of proposed rulemaking entitled Drawbridge Operation Regulations; Tensaw River, Hurricane, AL in the Federal Register 2019-12720. We received 0 comments on this rule.

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

CSX requested to change the operating requirements for the CSX railroad bridge across the Tensaw River mile 15.0, Hurricane, Baldwing County, Alabama. This bridge currently opens according to 33 CFR part 117.113 and opens on signal; except that, from 5 p.m. to 9 a.m. the draw shall open on signal if at least eight-hours-notice is given. CSX requested that the bridge open on signal if at least ten-hours-notice is given at all times.

This bridge spans the Tensaw River and is used by small recreational boats, house boats, and a tour boat. The bridge has a vertical clearance of 11 feet above mean high water in the closed to vessel position and unlimited vertical clearance in the open to vessel traffic position. There are few vessel movements through this bridge. From July 2017 through February 2018 the bridge opened 52 times for vessel passage. This equates to less than 7 times each month. Of these openings 38 were made for recreational vessels, 16 were made for a tour boat, 6 were made for house boats, and 2 were made for local law enforcement vessels.

This change allows CSX to align bridge tender operations with daylight and night time hours and provide for the reasonable needs of navigation.

There were no comments on this rule change. The Coast Guard provided a comment period of 30 days. Based on the infrequent times that this bridge has opened for vessel traffic over eight months this rule provides vessels with a reasonable ability to use the waterway. We did not identified any impacts on marine navigation with this proposed rule.

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 determination is based on the fact that vessels can still open the draw and transit if advance notice is provided. Those vessels with a vertical clearance requirement of less than 11 feet above mean high water may transit the bridge at any time, and the bridge will open in case of an emergency at any time. This change to the drawbridge operation regulations at 33 CFR 117.113 meets the reasonable needs of navigation.

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. The Coast Guard received 0 comments from the Small Business Administration on this rule. 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 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 promulgates the operating regulations or procedures for drawbridges. This action is categorically excluded from further review, under paragraph L49, of Chapter 3, Table 3-1 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:

The MBTA notified Sector Boston that there will be times in which the narrow navigable channel underneath the MBTA Railroad Bridge, Annisquam River, Gloucester, Massachusetts, will need to be closed for the replacement of submarine cables, abutment construction, and span replacement.

In response, on August 19, 2019, the Coast Guard published a notice of proposed rulemaking (NPRM) titled “Safety Zone, MBTA Railroad Bridge Replacement Project—Annisquam River, Gloucester, MA” (84 FR 42869). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to this safety zone. During the comment period that ended on September 18, 2019, we received zero comments.

The replacement project started in the fall of 2018 and is expected to be completed in December 2022. The COTP Boston determined that the potential hazards associated with the replacement of the submarine cables, abutment construction, and span replacement will be a safety concern for anyone within the work area. This temporary safety zone would be enforced during the replacement of the submarine cables, abutment construction, and span replacement or when other hazards to navigation arise. No vessel or person will be permitted to enter the temporary safety zone without obtaining permission from the COTP Boston or a designated representative.

The exact times of any waterways closures are unknown. However, every effort is being made by the MBTA and contractor to schedule these closures during the winter months when boating traffic is minimal. The Coast Guard will notify the public of closures through the Massachusetts Bay Harbor Safety Committee meetings, Boston's Port Operators Group meetings, Local Notice to Mariners and through the Gloucester Harbormaster's network. The Coast Guard will issue a Safety Marine Information Broadcast (SMIB) via marine channel 16 (VHF-FM) seven days in advance of the enforcement of the safety zones.

This rulemaking is to protect personnel, vessels, and the marine environment from potential hazards created during the replacement project of the MBTA Railroad Bridge, at mile 0.7, across the Annisquam River, Gloucester, Massachusetts. This rulemaking under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231).

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034. The COTP Boston and has determined that potential hazards associated with the replacement of the submarine cables, abutment construction, and span replacement will be a safety concern for anyone within the work area or anyone transiting within 100 yards of the MBTA Railroad Bridge. The purpose of this rule is to ensure the safety of vessels and personnel within 100 yards of the MBTA Railroad Bridge before, during, and after the replacement of the submarine cables, abutment construction, and span replacement.

As noted above, we received zero comments on the NPRM published August 19, 2019. The only regulatory text change in this rule is the start date is moved from November 1, 2019 to December 1, 2019. The contractor has stated that they are behind schedule and would not need the safety zone prior to December 1, 2019.

This rule establishes a safety zone from 12:01 a.m. on December 1, 2019, to 11:59 on June 30, 2023. While the safety zone would be effective throughout this period, it would only be enforced during periods when work barges and cranes will be placed in the navigable channel or when other hazards to navigation exist. Any closure is expected to last less than two weeks. The safety zone would include all navigable waters within 100 yards of the MBTA Railroad Bridge, at mile 0.7, across the Annisquam River, Gloucester, Massachusetts. During times of enforcement, no vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP Boston or a designated representative. The Coast Guard will notify the public of closures through the Massachusetts Bay Harbor Safety Committee meetings, Boston's Port Operators Group meetings, Local Notice to Mariners and through the Gloucester Harbormaster's network. The Coast Guard will issue a Safety Marine Information Broadcast (SMIB) via marine channel 16 (VHF-FM) seven days in advance of the enforcement of the safety zones.

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

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

This regulatory action determination is based on the size, location, duration, and time of year of the safety zone. There may be a time during the boating summer season that the safety zone needs to be enforced. However, the MBTA and contractor are making all attempts to schedule these needed closures during the winter months. We expect the adverse economic impact of this temporary rule to be minimal. We will provide ample notice of the safety zone effective dates and vessels will be able to enter the safety zone when construction equipment is not occupying the channel. Although this regulation may have some adverse impact on the public, the potential impact will be minimal because the boating season for vessels on the Annisquam usually concludes in mid-October and consequently the amount of traffic in this waterway during the effective period for the safety zone is limited to a few commercial lobstermen. The Gloucester Harbormaster will be allowing the lobstermen to moor their boats at the town docks on the harbor entrance side during periods of enforcement, which will allow the lobstermen to transit to their lobster gear with no impact. If a summer time closure is needed, with the exception of an emergency, we will coordinate with the MBTA, contractor, and Harbormaster to ensure that all alternatives are explored, the duration is of the shortest possible timeframe, and a minimum of two weeks notification are given to the boating public via Local Notice to Mariners, Safety Marine Information Broadcast via marine channel 16 (VHF-FM) and through the Gloucester Harbormaster network.

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

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this 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 section.

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

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

A rule has implications for federalism under Executive Order 13132 (Federalism), if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this 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 would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

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

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves the establishment of a temporary safety zone for the navigable waters within 100 yards of the MBTA Railroad Bridge, at mile 0.7, across the Annisquam River, Gloucester, Massachusetts, from December 1, 2019 through June 30, 2023 for the replacement of the bridge. The safety zone will only be enforced during periods when work barges and cranes will be placed in the navigable channel or when other hazards to navigation arise. As discussed in our pre-construction meeting, any closure is expected to be of less than a two-week duration and all attempts are being made by the MBTA and contractor to schedule these closures during winter months when boating traffic is minimal. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES.

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

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

Purpose: As noted above, this final rule incorporates classification changes adopted by the Nice Agreement that will become effective on January 1, 2020. Specifically, this rule adds new, or deletes existing, goods and services from 7 class headings to further define the types of goods and/or services appropriate to the class.

Summary of Major Provisions: The USPTO is revising § 6.1 in part 6 of title 37 of the Code of Federal Regulations to incorporate classification changes and modifications, as listed in the International Classification of Goods and Services for the Purposes of the Registration of Marks (11th ed., ver. 2020) (Nice Classification), published by WIPO, and that will become effective January 1, 2020.

The Nice Agreement is a multilateral treaty, administered by WIPO, which establishes the international classification of goods and services for the purposes of registering trademarks and service marks. As of September 1, 1973, this international classification system is the controlling system used by the United States, and it applies to all applications filed on or after September 1, 1973, and their resulting registrations, for all statutory purposes. See 37 CFR 2.85(a). Every signatory to the Nice Agreement must utilize the international classification system.

Each state party to the Nice Agreement is represented in the Committee of Experts of the Nice Union (Committee of Experts), which meets annually to vote on proposed changes to the Nice Classification. Any state that is a party to the Nice Agreement may submit proposals for consideration by the other members in accordance with agreed-upon rules of procedure. Proposals are currently submitted on an annual basis to an electronic forum on the WIPO website, commented upon, modified, and compiled by WIPO for further discussion and voting at the annual Committee of Experts meeting.

In 2013, the Committee of Experts began annual revisions to the Nice Classification. The annual revisions, which are published electronically and enter into force on January 1 each year, are referred to as versions and identified by edition number and year of the effective date (e.g., “Nice Classification, 10th edition, version 2013” or “NCL 10-2013”). Each annual version includes all changes adopted by the Committee of Experts since the adoption of the previous version. The changes consist of the addition of new goods and services to, and deletion of goods and services from, the Alphabetical List, and any modifications to the wording in the Alphabetical List, the class headings, and the explanatory notes that do not involve the transfer of goods or services from one class to another. New editions of the Nice Classification continue to be published electronically and include all changes adopted annually since the previous version, as well as goods or services transferred from one class to another or new classes that are created.

The annual revisions contained in this final rule consist of modifications to the class headings that were incorporated into the Nice Agreement during the 29th Session of the Committee of Experts, from April 29, 2019, through May 3, 2019. Under the Nice Classification, there are 34 classes of goods and 11 classes of services, each with a class heading. Class headings generally indicate the fields to which goods and services belong. Specifically, this rule adds new, or deletes existing, goods and services from 7 class headings, as further discussed in the Discussion of Regulatory Changes. The changes to the class headings further define the types of goods and/or services appropriate to the class. As a signatory to the Nice Agreement, the United States adopts these revisions pursuant to Article 1.

The USPTO is revising § 6.1 as follows:

In Class 10, the wording “the disabled” is amended to “persons with disabilities.”

In Class 29, the wording “yoghurt” is amended to “yogurt.”

In Class 37, the wording “Building construction” is amended to “Construction services.” The wording “repair;” is deleted where it appears as a separate clause. The wording “installation services” is amended to “installation and repair services” and the period after “services” is replaced with a semi-colon. The wording “mining extraction, oil and gas drilling” is added thereafter.

In Class 38, the wording “Telecommunications” is amended to add “services” thereafter.

In Class 40, the period after “Treatment of materials” is replaced with a semi-colon. The wording “recycling of waste and trash; air purification and treatment of water; printing services; food and drink preservation” is added thereafter.

In Class 42, the wording “industrial analysis and industrial research services” is amended to replace the “and” after “analysis” with a comma, and to add “and industrial design” after “research” and before “services.” The wording “quality control and authentication services;” is added immediately thereafter.

In Class 44, the wording “agriculture, horticulture and forestry services” is amended to add “aquaculture,” after “agriculture.”

A. Administrative Procedure Act: The changes in this rulemaking involve rules of agency practice and procedure, and/or interpretive rules. See Perez v. Mortg. Bankers Ass'n, 135 S. Ct. 1199, 1204 (2015) (Interpretive rules “advise the public of the agency's construction of the statutes and rules which it administers.” (citation and internal quotation marks omitted)); Nat'l Org. of Veterans' Advocates v. Sec'y of Veterans Affairs, 260 F.3d 1365, 1375 (Fed. Cir. 2001) (Rule that clarifies interpretation of a statute is interpretive.); Bachow Commc'ns Inc. v. FCC, 237 F.3d 683, 690 (D.C. Cir. 2001) (Rules governing an application process are procedural under the Administrative Procedure Act.); Inova Alexandria Hosp. v. Shalala, 244 F.3d 342, 350 (4th Cir. 2001) (Rules for handling appeals were procedural where they did not change the substantive standard for reviewing claims.).

Accordingly, prior notice and opportunity for public comment for the changes in this rulemaking are not required pursuant to 5 U.S.C. 553(b) or (c), or any other law. See Perez, 135 S. Ct. at 1206 (Notice-and-comment procedures are required neither when an agency “issue[s] an initial interpretive rule” nor “when it amends or repeals that interpretive rule.”); Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (stating that 5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), does not require notice and comment rulemaking for “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice” (quoting 5 U.S.C. 553(b)(A))).

B. Regulatory Flexibility Act: As prior notice and an opportunity for public comment are not required pursuant to 5 U.S.C. 553 or any other law, neither a Regulatory Flexibility Act analysis, nor a certification under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), is required. See 5 U.S.C. 603.

C. Executive Order 12866 (Regulatory Planning and Review): This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993).

D. Executive Order 13563 (Improving Regulation and Regulatory Review): The USPTO has complied with Executive Order 13563 (Jan. 18, 2011). Specifically, the USPTO has, to the extent feasible and applicable: (1) Made a reasoned determination that the benefits justify the costs of the rule; (2) tailored the rule to impose the least burden on society consistent with obtaining the regulatory objectives; (3) selected a regulatory approach that maximizes net benefits; (4) specified performance objectives; (5) identified and assessed available alternatives; (6) involved the public in an open exchange of information and perspectives among experts in relevant disciplines, affected stakeholders in the private sector and the public as a whole, and provided on-line access to the rulemaking docket; (7) attempted to promote coordination, simplification, and harmonization across government agencies and identified goals designed to promote innovation; (8) considered approaches that reduce burdens and maintain flexibility and freedom of choice for the public; and (9) ensured the objectivity of scientific and technological information and processes.

E. Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs): This rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.

F. Executive Order 13132 (Federalism): This rulemaking does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).

G. Executive Order 13175 (Tribal Consultation): This rulemaking will not: (1) Have substantial direct effects on one or more Indian tribes; (2) impose substantial direct compliance costs on Indian tribal governments; or (3) preempt tribal law. Therefore, a tribal summary impact statement is not required under Executive Order 13175 (Nov. 6, 2000).

H. Executive Order 13211 (Energy Effects): This rulemaking is not a significant energy action under Executive Order 13211 because this rulemaking is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required under Executive Order 13211 (May 18, 2001).

I. Executive Order 12988 (Civil Justice Reform): This rulemaking meets applicable standards to minimize litigation, eliminate ambiguity, and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996).

J. Executive Order 13045 (Protection of Children): This rulemaking does not concern an environmental risk to health or safety that may disproportionately affect children under Executive Order 13045 (Apr. 21, 1997).

K. Executive Order 12630 (Taking of Private Property): This rulemaking will not affect a taking of private property or otherwise have taking implications under Executive Order 12630 (Mar. 15, 1988).

L. Congressional Review Act: Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the USPTO will submit a report containing the final rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the Government Accountability Office. The changes in this notice are not expected to result in an annual effect on the economy of 100 million dollars or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. Therefore, this notice is not expected to result in a “major rule” as defined in 5 U.S.C. 804(2).

M. Unfunded Mandates Reform Act of 1995: The changes set forth in this notice do not involve a Federal intergovernmental mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, of 100 million dollars (as adjusted) or more in any one year, or a Federal private sector mandate that will result in the expenditure by the private sector of 100 million dollars (as adjusted) or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq.

N. National Environmental Policy Act: This rulemaking will not have any effect on the quality of the environment and is thus categorically excluded from review under the National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq.

O. National Technology Transfer and Advancement Act: The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because this rulemaking does not contain provisions that involve the use of technical standards.

P. Paperwork Reduction Act: This final rule does not involve information collection requirements which are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

For the reasons given in the preamble and under the authority contained in 15 U.S.C. 1112, 1123 and 35 U.S.C. 2, as amended, the USPTO is amending part 6 of title 37 as follows:

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

On September 20, 2019 (84 FR 49492), EPA proposed to redesignate the Ohio portion of the Steubenville Ohio-West Virginia interstate SO2 nonattainment area from nonattainment to attainment of the 2010 SO2 NAAQS. EPA also proposed to approve Ohio's SO2 maintenance plan for the area. An explanation of the CAA requirements for redesignation, a detailed analysis of the redesignation request and maintenance plan, and EPA's reasons for proposing approval were provided in the notice of proposed rulemaking and will not be restated here. The public comment period for this proposed rule ended on October 21, 2019.

The Steubenville nonattainment area is comprised of a portion of Jefferson County, Ohio and a portion of Brooke County, West Virginia. The Ohio portion of the Steubenville nonattainment area includes Cross Creek Township, Steubenville Township, Warren Township, Wells Township, and Steubenville City in Jefferson County.

Ohio and West Virginia prepared nonattainment State Implementation Plans (SIPs) to provide for attainment of the 2010 SO2 NAAQS in the Steubenville nonattainment area by the SO2 attainment date of October 4, 2018. EPA approved the nonattainment SIPs from Ohio and West Virginia on October 22, 2019 (84 FR 56385).

EPA received two public comments on the September 20, 2019 proposal to redesignate the Ohio portion of the Steubenville nonattainment area. Both comments supported the proposed redesignation. The comments are included in the docket for this action.

EPA is redesignating the Ohio portion of the Steubenville nonattainment area from nonattainment to attainment of the 2010 SO2 NAAQS. The Ohio portion of the Steubenville nonattainment area includes Cross Creek Township, Steubenville Township, Warren Township, Wells Township, and Steubenville City in Jefferson County. Ohio has demonstrated that the area is attaining the SO2 standard, and that the improvement in air quality is due to permanent and enforceable SO2 emission reductions in the nonattainment area. EPA is also approving Ohio's maintenance plan, which is designed to ensure that the area will continue to maintain the SO2 standard.

In accordance with 5 U.S.C. 553(d), EPA finds there is good cause for these actions to become effective immediately upon publication. This is because a delayed effective date is unnecessary due to the nature of a redesignation to attainment, which relieves the area from certain CAA requirements that would otherwise apply to it. The immediate effective date for this action is authorized under both 5 U.S.C. 553(d)(1), which provides that rulemaking actions may become effective less than 30 days after publication if the rule “grants or recognizes an exemption or relieves a restriction,” and section 553(d)(3), which allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.” The purpose of the 30-day waiting period prescribed in section 553(d) is to give affected parties a reasonable time to adjust their behavior and prepare before the final rule takes effect. This rule, however, does not create any new regulatory requirements such that affected parties would need time to prepare before the rule takes effect. Rather, this rule relieves the State of planning requirements for this nonattainment area. For these reasons, EPA finds good cause under 5 U.S.C. 553(d)(3) for these actions to become effective on the date of publication of these actions.

Under the CAA, redesignation of an area to attainment and the accompanying approval of the maintenance plan under CAA section 107(d)(3)(E) are actions that affect the status of the geographical area and do not impose any additional regulatory requirements on sources beyond those required by state law. A redesignation to attainment does not in and of itself impose any new requirements, but rather results in the application of requirements contained in the CAA for areas that have been redesignated to attainment. Moreover, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

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

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

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

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

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

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

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

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

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

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

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because redesignation is an action that affects the status of a geographical area and does not impose any new regulatory requirements on tribes, impact any existing sources of air pollution on tribal lands, nor impair the maintenance of ozone national ambient air quality standards in tribal lands.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by January 28, 2020. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Title 40 CFR parts 52 and 81 are amended as follows:

I. Codification A. What is codification?

Codification is the process of placing a State's statutes and regulations that comprise the State's approved UST program into the CFR. Section 9004(b) of RCRA, as amended, allows the EPA to approve State UST programs to operate in lieu of the Federal program. The EPA codifies its authorization of State programs in 40 CFR part 282 and incorporates by reference State regulations that the EPA will enforce under sections 9005 and 9006 of RCRA and any other applicable statutory provisions. The incorporation by reference of State authorized programs in the CFR should substantially enhance the public's ability to discern the current status of the approved State program and State requirements that can be federally enforced. This effort provides clear notification to the public of the scope of the approved program in each State.

The EPA is publishing this rule to codify North Dakota's approved UST program without a prior proposal because we believe this action is not controversial. The reason being that, in accordance with section 9004(b) of RCRA, EPA has already evaluated the State's regulatory and statutory requirements and has determined that the State's program meets the statutory and regulatory requirements established by RCRA. The EPA previously provided notifications and opportunity for comments on the Agency's decisions to approve the North Dakota program. The EPA is not reopening the decisions, nor requesting new comments, on the North Dakota approvals as previously published in the Federal Register documents specified in Section I.C of this final rule document. The previous approvals form the basis for the codification addressed in this final rule.

On December 10, 1991 (56 FR 51333, October 11, 1991) the EPA finalized a rule approving the UST program that North Dakota proposed to administer in lieu of the Federal UST program. The EPA incorporated by reference and codified North Dakota's then approved UST program in 40 CFR 282.84, effective August 21, 1995 (60 FR 32469; June 22, 1995). Due to unforeseen delays resulting from the lapse in appropriations, the EPA's final approvals concerning revisions to North Dakota's program originally proposed December 19, 2018, with an effective date of March 15, 2019 (83 FR 65104, December 19, 2018), were delayed. Thus, the EPA granted approval for changes to the North Dakota program effective April 30, 2019 (84 FR 8260, March 7, 2019). Through this action, the EPA is incorporating by reference and codifying North Dakota's State program in 40 CFR 282.84 to include the approved revisions.

In this rule, we are finalizing the Federal regulatory text that incorporates by reference the federally authorized North Dakota UST Program. In accordance with the requirements of 1 CFR 51.5, we are finalizing the incorporation by reference of the North Dakota rules described in the amendments to 40 CFR part 282 set forth below. The EPA has made, and will continue to make, these documents generally available through www.regulations.gov and/or in hard copy at the EPA Region 8 office (see the ADDRESSES section of this preamble for more information).

The purpose of this Federal Register document is to codify North Dakota's approved UST Program. The codification reflects the State program that was in effect at the time the EPA approved revisions to the North Dakota UST program addressed in the final rule published on December 19, 2018 (83 FR 65104, effective March 15, 2019). By codifying the approved North Dakota program and by amending the Code of Federal Regulations (CFR), the public will more easily be able to discern the status of the federally approved requirements of the North Dakota program.

The EPA is incorporating by reference the North Dakota approved UST program in 40 CFR 282.84. 40 CFR 282.84(d)(1)(i)(A) incorporates by reference for enforcement purposes the State's regulations. 40 CFR 282.84 also references the Attorney General's Statement, Demonstration of Adequate Enforcement Procedures, Enforcement Agreement, the Program Description and the Memorandum of Agreement, which are approved as part of the UST program under subtitle I of RCRA.

The EPA retains the authority under sections 9003(h), 9005 and 9006 of subtitle I of RCRA, 42 U.S.C. 6991b(h), 6991d and 6991e, and other applicable statutory and regulatory provisions to undertake corrective action, inspections, and enforcement actions, and to issue orders in approved States. If the EPA determines it will take such actions in North Dakota, the EPA will rely on Federal sanctions, Federal inspection authorities, and other Federal procedures rather than the State analogs. Therefore, though the EPA has approved the State procedures listed in 40 CFR 282.84(d)(1)(ii), the EPA is not incorporating by reference North Dakota's procedural and enforcement authorities.

Title 40 CFR 281.12(a)(3)(ii) states that where an approved State program has provisions that are broader in coverage than the Federal program, those provisions are not a part of the federally approved program. North Dakota's approved UST program does not include provisions which are “broader in coverage” than the Federal program.

This action only applies to North Dakota's UST Program requirements pursuant to RCRA Section 9004 and imposes no requirements other than those imposed by State law. It complies with applicable E.O.s and statutory provisions as follows:

The Office of Management and Budget (OMB) has exempted this action from the requirements of Executive Order 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011). This action codifies State requirements for the purpose of RCRA section 9004 and imposes no additional requirements beyond those imposed by State law. Therefore, this action is not subject to review by OMB.

This action is not an Executive Order 13771 (82 FR 9339, February 3, 2017) regulatory action because actions such as this incorporation by reference of North Dakota's revised underground storage tank program under RCRA are exempted under Executive Order 12866. Accordingly, I certify that this action will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

Because this action codifies pre-existing requirements under State law and does not impose any additional enforceable duty beyond that required by State law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538). For the same reason, this action also does not significantly or uniquely affect the communities of tribal governments, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

This action will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999), because it merely codifies State requirements as part of the State RCRA Underground Storage Tank Program without altering the relationship or the distribution of power and responsibilities established by RCRA.

This action also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant and it does not make decisions based on environmental health or safety risks.

This rule is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not a “significant regulatory action” as defined under Executive Order 12866.

The requirements being codified are the result of North Dakota's voluntary participation in the EPA's State program approval process under RCRA subtitle I. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply.

As required by section 3 of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing this rule, the EPA has taken the necessary steps to eliminate drafting errors and ambiguity, minimize potential litigation, and provide a clear legal standard for affected conduct.

The EPA has complied with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining the takings implications of the rule in accordance with the “Attorney General's Supplemental Guidelines for the Evaluation of Risk and Avoidance of Unanticipated Takings” issued under the executive order.

This rule does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). “Burden” is defined at 5 CFR 1320.3(b).

Executive Order 12898 (59 FR 7629, February 16, 1994) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States. Because this rule codifies pre-existing State rules, which are at least equivalent to, consistent with, and no less stringent than existing Federal requirements, and imposes no additional requirements beyond those imposed by State law, and there are no anticipated significant adverse human health or environmental effects, the rule is not subject to Executive Order 12898.

The EPA will submit a report containing this document and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2). This action will be effective November 29, 2019.

For the reasons set forth in the preamble, EPA is amending 40 CFR part 282 as follows:

U.S. purse seine fishing in the area of application of the Convention on the Conservation and Management of Highly Migratory Fish Stocks in the Western and Central Pacific Ocean (Convention), or Convention Area, is managed, in part, under the Western and Central Pacific Fisheries Convention Implementation Act, 16 U.S.C. 6901 et seq. (Act). Regulations implementing the Act are at 50 CFR part 300, subpart O. On behalf of the Secretary of Commerce, NMFS promulgates regulations under the Act as may be necessary to carry out the obligations of the United States under the Convention, to which it is a Contracting Party, including implementation of the decisions of the Commission.

Pursuant to WCPFC CMM 2018-01, NMFS issued regulations that established a limit of 1,616 fishing days that may be used by U.S. purse seine fishing vessels in the ELAPS in calendar year 2019 (see interim rule at 84 FR 37145, published July 31, 2019, codified at 50 CFR 300.223). The ELAPS consists of the areas of the U.S. Exclusive Economic Zone and the high seas that are in the Convention Area between the latitudes of 20° N and 20° S (see definition at 50 CFR 300.211). A fishing day means any day in which a fishing vessel of the United States equipped with purse seine gear searches for fish, deploys a fish aggregating device (FAD), services a FAD, or sets a purse seine, with the exception of setting a purse seine solely for the purpose of testing or cleaning the gear and resulting in no catch (see definition at 50 CFR 300.211).

Based on data submitted in logbooks and other available information, NMFS expected that the 2019 limit of 1,616 fishing days in the ELAPS would be reached and, in accordance with the procedures established at 50 CFR 300.223(a), closed the purse seine fishery in the ELAPS through a temporary rule effective 00:00 on October 9, 2019 UTC through December 31, 2019 (84 FR 52035; October 1, 2019). After the closure went into effect and the data for the days leading up to the closure were obtained, NMFS determined that 64 fishing days of the 2019 calendar year limit remain. Therefore, NMFS is publishing this temporary rule to reopen the purse seine fishery in the ELAPS for a limited period of time so that the remainder of the limit may be used. All fishing under the remaining limit must be done in accordance with the regulations at 50 CFR 300.223 and any other applicable regulations.

To determine the number of calendar days to reopen the fishery, NMFS used the fishing rate (i.e., the number of fishing days used by the entire U.S. purse seine fleet per calendar day) in the period just prior to the October 9, 2019, closure, modified to account for changes in fleet size. In the 14 days prior to the closure, the fishing rate in the ELAPS was 8.0 fishing days used by the entire U.S. purse seine fleet per calendar day. However, the U.S. purse seine fleet has since been reduced in size by three vessels, and there is potential for additional U.S. purse seine vessels to leave the fleet prior to the ELAPS being reopened. Assuming a 20 percent reduction in the fishing rate in the ELAPS due to the reductions in fleet size, NMFS estimates 6.4 fishing days will be used by the entire U.S. purse seine fleet per calendar day during the reopening of the ELAPS (i.e., 8.0 fishing days per calendar day reduced by 20 percent is 6.4 fishing days per calendar day, and 64 fishing days divided by 6.4 fishing days per calendar day is 10 calendar days). Based on this analysis, NMFS is reopening the fishery for 10 calendar days.

There is good cause under 5 U.S.C. 553(b)(B) to waive prior notice and opportunity for public comment on this action. Compliance with the notice and comment requirement would be impracticable, unnecessary, and contrary to the public interest because this action is simply a correction to a premature closure and is a benefit to fishermen since they cannot currently access the fishery. NMFS solicited public comments on the interim final rule establishing the 2019 limit of 1,616 fishing days in the ELAPS and will be responding to those comments in a subsequent final rule. For the same reasons, there is good cause under 5 U.S.C. 553(d)(3) to establish an effective date less than 30 days after the date of publication of this notice.

This action is taken under 50 CFR 300.223(a) is exempt from review under Executive Order 12866.

Background

The Atlantic commercial shark fisheries are managed under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). The 2006 Consolidated HMS Fishery Management Plan (FMP) and its amendments are implemented by regulations at 50 CFR part 635. For the Atlantic commercial shark fisheries, the 2006 Consolidated HMS FMP and its amendments established, among other things, measures related to commercial shark retention limits, commercial quotas for species and management groups, and accounting for under- and overharvests for the shark fisheries. The FMP also includes adaptive management measures, such as flexibility in establishing opening dates for the fishing season and the ability to make inseason adjustments to shark trip limits, which provide management flexibility in furtherance of equitable fishing opportunities, to the extent practicable, for commercial shark fishermen in all regions and areas.

On September 19, 2019, NMFS published a proposed rule (84 FR 49236), on management measures for the commercial shark fisheries for the 2020 fishing year. The rule proposed opening all Atlantic commercial shark management groups on January 1, 2020, setting initial retention limits for large coastal shark (LCS) retention by directed shark limited access permit holders, and adjusting quotas for the 2020 fishing year based on harvest levels during 2019. The proposed rule contains details about the action that are not repeated here. The comment period on the proposed rule closed on October 10, 2019. NMFS received 18 written and oral comments regarding the proposed opening dates, retention limits, and potential inseason retention limit adjustments as applied to LCS in the Gulf of Mexico and Atlantic regions. Those comments, along with the Agency's responses, are summarized below. After considering all the comments, NMFS is finalizing the rule as proposed, with three changes, discussed below.

NMFS is opening the fishing year for all shark management groups on January 1, 2020, as proposed. In setting the opening date, NMFS considered the “opening commercial fishing season” criteria at § 635.27(b)(3). These criteria include the following factors: Available annual quotas for the current fishing season; estimated season length and average weekly catch rates from previous years; length of the season and fishermen participation in past years; impacts to accomplishing objectives of the 2006 Consolidated HMS FMP and its amendments; temporal variation in behavior or biology of target species (e.g., seasonal distribution or abundance); impact of catch rates in one region on another; and effects of delayed season openings. The rule also establishes a retention limit for directed shark limited access permit holders in the blacktip, aggregated LCS, and hammerhead management groups for the entire Gulf of Mexico region of 45 LCS other than sandbar sharks per vessel per trip, as proposed. NMFS changed the initial retention limit for directed shark limited access permit holders in the aggregated LCS and hammerhead management groups for the Atlantic region from the proposed level of 25 LCS other than sandbar sharks per vessel per trip to 36 LCS other than sandbar sharks per vessel per trip. The retention limit for incidental shark limited access permit holders for all regions has not changed from the proposed rule and remains at 3 LCS other than sandbar sharks per trip and no more than 16 small coastal sharks (SCS) and pelagic sharks, combined, per vessel per trip consistent with § 635.24(a)(3) and (4). Additionally, the retention limit for blacknose sharks for all permit holders in the Atlantic region south of 34°00′ N lat. has not changed from the proposed rule and remains at eight blacknose sharks per trip consistent with § 635.24(a)(4). Blacknose sharks may not be harvested in the Gulf of Mexico region. This rulemaking does not consider changes to the retention limits outside of what is allowed currently by the regulations.

This final rule also adjusts the annual commercial quotas for 2020 based on over- and/or underharvests, calculated after accounting for landings reported by October 18, 2019, consistent with existing regulations. Based on updated landings information as of October 18, 2019, only the adjusted blacktip quota in the Gulf of Mexico region has changed since the proposed rule. All other quotas remain the same as proposed. While this action adjusts certain quotas as allowable, it does not establish or change the annual baseline commercial quotas established under the 2006 Consolidated HMS FMP and its amendments for any shark management group. The baseline quotas were established under previous actions, and any changes to those baseline quotas would be performed through a separate action.

NMFS received 18 written and oral comments on the proposed rule from fishermen, dealers, and other interested parties. All written comments can be found at http://www.regulations.gov/ by searching for RIN 0648-XT004. All of the comments received are summarized below.

Comment 1: NMFS received comments in support of the proposed opening date of January 1 for the LCS fisheries in the Gulf of Mexico and Atlantic regions.

Response: NMFS will open the LCS fisheries in the Gulf of Mexico and Atlantic regions on January 1, as proposed. NMFS will also open all other shark management groups on January 1, as proposed.

Comment 2: NMFS received several comments regarding the proposed commercial retention limit for the aggregated LCS, hammerhead, and blacktip shark management groups in the eastern and western Gulf of Mexico sub-regions. Some commenters were opposed to the proposed retention limit of 45 LCS other than sandbar sharks per vessel per trip, and noted that NMFS should increase the retention limit to 55 LCS other than sandbar sharks per vessel per trip. Commercial fishermen from the western Gulf of Mexico sub-region preferred the higher retention limit (55 sharks per vessel per trip) to provide equitable fishing opportunities for both Federal and state-water fishermen, while some commercial fishermen from the eastern Gulf of Mexico sub-region also preferred the higher retention limit to more fully utilize quotas, which were underutilized this year. NMFS also received comments from commercial fishermen in the eastern Gulf of Mexico sub-region that they preferred a retention limit of 45 LCS per vessel per trip to ensure a year-round fishery.

Response: After considering public comment, and bearing in mind NMFS's ability to further adjust retention limits inseason, NMFS has determined that starting the season at the default retention limit of 45 LCS other than sandbar sharks per vessel per trip, as proposed, is appropriate and will ensure equitable fishing opportunities in both Gulf of Mexico sub-regions, to the extent practicable. This season, the participation in the Gulf of Mexico LCS fishery was lower than in past years, and the shark management group quotas in both sub-regions remain open to date. In the western Gulf of Mexico sub-region, landings were particularly low this year, which commenters said was due to issues related to selling and transporting shark products across state lines. This reduction in overall landings has resulted in the blacktip, aggregated LCS, and hammerhead shark management groups in the western Gulf of Mexico sub-region remaining open to date, relatively late in the year, which has not occurred in past seasons, and a portion of each quota being transferred to the eastern Gulf of Mexico sub-region (84 FR 48791; September 17, 2019). In the eastern Gulf of Mexico sub-region, fishermen continue to harvest blacktip, aggregated LCS, and hammerhead shark management group quotas. In addition, NMFS understands that the State of Mississippi is considering starting a commercial shark fishery in state waters in 2020. Although NMFS does know at this time how many vessels might participate in this fishery, how many permits could be issued, or what the State regulations will be, associated landings would count against the western Gulf of Mexico sub-regional quotas, creating some additional uncertainty regarding the fishery for 2020. Thus, due to public comment regarding the year-round fishery and the uncertainty about the number of participants in the 2020 fishing season, NMFS has decided to keep the retention limit at the proposed 45 LCS other than sandbar sharks per vessel per trip for the start of the season. If 2020 landing rates are similar to landings rates in 2019, NMFS could consider adjusting the retention limit inseason to maximize quotas.

Comment 3: NMFS received several comments regarding the proposed commercial retention limits and the proposed change to the quota harvest level at which NMFS may consider adjusting the retention limit for the aggregated LCS and hammerhead shark management groups in the Atlantic region. NMFS received comments opposing the proposed retention limit of 25 LCS other than sandbar sharks at the beginning of the year. Instead, commenters stated they would prefer a retention limit of 36 LCS trip limit at the beginning of the year to more fully utilize the available quota. NMFS received comments in support of and opposition to the proposed level of 20 percent of quota harvested at which NMFS may consider adjusting the retention limit. Commenters suggested a variety of percentages that ranged from 20 to 40 percent, and expressed concern that a lower percentage and smaller hammerhead shark quota could limit harvest and increase the likelihood of a closure. If the fishery were to close early, then the overall quota would not be reached, similar to what has happened in recent years.

Response: NMFS will start the season with a commercial retention limit of 36 LCS other than sandbar sharks per vessel per trip. Additionally, NMFS recognizes that the 20 percent of quota harvested at which NMFS may consider adjusting the retention limit used in recent years along with other factors has resulted in the annual quotas in the Atlantic region not being fully utilized in recent years. For example, as of October 18, 2019, only 27 percent of the aggregated LCS and 38 percent of the hammerhead shark quotas have been landed. This means that approximately 73 percent of the aggregated LCS quota remains available and approximately 62 percent of the hammerhead shark quota remains available through December 31, 2019. In order to allow fishermen additional opportunities to fully harvest the aggregated LCS and hammerhead management group quotas, NMFS is implementing a higher retention limit (36 LCS other than sandbar sharks per vessel per trip) at the start of the season and a higher percentage of quota harvested at which NMFS may consider adjusting the retention limit (35 percent). If the quota is landed quickly (e.g., if approximately 35 percent of the quota is caught at the beginning of the year), NMFS anticipates that it would apply the appropriate regulatory criteria to consider an inseason reduction of the retention limit (e.g., to three or fewer LCS other than sandbar sharks per vessel per trip), then consider an increase in the retention limit later in the year, which is a similar process to what has been done in past seasons.

Comment 4: NMFS received comments regarding increasing the retention limit beyond the current threshold of 55 LCS other than sandbar sharks per vessel per trip or converting the retention limit back to pounds per trip. One commenter preferred a retention limit of 100 LCS other than sandbar sharks per vessel per trip, since the quotas are not harvested and shark populations have increased. Another commenter preferred the retention limit be 4,000 pound (lb) dressed weight (dw) per trip, which was the trip limit prior to 2008, to make trips more profitable and reduce discards. Additionally, some commenters would prefer separate retention limits for the Gulf of Mexico blacktip shark management group and hammerhead shark management groups in the Atlantic and Gulf of Mexico, since each management group has separate quotas. Other commenters requested a retention limit for sandbar sharks outside of the shark research fishery due to increased interactions during non-shark research fishery trips in recent years.

Response: These comments are outside the scope of this rulemaking because the purpose of this rulemaking is to set opening dates and commercial retention limits for the 2020 shark season and to adjust quotas for the 2020 shark seasons based on over- and underharvests from the previous years. Pursuant to § 635.24(a)(2), the commercial retention limit for LCS other than sandbar sharks may range between zero and 55 LCS other than sandbar sharks per vessel per trip. Thus, the maximum commercial retention limit is 55 LCS other than sandbar sharks per vessel per trip and a higher limit is not considered in this rulemaking, not was changing the approach to retention limits from numbers of individuals to weight. NMFS may reexamine the upper and lower bounds of the current commercial shark retention limits in a future rulemaking.

Comment 5: NMFS received comments that all quota linkages in the LCS fishery should be removed since such linkages have contributed to the underutilization of quotas.

Response: This comment is outside the scope of this rulemaking because the purpose of this rulemaking is to set opening dates and commercial retention limits for the 2020 shark season and to adjust quotas for the 2020 shark seasons based on over- and underharvests from the previous years. The current LCS quota linkages were implemented in the final rules for Amendment 5a and Amendment 6 to the 2006 Consolidated HMS FMP as part of rebuilding plans for shark species that are overfished in order to reduce mortality of overfished stocks during commercial fishing for other shark species. The issue of removing quota linkages is not being re-considered or re-addressed in this rulemaking.

Comment 6: NMFS received a comment regarding a concern about the increase in shark populations impacting other fisheries and stocks.

Response: This comment is outside the scope of this rulemaking. NMFS is aware of concerns expressed by some fishermen about increasing interactions between LCS in Council-managed and other HMS fisheries, including their concerns about depredation of yellowfin tuna, snapper-grouper, and other coastal migratory pelagic species, gear damage, economic loss, and possible effects on the long-term sustainability and conservation of other fish species. Given revisions to the Magnuson-Stevens Fishery Conservation and Management Act National Standard 1 (NS1) guidelines, NMFS is exploring options related to the implementation of those new guidelines as they relate to annual catch limits (ACLs) for Atlantic sharks in the HMS management unit. NMFS announced the availability of a scoping document for Amendment 14 to the 2006 Consolidated HMS FMP (84 FR 23014; May 21, 2019). In that scoping document, NMFS has also begun the process of re-examining how to establish these ACLs, including an examination of how to establish the acceptable biological catch (ABC) and account for uncertainty arising from the stock assessment and the impacts to the management measures.

Comment 7: NMFS received a comment supporting the prohibition of all commercial shark fishing.

Response: This comment is outside the scope of this rulemaking because the purpose of this rulemaking is to adjust quotas for the 2020 shark seasons based on over- and underharvests from the previous years and set opening dates and commercial retention limits for the 2020 shark season. Management of the Atlantic shark fisheries is based on the best available science to achieve optimum yield while also rebuilding overfished shark stocks and preventing overfishing. The final rule does not reanalyze the overall management measures for sharks, which have been analyzed in the 2006 Consolidated HMS FMP and its amendments. NMFS is considering further shark management measures, including options related to the implementation of relatively new Magnuson-Stevens Act NS1 guidelines as they relate to ACLs for Atlantic sharks in the HMS management unit, in Amendment 14 to the 2006 Consolidated HMS FMP.

As noted above, after considering public comment and updated landings data, NMFS made three changes from the proposed rule. Specifically, NMFS changed the retention limit for directed shark limited access permit holders at the start of the commercial shark fishing year for the aggregated LCS and hammerhead shark management groups in the Atlantic from 25 LCS other than sandbar sharks per vessel per trip to 36 LCS other than sandbar sharks per vessel per trip. NMFS is changing the proposed percentage of quota harvested at which to consider adjusting the retention limit from approximately 20 percent to 35 percent if the quota is landed too quickly. NMFS noted in the proposed rule that retention limits and the quota linkage threshold might change in response to public comment. These changes are within the established range of retention limits provided at § 635.24(a)(2) and consistent with the limits established in recent years at the start of the season. NMFS expects that a retention limit of 36 LCS other than sandbar sharks per vessel per trip with a 35 percent of quota harvested at which to consider adjusting the retention limit will provide equitable fishing opportunities throughout the region, to the extent practicable, and retains its discretion to make inseason adjustments to retention limits, in accordance with existing regulations and in furtherance of the goals and objectives of the 2006 Consolidated HMS FMP and its amendments.

Additionally, based on an underharvest calculation error, NMFS changed the final blacktip shark quota in both Gulf of Mexico sub-regions. In the proposed rule, NMFS calculated the underharvest for blacktip sharks within the Gulf of Mexico region as 141.8 mt dw, which was 50 percent of the 2019 adjusted annual quota. However, pursuant to § 635.27(b)(2)(ii), NMFS may apply up to 50 percent of the base annual quota (128.3 mt dw) to the 2020 quota. Any underharvest would be divided between the two sub-regions, based on the percentages that are allocated to each sub-region, which are set forth in § 635.27(b)(1)(ii)(C). Accordingly, the western Gulf of Mexico sub-regional baseline quota is being increased by 115.7 mt dw (255,131 lb dw), which is a reduction of 12.2 mt dw from the proposed rule. Similarly, the eastern Gulf of Mexico sub-regional baseline quota is being increased by 12.6 mt dw (27,719 lb dw), which is a reduction of 1.3 mt dw from the proposed rule (Table 1). Thus, the 2020 adjusted annual quota in western sub-regional Gulf of Mexico blacktip shark commercial quota is 347.2 mt dw (765,392 lb dw), and the eastern sub-regional Gulf of Mexico blacktip shark commercial quota is 37.7 mt dw (83,158 lb dw).

This final rule adjusts the 2020 commercial quotas due to overharvests and/or underharvests in 2019 and previous fishing years, based on landings data received by October 18, 2019. The 2020 annual quotas by species and management group are summarized in Table 1. At this time, NMFS anticipates that landings in dealer reports that are received by NMFS after October 18, 2019, will be accounted for by adjusting the 2021 quotas, as appropriate, although such landings could also be accounted for in the same year. A description of the quota calculations is provided in the proposed rule and is not repeated here. Any changes are described in the “Changes from the Proposed Rule” section.

NMFS considered the seven “opening commercial fishing season” criteria listed in § 635.27(b)(3), as described in the proposed rule (84 FR 49236; September 19, 2019). These criteria include, among other things: The available annual quotas based on any over-and/or underharvests experienced during the previous seasons; the estimated season length based on available quotas and catch rates from previous years; the length of the season in the previous years and whether fishermen were able to participate in the fishery in those years; and the effects of catch rates in one part of a region precluding vessels in another part of that region from having a reasonable opportunity to harvest a portion of the different species and/or management quotas. Application of the criteria discussed in the proposed rule is not repeated here.

Regarding the LCS retention limit, as shown in Table 2, directed shark limited access permit holders fishing on the Gulf of Mexico blacktip shark, aggregated LCS, and hammerhead shark management groups will start the commercial fishing year with a limit of 45 LCS other than sandbar sharks per vessel per trip. Directed shark limited access permits fishing on the Atlantic aggregated LCS and hammerhead shark management groups will start the commercial fishing year with a limit of 36 LCS other than sandbar sharks per vessel per trip. These retention limits could be changed throughout the year based on consideration of the inseason trip limit adjustment criteria at § 635.24(a)(8).

Specifically, in the Atlantic region, NMFS will closely monitor the quota at the beginning of the year. If it appears that the quota is being harvested too quickly to allow fishermen throughout the entire region the opportunity to fish (e.g., if approximately 35 percent of the quota is caught at the beginning of the year), NMFS will consider reducing the commercial retention limit, potentially to 3 LCS other than sandbar sharks per vessel per trip. Given the geographic distribution of the sharks at this time of year (i.e., they head north before moving south again later in the year), the retention limit would be adjusted to ensure there is quota available later in the year (see the criteria at § 635.24(a)(8)(i), (ii), (v), and (vi)). Then, based on the prior years' fishing activity, and to allow more consistent fishing opportunities later in the year, NMFS may consider raising the commercial retention limit later in the year. Any future increase or decrease in a retention limit would depend on a review of the inseason trip limit adjustment criteria at § 635.24(a)(8).

All of the shark management groups will remain open until December 31, 2020, or until NMFS determines that the landings for any shark management group have reached, or are projected to reach, 80 percent of the available overall, regional, and/or sub-regional quota, if the fishery's landings are not projected to reach 100 percent of the applicable quota before the end of the season, or when the quota-linked management group is closed. For the blacktip shark management group, regulations at § 635.28(b)(5)(i) through (v) authorize NMFS to close the management group before landings reach or are expected to reach 80 percent of the available overall, regional, and/or sub-regional quota after considering the following criteria and other relevant factors: Season length based on available sub-regional quota and average sub-regional catch rates; variability in regional and/or sub-regional seasonal distribution, abundance, and migratory patterns; effects on accomplishing the objectives of the 2006 Consolidated Atlantic HMS FMP and its amendments; amount of remaining shark quotas in the relevant sub-region; and regional and/or sub-regional catch rates of the relevant shark species or management groups. Additionally, NMFS has previously established non-linked and linked quotas. Linked quotas are explicitly designed to concurrently close multiple shark management groups that are caught together to prevent incidental catch mortality from exceeding the total allowable catch. The linked and non-linked quotas are shown in Table 2. If NMFS determines that a shark species or management group must be closed, then NMFS will publish a notice in the Federal Register of closure for that shark species, shark management group, region, and/or sub-region that will be effective no fewer than four days from the date of filing (§ 635.28(b)(2) and (3)). From the effective date and time of the closure until NMFS announces, via the publication of a notice in the Federal Register, that additional quota is available and the season is reopened, the fisheries for the shark species or management group are closed, even across fishing years.

The NMFS Assistant Administrator has determined that the final rule is consistent with the 2006 Consolidated HMS FMP and its amendments, other provisions of the Magnuson-Stevens Act, and other applicable laws.

Pursuant to 5 U.S.C. 553(d)(3), the NMFS Assistant Administrator has determined that there is good cause to waive the 30-day delay in effective date for the adjusted quotas and opening dates for the pelagic shark, shark research, blacknose shark, non-blacknose small coastal shark, and non-sandbar large coastal shark fisheries in the Atlantic and Gulf of Mexico regions, because such a delay is contrary to the public interest.

A delay in effectiveness of this rule would cause negative economic impacts on fishermen and diminish the opportunity for the collection of scientific data, which is critical to properly managing the fisheries because needed information would not be available for stock assessments, resulting in negative ecological impacts on the fishery resource.

A delay in the effectiveness of the quotas in this rule would result in the closure of the pelagic shark fishery until 30 days after the publication date of this rule. Most pelagic shark species are captured incidentally in swordfish and tuna pelagic longline fisheries that will be open in early January. If the quotas in this rule are not made effective as close to January 1, 2020, as possible, fishermen will have to discard, dead or alive, any pelagic sharks that are caught, while quota is technically available to be used for their retention.

Regarding the shark research fishery, NMFS selects a small number of fishermen to participate in the shark research fishery each year for the purpose of providing NMFS with biological and catch data to better manage the Atlantic shark fisheries. All the trips and catches in this fishery are monitored with 100 percent observer coverage. Delaying the opening of the shark research fishery would prevent NMFS from maintaining the monthly time-series of wintertime abundance for shark species or collecting vital biological and regional data during this time of year. Not conducting the necessary research trips could limit NMFS' ability to properly manage the shark fisheries because needed information would not be available for stock assessments, which would be contrary to the public interest.

Regarding the blacknose shark, non-blacknose small coastal shark, and smoothhound shark fisheries, these fisheries have both a directed component, where fishermen target these shark species, and an incidental component, where the fish are caught and, when the fishery is open, landed by fishermen targeting other species such as Spanish mackerel and bluefish. The incidental fishery catches small coastal and smoothhound sharks throughout the year. Delaying this action for 30 days would force all fishermen to discard, dead or alive, any small coastal and smoothhound sharks that are caught before this rule becomes effective. Opening the fishery as close to January 1, 2020, as possible ensures that any mortality associated with landings is counted against the commercial quota in real-time. Additionally, a month-long delay in opening the small coastal shark and smoothhound shark fisheries would occur during the time period when fishermen typically target these shark species. Therefore, fishermen would experience negative economic impacts that would continue until the small coastal and smoothhound shark fisheries were opened. Thus, delaying the opening of the small coastal and smoothhound shark fisheries would undermine the intent of the rule and is contrary to the public interest.

Regarding the non-sandbar large coastal shark fishery in the Atlantic and Gulf of Mexico region, NMFS received public comments in support of a January 1 opening date. This would allow south Atlantic fishermen to have a winter fishery and to potentially get a better price per pound, given the geographic distribution of the sharks at this time of year. However, delaying the opening of the non-sandbar large coastal shark fishery in the Atlantic and Gulf of Mexico region for an additional 30 days would have negative economic impacts on fishermen because they would not be able to fish for that period. Additionally, many of the primary species targeted in the non-sandbar large coastal shark fisheries are locally available in the southern portion of the Atlantic region in January and a 30-day delay would cause fishermen to miss out entirely on fishing opportunities, and the associated revenue. Therefore, delaying this action for 30 days is contrary to the public interest.

For the reasons described above, the Assistant Administrator finds good cause to waive the 30-day delay in effectiveness of the quotas and opening dates for the pelagic shark, shark research, blacknose shark, non-blacknose small coastal shark, smoothhound shark, and non-sandbar large coastal shark fisheries in the Atlantic and Gulf of Mexico regions.

This final rule is exempt from review under Executive Order 12866.

In compliance with section 604 of the Regulatory Flexibility Act (RFA), NMFS prepared a Final Regulatory Flexibility Analysis (FRFA) for this final rule. The FRFA analyzes the anticipated economic impacts of the final actions and any significant economic impacts on small entities. The FRFA is below.

Section 604(a)(1) of the RFA requires an explanation of the purpose of the rulemaking. The purpose of this final rule is, consistent with the Magnuson-Stevens Act and the 2006 Consolidated HMS FMP and its amendments, to establish the 2020 Atlantic commercial shark adjusted fishing quotas, retention limits, and fishing seasons. Without this rule, the Atlantic commercial shark fisheries would close on December 31, 2019, and would not reopen until appropriate action was taken. This final rule will be implemented according to the regulations implementing the 2006 Consolidated HMS FMP and its amendments. Thus, NMFS expects few, if any, economic impacts to fishermen other than those already analyzed in the 2006 Consolidated HMS FMP and its amendments. While there may be some direct negative economic impacts associated with the opening dates for fishermen in certain northern Atlantic areas, there could also be positive effects for other fishermen in the south Atlantic region. The opening dates were chosen to allow for an equitable distribution of the available quotas among all fishermen across regions and states, to the extent practicable.

Section 604(a)(2) of the RFA requires NMFS to summarize significant issues raised by the public in response to the Initial Regulatory Flexibility Analysis (IRFA), provide a summary of NMFS' assessment of such issues, and provide a statement of any changes made as a result of the comments. The IRFA was completed as part of the proposed rule for the 2020 Atlantic Commercial Shark Season Specifications. NMFS did not receive any comments specific to the IRFA.

Section 604(a)(3) of the RFA requires NMFS to the respond to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration in response to the proposed rule and provide a detailed statement of any change made to the proposed rule as a result of the comments. NMFS did not receive any comments from the Chief Counsel for Advocacy of the Small Business Administration on the proposed rule.

Section 604(a)(4) of the RFA requires NMFS to provide an estimate of the number of small entities to which the rule would apply. The Small Business Administration (SBA) has established size criteria for all major industry sectors in the United States, including fish harvesters. Provision is made under SBA's regulations for an agency to develop its own industry-specific size standards after consultation with Advocacy and an opportunity for public comment (see 13 CFR 121.903(c)). Under this provision, NMFS may establish size standards that differ from those established by the SBA Office of Size Standards, but only for use by NMFS and only for the purpose of conducting an analysis of economic effects in fulfillment of the agency's obligations under the RFA. To utilize this provision, NMFS must publish such size standards in the Federal Register, which NMFS did on December 29, 2015 (80 FR 81194; 50 CFR 200.2). In that final rule effective on July 1, 2016, NMFS established a small business size standard of $11 million in annual gross receipts for all businesses in the commercial fishing industry (NAICS 11411) for RFA compliance purposes. NMFS considers all HMS permit holders to be small entities because they had average annual receipts of less than $11 million for commercial fishing.

As of October 2019, the final rule would apply to the approximately 219 directed commercial shark permit holders, 263 incidental commercial shark permit holders, 162 smoothhound shark permit holders, and 103 commercial shark dealers. Not all permit holders are active in the fishery in any given year. Active directed commercial shark permit holders are defined as those with valid permits that landed one shark based on HMS electronic dealer reports. Of the 482 directed and incidental commercial shark permit holders, only 12 permit holders landed sharks in the Gulf of Mexico region and only 70 landed sharks in the Atlantic region. Of the 162 smoothhound shark permit holders, only 63 permit holders landed smoothhound sharks in the Atlantic region and none landed smoothhound sharks in the Gulf of Mexico region. NMFS has determined that the final rule would not likely affect any small governmental jurisdictions.

Section 604(a)(5) of the RFA requires NMFS to describe the projected reporting, recordkeeping, and other compliance requirements of the final rule, including an estimate of the classes of small entities which would be subject to the requirements of the report or record. None of the actions in this final rule would result in additional reporting, recordkeeping, or compliance requirements beyond those already analyzed in the 2006 Consolidated HMS FMP and its amendments.

Section 604(a)(6) of the RFA requires NMFS to describe the steps taken to minimize the economic impact on small entities, consistent with the stated objectives of applicable statutes. Additionally, the RFA (5 U.S.C. 603(c)(1)-(4)) lists four general categories of significant alternatives that would accomplish the stated objectives of applicable statutes and minimize any significant economic impact of the rule on small entities. These categories of alternatives are: (1) Establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) clarification, consolidation, or simplification of compliance and reporting requirements under the rule for such small entities; (3) use of performance rather than design standards; and (4) exemptions from coverage of the rule, or any part thereof, for small entities.

In order to meet the objectives of this rule, consistent with the Magnuson-Stevens Act, NMFS cannot exempt small entities or change the reporting requirements only for small entities because all the entities affected are small entities. Thus, there are no alternatives discussed that fall under the first, second, and fourth categories described above. NMFS does not know of any performance or design standards that would satisfy the aforementioned objectives of this rulemaking while, concurrently, complying with the Magnuson-Stevens Act; therefore, there are no alternatives considered under the third category.

This rulemaking does not establish new management measures to be implemented, but rather implements previously adopted and analyzed measures as adjustments within a range of previously-authorized activities, as specified in the 2006 Consolidated HMS FMP and its amendments and the Environmental Assessment (EA) for the 2011 shark quota specifications rule (75 FR 76302; December 8, 2010). Thus, in this rulemaking, NMFS adjusted the baseline quotas established and analyzed in the 2006 Consolidated HMS FMP and its amendments by subtracting the underharvest or adding the overharvest, as specified and allowable in existing regulations. Under current regulations (§ 635.27(b)(2)), all shark fisheries close on December 31 of each year, or when NMFS determines that the landings for any shark management group has reached, or is projected to reach, 80 percent of the available overall, regional, and/or sub-regional quota if the fishery's landings are not projected to reach 100 percent of the applicable quota before the end of the season, or when the quota-linked management group is closed. The fisheries do not open until NMFS takes action, such as this rulemaking, to re-open the fisheries. Thus, not implementing these management measures would negatively affect shark fishermen and related small entities, such as dealers, and also would not provide management flexibility in furtherance of equitable fishing opportunities, to the extent practicable, for commercial shark fishermen in all regions and areas.

Based on the 2018 ex-vessel meat and fin prices (Table 3), fully harvesting the unadjusted 2020 Atlantic shark commercial base quotas could result in total fleet revenues of $8,775,599. For the Gulf of Mexico blacktip shark management group, NMFS will increase the baseline sub-regional quotas due to the underharvests in 2019. The increase for the western Gulf of Mexico blacktip shark management group could result in a $210,580 gain in total revenues for fishermen in that sub-region, while the increase for the eastern Gulf of Mexico blacktip shark management group could result in a $37,570 gain in total revenues for fishermen in that sub-region. For the Gulf of Mexico and Atlantic smoothhound shark management groups, NMFS will increase the baseline quotas due to the underharvest in 2019. This would cause a potential gain in revenue of $262,788 for the fleet in the Gulf of Mexico region and a potential gain in revenue of $1,057,482 for the fleet in the Atlantic region.

All of these changes in gross revenues are similar to the changes in gross revenues analyzed in the 2006 Consolidated HMS FMP and its amendments. The FRFAs for those amendments concluded that the economic impacts on these small entities are expected to be minimal. In the 2006 Consolidated HMS FMP and its amendments and the EA for the 2011 shark quota specifications rule, NMFS stated it would be conducting annual rulemakings and considering the potential economic impacts of adjusting the quotas for under- and overharvests at that time.

For this final rule, NMFS reviewed the “opening commercial fishing season” criteria at § 635.27(b)(3)(i) through (vii) to determine when opening each fishery will provide equitable opportunities for fishermen, to the extent practicable, while also considering the ecological needs of the different species. The 2019 fishing year and previous years' over- and/or underharvests were examined for the different species/complexes to determine the effects of the 2020 final quotas on fishermen across regional fishing areas. NMFS examined season lengths and previous catch rates to ensure equitable fishing opportunities for fishermen. Lastly, NMFS examined the seasonal variation of the different species/complexes and the effects on fishing opportunities. In addition to these criteria, NMFS also considered updated landings data and public comment on the proposed rule before arriving at the final opening dates for the 2020 Atlantic shark management groups. For the 2020 fishing year, NMFS is opening the shark management groups on January 1, 2020. The direct and indirect economic impacts will be neutral on a short- and long-term basis for the Gulf of Mexico blacktip shark, Gulf of Mexico aggregated LCS, Gulf of Mexico hammerhead shark, Gulf of Mexico non-blacknose shark SCS, Gulf of Mexico and Atlantic smoothhound shark, Atlantic non-blacknose shark SCS, Atlantic blacknose shark, sandbar shark, blue shark, porbeagle shark, and pelagic shark (other than porbeagle or blue sharks) management groups, because NMFS did not change the opening dates of these fisheries from the status quo of January 1.

Opening the aggregated LCS and hammerhead shark management groups in the Atlantic region on January 1 will result in short-term, direct, moderate, beneficial economic impacts, as fishermen and dealers in the southern portion of the Atlantic region will be able to fish for and sell aggregated LCS and hammerhead sharks starting in January. The opening date finalized in this rule for the Atlantic region has been the same or similar to those since 2016, however, the retention limit would be different from this past year and similar to the one since 2016.

Based on past public comments, some Atlantic fishermen in the southern and northern parts of the region prefer a January 1 opening for the fishery as long as the majority of the quota is available later in the year. Along with the inseason retention limit adjustment criteria in § 635.24(a)(8), NMFS monitors the quota through the HMS electronic reporting system on a real-time basis. This allows NMFS the flexibility to further provide equitable fishing opportunities for fishermen across all regions, to the extent practicable. The direct impacts to shark fishermen in the Atlantic region of reducing the retention limit depend on the needed reduction in the retention limit and the timing of such a reduction. Therefore, such a reduction in the retention limit for directed shark limited access permit holders is only anticipated to have minor adverse direct economic impacts to fishermen in the short-term; long-term impacts are not anticipated as these reductions would not be permanent.

In the northern portion of the Atlantic region, a January 1 opening for the aggregated LCS and hammerhead shark management groups, with inseason trip limit adjustments to ensure quota is available later in the season, will have direct, minor, beneficial economic impacts in the short-term for fishermen as they will potentially have access to the aggregated LCS and hammerhead shark quotas earlier than in past seasons. Fishermen in this area have stated that, depending on the weather, some aggregated LCS species might be available to retain in January. Thus, fishermen will be able to target or retain aggregated LCS while targeting non-blacknose SCS. There will be indirect, minor, beneficial economic impacts in the short- and long-term for shark dealers and other entities that deal with shark products in this region as they will also have access to aggregated LCS products earlier than in past seasons. Thus, opening the aggregated LCS and hammerhead shark management groups in January and using inseason trip limit adjustments to ensure the fishery is open later in the year in 2020 will cause beneficial cumulative economic impacts, because it allows for a more equitable distribution of the quotas among constituents in this region, consistent with the 2006 Consolidated HMS FMP and its amendments.

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, NMFS has prepared a listserv summarizing fishery information and regulations for Atlantic shark fisheries for 2020. This listserv also serves as the small entity compliance guide. Copies of the compliance guide are available from NMFS (see ADDRESSES).

General Background

The summer flounder, scup, and black sea bass fisheries are managed cooperatively under the provisions of the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan (FMP) developed by the Mid-Atlantic Fishery Management Council and the Atlantic States Marine Fisheries Commission, in consultation with the New England and South Atlantic Fishery Management Councils. The management units specified in the FMP include summer flounder (Paralichthys dentatus) in U.S. waters of the Atlantic Ocean from the southern border of North Carolina northward to the U.S./Canada border, and scup (Stenotomus chrysops) and black sea bass (Centropristis striata) in U.S. waters of the Atlantic Ocean from 35° 13.3′ N. lat. (the approximate latitude of Cape Hatteras, North Carolina). States manage these three species within 3 nautical miles (4.83 km) of their coasts, under the Commission's management plan for summer flounder, scup, and black sea bass. The applicable species-specific Federal regulations govern vessels and individual fishermen commercially and recreationally fishing in Federal waters of the exclusive economic zone, as well as vessels possessing a summer flounder, scup, or black sea bass Federal charter/party vessel permit, regardless of where they fish. This rule implements management measures intended to provide more flexibility in the commercial and recreational fisheries for these species and includes the following changes to the FMP:

• Include conservation equivalency as an annual management option for the black sea bass recreational fishery;

• Create a Federal waters transit zone for non-federally permitted vessels fishing in state waters around Block Island Sound; and

• Incorporate a maximum recreational size limit in the list of potential specification measures for summer flounder and black sea bass to enable consideration of slot limits as a management tool.

These measures, which are further explained below, are consistent with the recommendations of the Council and the Commission's Summer Flounder, Scup, and Black Sea Bass Management Board for this action.

Framework Adjustment 14 to the Summer Flounder, Scup, and Black Sea Bass FMP establishes a process for conservation equivalency for future use in the recreational black sea bass fishery based on the process used for summer flounder. Under conservation equivalency, the Council and Board will decide each year whether to use Federal coastwide measures or state-by-state or regional conservation equivalency to manage the recreational black sea bass fishery. Conservation equivalency waives Federal measures so long as the states implement appropriate measures. If states agree to use conservation equivalency, they must also develop a set of non-preferred coastwide measures (minimum fish size limit, possession limit, and season) that would be expected to prevent harvest from exceeding the annual recreational harvest limit. The Council and Board must also recommend a suite of precautionary default measures that would apply to all recreational anglers and Federal party/charter permit holders fishing in Federal waters and landing black sea bass in states that do not develop and implement Commission-approved conservationally equivalent measures.

If the Council and Board agree to use conservation equivalency in a given year, the Board will determine the management program to implement conservation equivalency for black sea bass in that year through a separate action. After reviewing and approving the state/regional proposals, the Commission must submit a letter to us certifying that the combination of state and regional measures is expected to prevent harvest from exceeding that year's recreational harvest limit. Based on the Commission's certification, we would be able to approve conservation equivalency and waive Federal measures for the remainder of the calendar year in favor of the state or regional conservation equivalency measures. Federally permitted party/charter vessels and private recreational vessels fishing in Federal waters would then be subject to the regulations in the states where they land their catch. If the Commission submits a letter to us announcing that a state or states have not implemented appropriate measures, the state or states would be required to implement precautionary default measures in state waters through the Commission. We would also apply those precautionary default measures to Federal party/charter permit holders and recreational vessels fishing in Federal waters that are landing black sea bass in applicable states. If a state or region implements measures that are not approved, the Commission would require the precautionary default measures to be enforced in that state or region and would request that we apply those measures to federally permitted vessels landings in those states as well. Non-preferred coastwide measures would be implemented: (1) If we do not approve conservation equivalency; or (2) at the start of the next fishing year (i.e., when conservation equivalency for a given year has expired).

This action creates a transit area for state-only permitted vessels fishing for summer flounder, scup, and black sea bass around Block Island to address issues when Federal and state management measures differ. The transit zone mirrors the current transit area for striped bass and allows transit through Federal waters for state-only permitted commercial and party/charter vessels and private recreational anglers with summer flounder, scup, and/or black sea bass on board that were legally harvested in state waters (Figure 1). These vessels may transit between the Rhode Island state waters surrounding Block Island and the coastal state waters of Rhode Island, New York, Connecticut, or Massachusetts while complying with the state waters measures for those species. Transit through the defined area is allowed, provided that fishermen are compliant with all applicable state regulations, including harvest limits; gear is stowed in accordance with Federal regulations; no fishing takes place from the vessel while in Federal waters; and the vessel is in continuous transit.

This transit provision does not apply to federally permitted summer flounder, scup, or black sea bass vessels. There are no changes to current Federal regulations requiring all federally permitted vessels to abide by the measures of the state(s) in which they harvest or land their catch, or the Federal waters measures, whichever are more restrictive.

This action specifies that a maximum size limit can be set through specifications for summer flounder and black sea bass recreational fisheries. By including a maximum size, the Council can recommend both a minimum and maximum recreational size limit to allow for consideration of regular slot limits, split slot limits, and/or trophy fish when setting recreational measures each year. This action does not change any current Federal recreational measures, but adds flexibility in specifying future recreational management measures.

The public comment period for the proposed rule ended on September 9, 2019, and a total of three relevant comments were received from the public. Two commenters stated that conservation equivalency should not be used in the black sea bass recreational fishery, or should only be used when Marine Recreational Information Program information is reliable. The other commenter noted that maximum size limits should not be used. In response to those three comments, this action is only allowing for consideration of conservation equivalency in the black sea bass recreational fishery and providing the ability to set a maximum size limit. The Council and Commission will make annual determinations on whether or not to utilize either of these management tools.

There are no substantive changes from the proposed rule. Minor clarifications were made to the regulations to clarify references to moratorium permits included in the Block Island Sound transit provisions are specific to summer flounder, scup, and black sea bass.

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), the NMFS Assistant Administrator has determined that this final rule is consistent with the Summer Flounder, Scup, and Black Sea Bass FMP, other provisions of the Magnuson-Stevens Act, and other applicable law.

This final rule has been determined to be not significant for purposes of Executive Order 12866.

This final rule does not duplicate, conflict, or overlap with any existing Federal rules.

This action does not contain a collection of information requirement for purposes of the Paperwork Reduction Act.

This final rule is considered an Executive Order 13771 deregulatory action.

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

For the reasons set out in the preamble, 50 CFR part 648 is amended as follows:

The Regional Administrator of NMFS for the Greater Atlantic Region monitors the herring fishery catch in each of the management areas based on vessel and dealer reports, state data, and other available information. The regulations at 50 CFR 648.201 require that when the Regional Administrator projects that herring catch will reach 92 percent of the Sub-Annual Catch Limit (sub-ACL) allocated in Management Area 1A designated in the Atlantic Herring Fishery Management Plan (FMP), through notification in the Federal Register, NMFS must prohibit for the remainder of the fishing year, vessels from fishing for, possessing, transferring, receiving, landing, or selling, or attempting to fish for, possess, transfer, receive, land or sell, more than 2,000 lb (907.2 kg) of herring per trip or calendar day in or from the specified management area from a vessel issued and holding a valid Federal herring permit.

The Regional Administrator has projected, based on vessel and dealer reports, state data, and other available information, that the herring fleet will have caught 92 percent of the herring sub-ACL allocated to Management Area 1A by November 27, 2019. Therefore, effective 00:01 hr local time, November 27, 2019, no person may, or attempt to, fish for, possess, transfer, receive, land, or sell more than 2,000 lb (907.2 kg) of herring per trip or calendar day, in or from Management Area 1A, through December 31, 2019, from a vessel issued or holding a valid Federal herring permit. Vessels that have entered port before 00:01 hr local time, November 27, 2019, may land and sell more than 2,000 lb (907.2 kg) of herring from Area 1A from that trip. A vessel may transit through Area 1A with more than 2,000 lb (907.2 kg) of herring on board, provided all herring was caught outside of Area 1A and all fishing gear is stowed and not available for immediate use as defined by § 648.2. All herring vessels must land in accordance with state landing restrictions.

Effective 00:01 hr local time, November 27, 2019, through 24:00 hr local time, December 31, 2019, federally permitted dealers may not purchase, possess, receive, sell, barter, trade or transfer, or attempt to purchase, possess, receive, sell, barter, trade or transfer more than 2,000 lb (907.2 kg) of herring per trip or calendar day from Management Area 1A from a vessel issued and holding a valid Federal herring permit, unless it is from a trip landed by a vessel that entered port before 00:01 hr local time, November 27, 2019, and that catch is landed in accordance with state regulations.

This action is required by 50 CFR part 648 and is exempt from review under Executive Order 12866.

NMFS finds good cause pursuant to 5 U.S.C. 553(b)(3)(B) to waive prior notice and the opportunity for public comment because it would be contrary to the public interest and impracticable. Further, in accordance with 5 U.S.C 553(d)(3), NMFS also finds good cause to waive the 30-day delayed effectiveness. NMFS is required by Federal regulation to put in place a 2,000-lb (907.2-kg) herring trip limit for Management Area 1A through December 31, 2019, when 92 percent of the area quota is harvested. The 2019 herring fishing year opened on January 1, 2019, and Management Area 1A opened to fishing June 1, 2019. Data indicating the herring fleet will have landed at least 92 percent of the 2019 sub-ACL allocated to Management Area 1A have only recently become available. Once available data supports projecting that 92 percent of the sub-ACL will be caught, regulations at § 648.201(a) require NMFS to close the directed fishery and impose a trip and calendar day limit to ensure that herring vessels do not exceed the 2019 sub-ACL allocated to Management Area 1A. High-volume catch and landings in this fishery increase total catch relative to the sub-ACL quickly, especially in this fishing year where annual catch limits are unusually low. If implementation of this closure is delayed to solicit prior public comment, the sub-ACL for Management Area 1A for this fishing year will likely be exceeded, thereby undermining the conservation objectives of the FMP. If sub-ACLs are exceeded, the excess must also be deducted from a future sub-ACL and would reduce future fishing opportunities. In addition, the public had prior notice and full opportunity to comment on this process when these provisions were put in place. The public expects these actions to occur in a timely way consistent with the fishery management plan's objectives.