Background Information

Public Law 115-324 (the “Small Business Runway Extension Act of 2018”) amended section 3(a)(2)(C)(ii)(II) of the Small Business Act, 15 U.S.C. 632(a)(2)(C)(ii)(II), to modify the requirements for proposed small business size standards prescribed by an agency without separate statutory authority to issue size standards.

Under section 3(a)(2)(C)(ii) of the Small Business Act, as amended, an agency without separate statutory authority to issue size standards must satisfy three requirements to prescribe a size standard. First, the agency must propose the size standard with an opportunity for public notice and comment. Second, the agency must provide for determining the size of a manufacturing concern based on a 12-month average of the concern's employment, the size of a services concern based on a 5-year average of gross receipts, and the size of another business concern on the basis of data of not less than 3 years. Third, the agency must obtain approval of the contemplated size standard from the SBA Administrator.

In contrast to agencies subject to section 3(a)(2)(C), SBA has independent statutory authority to issue size standards. Under section 3(a)(2)(A) of the Small Business Act, the SBA Administrator may specify detailed definitions or standards by which a business concern may be determined to be a small business concern for the purposes of SBA's programs or any other Federal Government program. Section 3(a)(2)(B) of the Small Business Act further provides that such definitions may utilize the number of employees, dollar volume of business, net worth, net income, a combination thereof, or other appropriate factors. To determine eligibility for Federal small business assistance, SBA establishes detailed size definitions for small businesses (usually referred to as “size standards”) that vary from industry to industry reflecting differences among the various industries. SBA typically uses two primary measures of business size for size standards purposes: (i) Average annual gross receipts for businesses in services, retail trade, agricultural, and construction industries, and (ii) average number of employees for businesses in all manufacturing, most mining and utilities industries, and some transportation, information and research and development (R&D) industries. SBA uses financial assets for certain financial industries and refining capacity, in addition to employees, for the petroleum refining industry to measure business size standards purposes.

The SBA's size standards are used to establish eligibility for a variety of Federal small business assistance programs, including for Federal Government contracting and business development programs designed to assist small businesses in obtaining Federal contracts and for SBA's loan guarantee programs, which provide access to capital for small businesses that are unable to qualify for and receive conventional loans elsewhere. The Federal Government contracting programs that use SBA's size standards include the SBA's 8(a) Business Development (BD) program, the Historically Underutilized Business Zones (HUBZone) program, the Service Disabled Veteran-Owned Small Business (SDVOSB) program, the Women-Owned Small Business (WOSB) program, and the Economically Disadvantaged Women-Owned Small Business (EDWOSB) program. SBA's Small Business Investment Company (SBIC), Certified Development Company (CDC/504), and 7(a) loan programs use either the industry-based size standards or tangible net worth and net income based alternative size standards to determine eligibility for those programs.

SBA has long interpreted section 3(a)(2)(C) of the Small Business Act as not applying to SBA's size standards issued under section 3(a)(2)(A). In the preambles to the proposed and final rules implementing 3(a)(2)(C), SBA explained that the Small Business Act requires that other Federal agencies either use SBA's size standards or use their own size standards that meet the requirements as set forth in that section. 65 FR 4176 (Jan. 26, 2000) and 67 FR 13714 (March 26, 2002). In the final implementation in 2002, SBA interpreted section 3(a)(2)(C) as applying only to non-SBA agencies, stating, “Unless a statute specifies size standards for an agency's program or gives an agency direct authority to establish size standards, the agency must use the applicable size standards established by SBA.” However, the Act allows an agency to “prescribe a size standard for categorizing a business concern as a small business concern (see sec. 3(a)(2)(C) of the Act) provided that the contemplated size standard meets certain criteria, and the agency obtains approval of the SBA Administrator.” 67 FR 13714. For further details on section 3(a)(2)(C) not applying to SBA's size standards, see the proposed rule (84 FR 29399).

Nevertheless, to promote consistency government-wide on small business size standards, on June 24, 2019 (84 FR 29399), SBA issued for comments a proposed rule to change its method for calculating average annual receipts for all SBA's receipts-based size standards and other agencies' proposed receipts-based size standards for firms in services industries from a 3-year averaging period to a 5-year averaging period.

SBA determined that it would be confusing for a service-industry business concern to use a 3-year average for SBA's receipts-based size standards and switch to a 5-year average for another agency's receipts-based size standards. Similarly, it would be confusing to apply SBA's size standards for a business that is engaged in both service- and non-service industries to use a 5-year average for determining small business status in a service industry but switch to a 3-year average for a non-service industry. Thus, although section 3(a)(2)(C), as amended, permits another agency to use a 3-year average outside of the service industries, SBA is adopting a 5-year averaging period for calculating the annual receipts of businesses for all industries that are subject to its receipts-based size standards, including the retail trade, agricultural, and construction industries.

In accordance with Public Law 115-324, SBA proposed to change the averaging period for calculating annual receipts for other agencies' receipts-based size standards for firms in services-industries from 3 years to 5 years and to maintain the 3-year averaging period for calculating the size for non-services firms. To promote consistency and avoid confusion, in this final rule, SBA is adopting the same 5-year averaging period for all receipts-based size standards issued by other agencies as well. More than 40 comments to the proposed rule, as discussed below, expressed support for adopting the same 5-year averaging period for all SBA receipts-based size standards. Of those, 3 also recommended using the same averaging period for all receipts-based size standards prescribed by other agencies.

This final rule carries out the intent of Public Law 115-324, as expressed in the Report of the House Committee on Small Business, H. Rpt. 115-939, with respect to Federal procurement opportunities. The Committee report states that, to help advanced small businesses successfully navigate the middle market as they reach their small business size thresholds, the bill would lengthen the time in which the SBA measures size through revenue, from the average of the past 3 years to the average of the past 5 years. The Committee report states that the bill would reduce the impact on small businesses from rapid growth in some years which would result in spikes in revenue that may prematurely eject a small business out of their small business status. The Committee report adds that the bill would allow small businesses at every level more time to grow and develop their competitiveness and infrastructure, before entering the open marketplace. The bill, as the Committee report states, would also protect Federal investment in SBA's small business procurement programs by increasing chances of success in the middle market for newly graduated firms, resulting in enhanced competition against large prime contractors.

As stated in the Committee report, during the period when annual revenues are rising, the 5-year average will generally be lower than the 3-year average, thereby allowing: (i) Mid-sized businesses who have just exceeded size standards to regain their small business status, and (ii) advanced small businesses close to exceeding the size standard to retain their small business status for a longer period. In the proposed rule, SBA noted that, when annual revenues are declining, the 5-year average may be higher than the 3-year average. This would cause small businesses near the size thresholds to lose their small business status sooner under the 5-year average than under the 3-year average. This is more likely to happen during economic downturns. Businesses that lose their small business status under the 5-year average may be disadvantaged further because they may have to wait several years more to regain their small business status, as compared to under a 3-year average. The proposed rule added that newly established firms that have been in business for less than 5 years will receive no benefit from a change to a 5-year average. A firm that has been in business for less than the averaging period simply annualizes the receipts from its full existence.

Additionally, SBA also stated in the proposed rule that by enabling mid-size businesses to regain small business status and by lengthening the small business status of advanced and successful larger small businesses, the longer averaging period may disadvantage smaller small businesses in more need of Federal assistance than their more advanced and larger counterparts in competing for Federal opportunities. Similar to concerns from mid-size businesses that they lack necessary resources, past performance qualifications, and expertise to be able to compete against very large businesses in the full and open market, SBA has also received concerns from smaller small businesses that they also lack resources, past performance qualifications, and expertise to be able to compete against more resourceful, qualified, and experienced larger small businesses for Federal opportunities for small businesses.

In its June 24, 2019 proposed rule, SBA sought comments on its proposal to change the averaging period for the calculation of average annual receipts for all receipts-based size standards from 3 years to 5 years.

1. SBA sought feedback, along with supporting facts and analyses, on whether the Agency should calculate average annual receipts over 5 years for all industries subject to receipts-based size standards and on whether it should use a 5-year average annual receipts for businesses in services industries only and continue using a 3-year average annual receipts for other businesses. SBA was concerned that the latter option may create confusion for both businesses in reporting their size based on average annual receipts and contracting personnel in verifying the size of bidders to Federal contracts.

2. SBA sought input on how the use of average annual receipts over 5 years instead of 3 years would impact both smaller small businesses and more advanced, larger small businesses in terms of getting access to Federal opportunities for small businesses.

Additionally, SBA requested comments on its clarification of how annual receipts should be calculated in connection with the acquisition or sale of a division. The proposed rule provided that the annual receipts of a concern would not be adjusted where the concern sells or acquires a segregable division during the applicable period of measurement. This is distinct from how SBA treats the sale or acquisition of a subsidiary that is a separate legal entity.

In this final rule, SBA adopts the changes as stated in the proposed rule, with two modifications. First, in response to comments, SBA is not including the 7(a) Loan Program, the Microloan Program, the Intermediary Lending Pilot Program, and the Development Company Loan Program (collectively, the “Business Loan Programs”) in this present change. SBA also is not including Physical Disaster Business Loans, Economic Injury Disaster Loans, Military Reservist Economic Injury Disaster Loans, and Immediate Disaster Assistance Program loans (collectively, the “Disaster Loan Programs”). At a later date, SBA will issue a proposed rule to seek additional input to assess the impact of any changes to the Business Loan and Disaster Loan Programs. Second, for all other SBA programs, including the Federal procurement programs, SBA adopts a two-year transition period through January 6, 2022. During the transition period, a firm may choose between calculating receipts using a 3-year average or a 5-year average.

SBA received a total of 217 comments to the proposed rule, of which 5 were not pertinent to the scope of the proposed rule. Of the 212 comments that were pertinent, 140 commenters (including more than 10 trade associations, small and mid-size business groups, and small business advocacy organizations) fully supported the proposed rule; 5 comments supported the change to a 5-year averaging period but opposed SBA's proposal not to adjust receipts for the sale or acquisition of a segregable division; 28 comments did not oppose the change to a 5-year averaging period but opposed the use of 5 years of tax returns to analyze any loan program requirement other than size; 37 comments opposed the change to a 5-year averaging period; and 2 comments could not be categorized as either supporting or opposing the proposed rule. All of these comments are available at www.regulations.gov (RIN 3245-AH16), are summarized and discussed below in terms of various categories of comments, and are accompanied by SBA's responses.

SBA requested comments on whether it should use a 5-year averaging period for all of its receipts-based standards (i.e., for both services industries and non-services industries) or only for services industries. Forty-one commenters responded to this issue, all of which supported using the 5-year averaging period for all SBA's receipt-based size standards. Three of those comments also supported using the 5-year averaging period for other agencies' size standards for non-services industries that are subject to receipts-based size standards.

Commenters expressed support for expanding the 5-year averaging period to all receipt-based size standards for a variety of reasons. For example, one organization agreed with SBA that using different formulas for calculating size in different industries may create confusion, adding that “using different formulas could incentivize NAICS appeals as contractors jockey for a code that not only uses their preferred size standard, but also their preferred number of years in the calculation of size.” Similarly, another organization supported the expansion of the 5-year averaging period for all receipts-based size standards because maintaining a separate averaging period for non-services industries would lead to confusion for small firms in that some firms would be small under one NAICS code but other-than-small under another NAICS code with the same or higher size standard. The organization explained that maintaining a 3-year averaging period for non-services industries would “leave companies that have multiple capabilities to potentially be small under their services NAICS code, but not under other NAICS of work they perform.” Another organization supported applying the 5-year averaging period to all receipts-based size standards because it would “reduce the burden on small businesses in determining which size standard to apply to a given procurement.”

However, some commenters opposed the move to a 5-year averaging period on the grounds that this would increase paperwork and compliance burden on lenders and borrowers of the SBA's loans. These commenters suggested, as discussed below, that SBA retain the current 3-year averaging period for calculating annual revenues for services firms for the SBA's financial assistance programs, if SBA decides to adopt the proposed 5-year averaging period elsewhere.

SBA's response:

SBA agrees with the commenters that, in applying SBA's size standards, separating out services industry firms from non-services firms would cause confusion and create a greater compliance burden on firms that participate in both services industries and non-services industries. SBA also agrees that using a 5-year averaging period for services industries and a 3-year averaging period for non-services industries can lead to an inconsistent result of making a business small in one NAICS code and other than small in another NAICS code with a same or higher size standard. SBA also finds that it will be equally confusing to use, in the same industry, a 5-year averaging period for the SBA's size standard and a 3-year averaging period for other agencies' size standards. To avoid such confusion and inconsistency, in this final rule, SBA is adopting the 5-year averaging period for calculating the average annual receipts for all SBA's receipts-based size standards. For the same reason, SBA is also adopting the same 5-year averaging period for both services and non-services industries when approving receipt-based size standards by other federal agencies.

Of the 212 pertinent comments received, 173 (or approximately 82%) supported the SBA's proposal to change its method for calculating annual receipts from a 3-year averaging period to a 5-year averaging period, although some of those comments rejected other aspects of the proposed rule. Commenters expressed support for the proposed change for a variety of reasons, as discussed below.

A vast majority of commenters maintained that the proposed change would benefit small businesses that are either about to exceed or have just exceeded the relevant size standards (often referred to as “mid-size businesses”) by allowing them more time to develop capabilities, strengthen and diversify experience, and build resources, thus enabling them to compete successfully for unrestricted opportunities in the full-and-open market with very large businesses that have extensive capabilities, experience, and past-performance qualifications. Several commenters shared that a transition from “small” to “other-than-small” status is much more difficult than a transition from “very small” to “small” status. Some indicated that a longer lookback period would also ameliorate the current dilemma growing small businesses face in the Federal market when they exceed their size standards: Deciding whether to restrain growth to remain small (and avoid the difficulty of competing in a full-and-open environment), sell, or go out of business.

Another common comment was that the change from a 3-year averaging period to a 5-year averaging period will be very helpful to small businesses of every size, especially those that have successfully grown to revenues above the 3-year average for their respective NAICS codes. Some commenters expressed support for the proposed change because the 5-year averaging method would promote fairness and increase the accuracy of size representation. For example, one commenter explained that “one abnormally successful year could cause a small business to size out of the standard. Amortizing a year of success over five years instead of three will likely lengthen a small business' eligibility period and be a more accurate reflection of that business' true operations.” Another commenter explained that a firm's temporary spike in revenue “may not have resulted in increased infrastructure for the firm such that it will be ready to compete in the open market.” Several other commenters expressed support for the proposed rule because it would give advanced small firms more time to take advantage of SBA small business assistance programs. Similarly, another commenter explained that “Nurturing small business capabilities is important because it results in more price competition, it spurs innovation, and helps create jobs.” Other commenters expressed that growing small businesses should be rewarded for their success with a longer lookback averaging period.

Commenters also expressed support for the proposed change because it would increase the total number of small businesses and strengthen the Federal small business industrial or supplier base. Several commenters maintained that, with the availability of more businesses qualifying as small, the move to a 5-year averaging period would increase set-aside opportunities for all small businesses as the agencies are likely to set aside more contracts for small businesses. Other commenters expressed that an expanded pool of small businesses would benefit the Federal government by providing a larger and more stable pool of qualified small businesses in the Federal procurement market. The Federal government also will benefit from lower prices for its procurements due to increased competition, and from reduced risks by allowing agencies to retain their trusted and qualified incumbent small business contractors for a longer period. Several commenters also maintained that, with more businesses qualifying as small under the 5-year receipts average, the change also would provide large prime contractors with a robust pool of qualified small businesses to draw from to meet their small business subcontracting requirements.

Several commenters also expressed support for the proposed change because it would reduce the impacts of unusual spikes in revenues in some years on growing small businesses and enable them to adjust to revenue swings due to fluctuations in economic conditions, business environment, and changes in the Federal market. For example, one commenter explained that it is increasingly common for the government to utilize larger and longer indefinite delivery, indefinite quantity (IDIQ) contract vehicles, where one high-valued contract or task order can throw a small business out of its small business status. Some commenters supporting the proposed rule also stated that, under the 5-year averaging period, growing small businesses will be able to maintain their small business status for a longer period and, as a consequence, achieve and sustain growth. A number of comments also supported the SBA's proposal to remove “Schedule K” from the definition of receipts.

SBA's response:

SBA agrees with commenters that this rule will benefit small businesses, the Federal Government, and large businesses. With an expanded pool of small businesses, the Federal Government will have more qualified small businesses to choose from, and as a result, likely will set aside more contracts for small businesses. SBA also agrees with commenters that the 5-year averaging period will allow more small firms to benefit from SBA's small business assistance programs by extending their small business status for a longer period. The change would also enable small businesses that have just exceeded their size standards to regain their small business status and to benefit from Federal small business assistance. SBA believes that the change to a 5-year averaging period will expand benefits to all small businesses over the long-run, although the proposed change would have led to some negative impacts in the short-run. Accordingly, in this final rule, except for the Business Loan and Disaster Loan Programs, SBA is amending its regulations on the calculation of average annual receipts for all receipts-based SBA size standards from a 3-year averaging period to a 5-year averaging period, with a transition period through January 6, 2022, during which firms (and their affiliates) can choose either a 3-year or a 5-year averaging period. SBA is also removing “Schedule K” from the definition of receipts, as proposed.

Of 212 pertinent comments that SBA received, 37 opposed the change to the averaging period for annual receipts calculation from 3 years to 5 years. Comments that opposed the proposed rule mostly focused on one or more of the following three issues: (1) Disadvantages to firms with declining revenues, (2) undue advantages to “larger” small businesses, and (3) additional burden on borrowers and lenders. Below, SBA summarizes each of the three comment categories listed above.

(1) Disadvantages to Firms with Declining Revenues. Of the 37 comments opposing the shift to a 5-year averaging period, 7 commenters opposed the rule based on the reason that a 5-year averaging period would disadvantage firms with declining revenues. Of these 7 commenters, 2 affirmatively stated that their firm's size status would change from small to other-than-small as a result of the shift to a 5-year averaging period. Several commenters opposing the proposed rule observed that it will take longer for small businesses to qualify as small again once they have exceeded the size standard. Other commenters noted that the proposed rule would harm small firms with declining revenues, causing them to lose their small business size status sooner under the 5-year average receipts as compared to the 3-year receipts. One commenter explained that “while increasing the receipts lookback period from 3 years to 5 years will benefit many growing companies, it could also be detrimental to businesses that have experienced declining revenues, as it would cause many such businesses to lose their small business status despite declining receipts.” Another commenter stated that it was unfair for small businesses to be “penalized” for having declining revenues. The commenter explained that business concerns that face a downturn “should not be penalized, by being excluded from eligibility for SBA's small business programs. . . . Such an outcome would be an unintended negative consequence of the Act.” Some commenters contended that the proposed change primarily benefits growing and more successful larger small businesses by enabling them to maintain their small business status longer and better prepare for a successful transition to the full-and-open market, but it hurts emerging and smaller small businesses that are in need of the SBA assistance the most.

SBA's response:

SBA acknowledges that the move from a 3-year averaging period to a 5-year averaging period could, as an unintended negative impact, cause some small businesses that are close to their size standard to lose their small business status immediately or subsequently during the period of declining annual revenues. SBA agrees that a firm that exceeds the size standard based on a 5-year average, but then has subsequent years of declining revenues, will face a longer period before regaining its small business status. In order to mitigate this impact, in this final rule, except for the Business Loan and Disaster Loan Programs, SBA is providing a transition period until January 6, 2022, during which firms will be allowed to choose either the 3-year receipts average or 5-year receipts average for size eligibility purposes.

(2) Undue Advantages to “Larger” Small Businesses. Of the 37 comments opposing the shift to a 5-year averaging period, 5 comments opposed the proposed rule on the grounds that it may give an undue advantage to “larger” small businesses near the industry size threshold to the detriment of “smaller” small businesses in competing for small business opportunities. One commenter expressed concerns that the move to the 5-year averaging period lacked benefits for “smaller” small firms that need SBA's assistance the most. The commenter explained that by extending the measurement period, it only allows for companies to resist growth, control revenue and continue to be small. This process, if extended, will only provide a further advantage to those who are on the upper limit but does nothing to help those who are truly small.

A number of commenters opposed the rule because it will allow companies to continue to be small businesses after the period at which those businesses should transition to other-than-small business status, making it difficult for smaller small businesses to compete against their larger counterparts under the 5-year averaging period. One commenter, expressing concerns about this issue, explained that the proposed rule would “keep start-up small businesses from competing for small business set-aside opportunities . . . and allow `extended' small businesses with contracts to out compete those businesses that are truly `small.' ” Some of these commenters raised industry-specific concerns.

SBA's response:

SBA acknowledges that smaller small firms could face some disadvantages in competing for set-aside contracts against a larger pool of small firms, especially against the newly qualified larger small businesses and advanced small businesses who are able to remain small for a longer period. However, as detailed in SBA's benefit-cost analysis of the proposed rule, the change from a 3-year averaging period to a 5-year averaging period will increase the total number of small businesses, which would, because of greater potential small business competition for government contracts, likely lead to expansion of set-aside opportunities for all small businesses. In addition, as some commenters stated, that “smaller” small firms may not be in direct competition with “larger” small firms due to differences in their missions, capabilities, and resources, and therefore, would not face negative impacts from an increase in the number of “larger” small firms. As one organization commenting on the proposed rule explained, “these emerging small companies tend to have their own swim lanes, and do not typically compete against `larger' small businesses directly and in some cases do not compete in the federal market all.”

The contracts awards data also shows that in most industries the majority of small business contract dollars go to businesses that are substantially smaller than their size standards. The results from some industries with recent large increases to size standards also reveal that small businesses under the previous size standards continue to receive the same amount of contract dollars as before the increase. SBA agrees that the move to a 5-year averaging method is likely to benefit advanced small businesses that have just exceeded or are about to exceed their size standards more than their smaller counterparts in the short-run, but in the long-run it will benefit all small businesses at every level as they continue to grow and approach the size standard.

(3) Additional Burden on Borrowers and Lenders. Of the 37 comments opposing the shift to a 5-year averaging period, 23 (including one trade association representing lenders serving small businesses under the SBA CDC/504 loan program) opposed the move to the 5-year average because the change would cause undue additional burden on borrowers and lenders under the Business Loan Programs. An additional 28 commenters (including another trade association representing lenders serving small businesses under the SBA's 7(a) loan program) also expressed similar concern that the 5-year averaging would result in an undue additional burden on borrowers and lenders participating in the Business Loan Programs, but they did not specifically oppose the shift to a 5-year averaging period for SBA's revenue-based size standards.

A majority of these commenters included members of those two trade associations in support of the position of their respective associations. Some commenters opposed the rule on the basis that it may require SBA Lenders to collect and review two additional years of tax returns or financial statements to establish eligibility for the SBA's loan programs. Some of these commenters expressed concerns that this will add costs to loan processing, increase turn-around times, and discourage small businesses from participating in the SBA's loan programs. One trade association commented that “the process for obtaining an SBA loan already requires extensive documentation from a small business, and this additional requirement increases that burden without any underlying benefit to the small business.” The trade association requested that SBA “give consideration to allowing the service-industry size standard calculation to remain at its current 3-year averaging period for the SBA loan guarantee programs.”

Some commenters noted that a central premise of the proposed change appears to address the concern that the current 3-year averaging method “ejects” growing small businesses from Federal small business contracting programs before they are ready to compete in the full and open market. They stated that there is no such concern as it relates to the SBA's loan programs, as small businesses seeking or obtaining SBA's loans are rarely “ejected” from eligibility due to size.

Several commenters asked that SBA clarify that the 5-year averaging period is intended to apply only to SBA's receipts-based size standards, not for any other loan application purpose. One trade association commented that “Tax return information is used for multiple purposes related to the loan application process,” including verifying an applicant's historical cash flow, income, or tax payment history. The trade association further explained, “None of those purposes would require or substantially benefit from a look-back period greater than 3 years.” A trade association and a number of other commenters asked that SBA exempt the SBA's loan programs from the change, allowing SBA lenders to continue to apply a 3-year receipts average. Other commenters (including a trade association representing 7(a) lenders) requested that SBA's final rule “[S]pecifically include language clarifying that the longer 5-year period is intended to apply only for purposes of determining size for loan applicants using SBA's traditional revenue-based sized standards, and not for any other loan application purpose.”

SBA's response:

In response to comments regarding the burden of the rule on SBA Lenders and loan applicants, SBA has determined that the Business Loan and Disaster Loan Programs should not be included in this final rule. SBA included the Business Loan and Disaster Loan Programs in the proposed rule's cost-benefit analysis, but, otherwise, the initial proposed rule did not discuss the effect that the rule would have on SBA Lenders and loan program participants. Based on the comments expressing that SBA Lenders and loan program applicants would experience burden, SBA will seek additional comment and public input through a proposed rule at a later date to determine how best to consider changes to size eligibility in the Business Loan and Disaster Loan Programs. Through this later proposed rule, SBA intends to ask for data and additional detail about the burden faced by SBA Lenders and applicants, and for comment on any benefit that applicants might obtain through a longer averaging period for determining eligibility for SBA's Business Loan and Disaster Loan Programs.

SBA received 20 comments responding to its proposed clarification on the calculation of the annual receipts of a concern where the concern sells or acquires a segregable division during the applicable period of measurement. Of those 20 comments, 3 comments agreed with SBA's proposed clarification, 5 comments disagreed, 11 comments requested further clarification, and 1 comment was not clear as to its stance on this issue.

The 3 commenters who agreed with SBA's proposed treatment of the sale or acquisition of a segregable division emphasized that the receipts of a division remain the receipts of the selling concern even after it is sold and that the receipts of an acquired division prior to the acquisition do not become the receipts of the acquiring concern after the acquisition. One association commenting on the proposed rule stated that it supports SBA's position because it “provides clarity to the community with regard to the application of the former affiliate rule.” The same association also requested that SBA expand the scope of its clarification to include segregable divisions and “other assets not held as a separate legal entity.” The association stated that such an expansion would “ensure that SBA's clarification applies to the sale or purchase of non-segregable assets as well, e.g., when an entity acquires the assets performing a specific contract.”

The 5 commenters who disagreed with SBA's proposed treatment of the sale or acquisition of a segregable division stated that (1) it elevates form over substance in distinguishing between a division and a subsidiary that is a separate legal entity, (2) it would create a burden for businesses seeking to benefit from selling off a division by moving all of its assets to a newly created subsidiary, (3) it would harm businesses that relied on current SBA policy when selling segregable divisions and were small as a result of the sale, and (4) it would create unpredictability and uncertainty in good-faith size status calculations.

The 11 commenters who requested further clarification all stated (1) that they would have liked to see proposed regulatory text, and (2) that the Office of Hearings and Appeals (OHA) cases that SBA cited in the proposed rule do not make a distinction between divisions and subsidiaries. One commenter cited two additional OHA decisions which it believes contradict SBA's distinction between a division and subsidiary. The commenter stated that in the proposed rule, “SBA cites a quotation from such a decision which provides that `a firm which acquires most of the assets of a subsidiary or division of a larger firm is affiliated only with that subsidiary or division, and not with the entire parent company' (emphasis added). As such, it appears that SBA's Office of Hearings and Appeals does not, in fact, make a distinction between divisions and subsidiaries.”

SBA's response:

SBA agrees with the commenters who stated that the receipts of a sold division remain the receipts of the selling concern after the sale, just as the receipts of an acquired division prior to its acquisition should not be treated as the receipts of the acquiring concern prior to the acquisition. SBA believes that it is not logical to allow a firm to exclude the receipts of a former division just because that division was sold, since those receipts accrued to the concern.

SBA believes that there really is a difference between the sale or acquisition of a segregable division as opposed to the sale or acquisition of a separate legal entity. The sale or acquisition of a division is not a question of affiliation. It simply represents an addition or subtraction to the concern itself. This is distinct from the sale or acquisition of a separate legal entity, which implicates questions of affiliation.

Regarding the OHA cases cited by the commenters, none of these decisions speak specifically to how receipts should be calculated after the sale or acquisition of a segregable division. However, as stated by several commenters, SBA is not obligated to follow OHA decisions when putting forth changes to its regulations.

For all the reasons above, SBA is adding the language to §§ 121.104(d)(4) and 121.106(b)(4)(ii) to clarify that the former affiliate rule does not permit a concern to adjust its receipts when the concern sells a segregable division that is not a separate legal entity.

Although not specifically requested in the proposed rule, SBA received 31 comments requesting some sort of alternative option which would allow firms to use either a 3-year average or 5-year average of annual receipts depending on which one would be more advantageous to them. The comments proposing such an option suggested that the 3-year vs. 5-year option be for available for a specific period or be made permanent. Of the 31 total comments addressing this issue, 13 commenters recommended using a transition period of 2 years or less; 12 recommended a transition of 3 or more years; 4 suggested making the transition period permanent; and 2 did not specify a duration.

In support of the transition period were commenters both for and against the shift to a 5-year averaging period for calculating annual receipts. Of the 31 comments supporting a transition period, 20 supported the proposed rule; 5 opposed the proposed rule; 5 supported some elements while opposing others; and 1 comment did not express support or opposition to the move from a 3-year averaging period to a 5-year averaging period but recommended that SBA consider the transition period as an alternative to mitigate the impact on businesses that are currently small under the 3-year receipts average but would become other-than-small under the 5-year average receipts.

SBA found that these commenters supported the adoption of a transition period for two reasons: (1) To ensure an organized and transparent implementation of the final rule, and (2) to minimize harm to small firms with declining revenues or to those becoming other than small under the 5-year receipts upon the implementation of the final rule.

For example, one commenter suggested that SBA implement a 2-year transition period to reduce confusion and uncertainty for small firms that have occurred since the Small Business Runway Extension Act was signed into law. The commenter explained that “some firms have been submitting proposals using a 3-year average in accordance with the SBA's guidance, while others have used a 5-year average in accordance with the new law. Due to this uncertainty, [Commenter] recommends allowing a two-year transition period for small companies . . .” Another commenter recommended that SBA “provide for a reasonable transition period for implementation . . . to allow government systems to be updated and to give the contractor community time to properly implement the size calculation change.”

One commenter, expressing concern regarding the proposed rule's impact on firms with declining revenues, explained that “While increasing the look-back period from 3 years to 5 years will provide a benefit to many growing companies, it could be detrimental to businesses that have experienced declining revenue.” The commenter further stated that “SBA should consider a hybrid approach whereby contractors are permitted to calculate revenues under both the 3-year period and the 5-year period and use the lower of the two results to determine its size status. This approach would be beneficial to both those small contractors that are experiencing a period of revenue growth, as well as those facing declining revenues.”

SBA's response:

SBA agrees with the comments supporting a temporary transition period under which firms still could choose to use a 3-year averaging period. A plurality of commenters asked for a 2-year transition period or less, and SBA agrees that a 2-year period is appropriate because 2 years is an adequate time to allow firms to prepare for a permanent transition to a 5-year averaging period. Therefore, for the SBA programs affected by this rule, SBA will allow firms to choose either a 3-year or 5-year averaging period through January 6, 2022. After that date, firms with at least 5 years of receipts will be required to use a 5-year averaging period. A firm with fewer than 5 years of receipts will average its annual receipts over its existence.

SBA does not believe that allowing for alternate averaging periods on a permanent basis would be beneficial. Using multiple averaging periods in the long term will result in confusion about how to determine size for Federal opportunities, including procurements. Within a single contract competition, businesses would be able to determine size on a separate basis. After the transition period, there is not sufficient reason to justify maintaining two separate averaging periods.

SBA received some additional comments that addressed issues which did not fit into any of the above categories. One commenter requested that SBA change its regulations at 13 CFR 124.112(e)(2) to allow an 8(a) Business Development (BD) Program participant to change its primary industry classification using the last 5 completed fiscal years, instead of the current 3 completed fiscal years. This commenter stressed the advantage of reconciling this primary industry classification calculation period with the size determination calculation period, especially at the 5th year annual update for an 8(a) BD Program participant.

SBA also received a few comments concerning the timeline for the implementation of the final rule. Most of these commenters suggested that SBA implement the final rule as soon as possible. One commenter stated that it is unlawful to delay the implementation of the new law, and the comment from one trade association suggested that SBA make the final rule retroactive to December 17, 2018, the date of enactment of Public Law 115-324. Another commenter recommended delaying the implementation of the final rule until January 1, 2021 if SBA decides to not grant a grace period to use the 3-year lookback. The commenter stated, “dropping the 3-year rule `grace period' in the middle of the year will only confuse and complicate the implementation of the rule.”

One commenter suggested that SBA establish a 5-year averaging period for employee-based size standards as well.

SBA's response:

The comment that SBA update its regulations at 13 CFR 124.112(e)(2) is outside the scope of establishing and reviewing size standards. This rule is only concerned with the method of calculation of annual receipts for size standards purposes. The comment regarding 13 CFR 124.112(e)(2) concerns a calculation related to the primary industry classification under 8(a) BD Program and that is outside the scope of this rule. Similarly, this rule does not affect the application of a 3-year average in the “economic dependence” test under 13 CFR 121.103(f)(2).

With respect to the comments concerning the implementation timeframe of the final rule, Public Law 115-324 did not include an effective date for the averaging change. Section 3(a)(2)(C) of the Small Business Act requires SBA to provide an opportunity for public notice and comment through the rulemaking process prior to implementing changes to size standards prescribed through section 3(a)(2). Accordingly, on December 21, 2018, SBA issued an Information Notice (6000-180023) advising that, until SBA makes necessary changes to its regulations, businesses must report their receipts based on a 3-year average. Thus, making the rule retroactive to the December 17, 2018, enactment date would not only run counter to SBA's guidance, but also would require corrections to contracts awards data in the Federal Procurement Data System-Next Generation (FPDS-NG) to reflect changes in size status of contractors due to the change in the averaging period. Conversely, delaying the implementation date would be against the interests of many small businesses and Federal agencies that want to see the final rule being implemented as soon as possible. Accordingly, this final rule will be effective after 30 days from the date of its publication in the Federal Register.

Lastly, this rule does not change the calculation period for employee-based size standards. SBA does not find sufficient reason from the comments to a propose a change to the period for employee-based size standards.

Based on the analyses of impacts using the latest relevant industry and Federal contracting data available to SBA when the proposed rule was prepared and thorough evaluation of all public comments on the proposed rule, as discussed above, SBA is taking the following actions in this final rule, except for the Business Loan and Disaster Loan Programs:

(i) Adopting the 5-year averaging period for calculating annual revenues of firms and revenues of their affiliates in all industries that are subject to SBA's receipts-based size standards;

(ii) Adopting the 5-year averaging period for calculating annual revenues of firms (including affiliates, if any) in all industries for prescribing receipts-based size standards by other Federal agencies; and

(iii) Providing a transition period until January 6, 2022, allowing firms (and their affiliates, if any) to choose either a 3-year averaging period or a 5-year averaging period for calculating average annual receipts for size standards purposes.

The final rule removes “Schedule K” from the definition of receipts. SBA has found that reviewing Schedule K is generally not useful, but SBA reserves the ability to request a Schedule K as part of SBA's review of the other Internal Revenue Service (IRS) forms listed in § 121.104(a).

For consistency with the size standard averaging period being changed in § 121.903, for the purposes of applying SBA's receipts-based size standards, the final rule changes the averaging period for a business that has been in business for 5 or more fiscal years to a 5-year period, i.e., the business calculates its total receipts over the 5-year period and divides by 5. Under the final rule, if a business has been in business for less than 5 complete fiscal years, the business calculates its total receipts, divides by the number of weeks in business, and multiplies by 52. This is the same process SBA currently uses when a business has less than 3 completed fiscal years. If a business has a short year as one of its 5 years, the business calculates its total receipts over the 5-year period, divides by the number of weeks in the short year and its other 4 fiscal years, and multiplies by 52. This too is the same process SBA currently uses.

The 5-year averaging period in § 121.104 would not distinguish between firms in service industries and other firms subject to receipts-based size standards. SBA believes that, in applying SBA's own size standards, separating out service-industry firms would cause confusion and create a greater compliance burden on firms that participate in both services industries and non-services industries (such as agriculture, construction, and retail trade) with receipts-based size standards.

This final rule only would affect the application of SBA's new size standard rules after its effective date. Thus, until the effective date of a final rule, SBA will continue to apply the 3-year averaging period in the present § 121.104 for calculating average annual receipts for all SBA's receipts-based size standards. Since size is determined as of the date when a firm certifies its size as part of its initial offer which includes price, the 3-year calculation period will apply to any offer submitted prior to the effective date of the final rule. Thus, even if SBA receives a request for a size determination or size appeal after the effective date of the final rule, SBA will still use a 3-year calculation period if the determination or appeal relates to a certification submitted prior to the final rule's effective date. Misrepresentations made under the existing calculation period are material for the purposes of criminal, civil, or administrative actions.

SBA also clarifies how it believes annual receipts should be calculated in connection with the acquisition or sale of a division. Specifically, the final rule provides that the annual receipts of a concern would not be adjusted where the concern sells or acquires a segregable division during the applicable period of measurement or before the date on which it self-certified as small. This would be different from how SBA treats the sale or acquisition of a subsidiary. In the case of a subsidiary, SBA's regulations provide that “[t]he annual receipts of a former affiliate are not included if affiliation ceased before the date used for determining size. This exclusion of annual receipts of a former affiliate applies during the entire period of measurement, rather than only for the period after which affiliation ceased.” 13 CFR 121.104(d)(4).

SBA believes that the sale or acquisition of a division is different from buying or selling a separate legal entity and, as such, should be treated differently. Any receipts attributable to a specific division of a concern are certainly receipts earned by the concern. Even if that division is later sold, its receipts were always part of the receipts directly received by the concern itself, and SBA believes that those receipts should remain a part of the concern's receipts after the sale for purposes of determining the concern's size. Similarly, where a concern acquires a segregable division from another business entity during the applicable period of measurement, SBA would not increase the concern's overall receipts by the amount of receipts attributable to that division.

SBA understands that some may feel that distinguishing the sale of a division from that of a subsidiary would elevate form over substance, and would merely require a seller to move assets into a separate subsidiary and then sell that subsidiary in order to bring the transaction under the rule. However, as noted above, SBA believes that there really is an important distinction between a division and a separate legal entity.

The Final Rule adds a transition period through January 6, 2022, during which a firm may calculate its receipts and the receipts of its affiliates using either a 3-year average or a 5-year average. The Final Rule adds a paragraph (c)(4) to use a 3-year averaging period for the Business Loan Programs, which are the 7(a) Loan Program, the Microloan Program, the Intermediary Lending Pilot Program, and the Development Company Loan Program (“504 Loan Program”), and the Disaster Loan Programs, which are Physical Disaster Business Loans, Economic Injury Disaster Loans, Military Reservist Economic Injury Disaster Loans, and Immediate Disaster Assistance Program loans. SBA intends to seek comment on the Business Loan and Disaster Loan Programs in a proposed rule through a separate rulemaking.

As required by Public Law 115-324, SBA is amending the requirements for agencies that seek to propose and adopt size standards for their own programs, instead of applying SBA's size standards. Under the final rule, a non-SBA agency's receipts-based size standard, whether applying to services or non-services firms, must be proposed with a 5-year averaging period.

Section 3(a)(2)(ii)(III) of the Small Business Act still provides that other agencies prescribe size standards for industries other than services or manufacturing using “data over a period of not less than 3 years.” While Congress did not change this statutory language, SBA believes that it also can require other agencies establishing size standards for industries other than services or manufacturing to use data over a 5-year period and specifically solicited comment on whether to make such a change. SBA received strong support for applying the 5-year averaging period for all industries. To avoid confusion from using the 5-year average receipts for SBA's size standards and 3-year average receipts for other agencies' size standards and promote consistency in measuring business size across the Federal government, in this final rule, SBA is also adopting the same 5-year averaging period for all receipts-based size standards proposed by other Federal agencies.

This new calculation period does not affect existing non-SBA size standards that specify a 3-year average unless the responsible agency proposes and finalizes changes to the existing specification of a 3-year average. This is consistent with the change in Public Law 115-324 to the requirements for prescribing a non-SBA size standard, given the lack of any restrictions in the Small Business Act or Public Law 115-324 on applying an existing size standard. In adopting or proposing a change to the averaging period for its existing size standard, the responsible agency should coordinate with SBA using the procedure in § 121.903.

In response to the Proposed Rule, the Office of Advocacy of the SBA (Office of Advocacy) requested that the SBA update its Initial Regulatory Flexibility Analysis (IRFA) to include more relevant alternatives to the proposed regulatory change to mitigate negative impacts on small businesses. Specifically, the Office of Advocacy suggested that SBA allow the public to consider at least 2 specific alternatives: (1) A 2-year transition period during which firms could use either a 3-year or 5-year averaging period, or (2) allowing a small business that has been awarded a contract to recertify its small business size status through any option periods.

As suggested by the Office of Advocacy, SBA has adopted a 2-year transition period that will end January 6, 2022. During that period, firms will choose either a 3-year or 5-year averaging period. Thus, firms that wish to continue using a 3-year average for certifying or assessing small business size status may continue to do so until January 6, 2022.

With regard to updating the IRFA, SBA does not believe that it is practical to issue a revised IRFA for public comment at this time. There is an urgent need to implement the intent of Congress and a further delay would result in more uncertainty and confusion for small businesses and the Federal contracting community. A number of comments to the proposed rule urged SBA to implement the final rule as soon as possible. In addition, SBA has adopted one of the relevant alternatives discussed by the Office of Advocacy, a 2-year transition period during which firms could use either a 3-year or a 5-year averaging period. Thus, issuing a revised IRFA for public comment would be superfluous. Accordingly, SBA is declining to issue a revised IRFA for public comment with the alternatives proposed by the Office of Advocacy.

With regard to recertification, SBA believes it would be extremely complicated to allow a firm that has already been awarded a contract to recertify its size status, after the transition period, using either the 3-year or 5-year averaging period through the length of that contract and any options. This would create extensive tracking and recordkeeping requirements that would also result in uncertainty and unpredictability for firms trying to determine their size status after the end of the 2-year transition period created in this rule. Thus, even if a firm initially certified for a contract under a 3-year averaging period, a firm must use a 5-year average when it submits a new certification or recertification for that contract after the end of the transition period.

The Office of Management and Budget (OMB) has determined that this final rule is not a significant regulatory action for purposes of Executive Order 12866. Nonetheless, as required by section 3(a)(6) of the Small Business Act, 15 U.S.C. 632(a)(6), in the next section, SBA provides a benefit-cost analysis of this final rule, including: (1) A statement of the need for the proposed action, and (2) an evaluation of the benefits and costs—both quantitative and qualitative—of this regulatory action. This rule is also not a “major rule” under the Congressional Review Act, 5 U.S.C. 800, et seq.

As stated elsewhere, the Small Business Act delegates to SBA's Administrator the responsibility for establishing small business size definitions (usually referred to as “size standards”). Recently, Public Law 115-324 modified the requirements for proposed small business size standards prescribed by an agency without separate statutory authority to issue size standards.

The need of this final rule is to carry out the intent of Public Law 115-324 and to ensure consistency in the calculation of average annual receipts for size standards across the Federal Government.

SBA's mission is to aid and assist small businesses through a variety of financial, procurement, business development and counseling, and disaster assistance programs. This regulatory action promotes the Administration's goals and objectives and meets the SBA's statutory responsibility to implement a new law impacting size definitions for small businesses. One of SBA's goals in support of promoting the Administration's objectives is to help small businesses succeed through access to capital, Federal Government contracts and purchases, and management, technical and disaster assistance.

Changing the period for calculating average annual receipts from 3 years to 5 years may enable some mid-size businesses that have just exceeded size standards to regain small business status. Similarly, it could also allow some advanced and larger small businesses about to exceed size standards to retain their small business status for a longer period. However, as stated in the June 24, 2019, proposed rule, it could also result in some advanced small businesses having a 5-year receipts average that happens to be higher than the 3-year receipts average, thus ejecting them out of their small business status sooner. Detailed impacts of the proposed change are discussed below.

It is difficult to determine the actual number of small and mid-size businesses that would be impacted by Public Law 115-324 and this regulatory action because there is no annual data on receipts of businesses. The annual receipts data from the Economic Census special tabulation are only available once every 5 years. Similarly, the System for Award Management (SAM) only records the data on 3-year average annual receipts of businesses over their 3 preceding fiscal years, but not their annual receipts for each fiscal year. For example, the receipts data for year 2018 is an average of annual receipts for 2017, 2016, and 2015. Similarly, the receipts data for 2017 is an average of annual receipts for 2016, 2015, and 2014, and so on. A 5-year receipts average for 2018 would be an average of annual receipts for 2017, 2016, 2015, 2014, and 2013.

Given the lack of annual receipts for each year, SBA approximated a firm's 5-year average annual revenue for 2018 as follows:

This result may slightly underestimate the 5-year revenue average when annual revenues are rising (i.e., 2014 revenue > 2013 revenue > 2012 revenue) and overestimate it if annual revenues are declining (i.e., 2014 revenue < 2013 revenue < 2012 revenue).

To estimate the 5-year receipts average for 2018 using the above formula, SBA analyzed the 2018 SAM extracts (as of September 1, 2018) and 2015 SAM extracts (as of September 1, 2015). The above 5-year average annual receipts formula would only work for businesses that were present in both 2015 and 2018 SAM extracts. One challenge was that some businesses found in 2018 SAM could not be found in 2015 SAM and vice versa. Excluding entities registered in SAM for purposes other than government contracting and entities ineligible for small business consideration (such as foreign governments and state-controlled institutions of higher learning), there were a total of 346,958 unique business concerns in SAM subject to at least one receipts-based size standard. Of these concerns, 293,524 (or about 84.6 percent) were “small” in all North American Industry Classification System (NAICS) industries, 9,990 (or 2.9 percent) were “small” in some industries and “not small” in other industries, and 43,444 (or 12.5 percent) were “not small” in any industry.

Excluding entities with “null” or “zero” receipts values, 194,686 firms (or about 56 percent) appeared both in 2018 SAM and in 2015 SAM and were included in the 5-year average annual receipts approximation and calculation of number of businesses impacted. Of those 194,686 matched firms subject to a receipts-based size standard, 154,220 (or about 79 percent) were “small” in all NAICS industries, 8,049 (or 4.1 percent) were “small” in some industries and other than small (“not small”) in other industries, and 32,417 (or about 17 percent) were “not small” in any industry. In other words, 303,514 (or 87.5 percent) of 346,958 total concerns in SAM 2018 and 162,269 (or 83.3 percent) of 194,686 total matched firms were small in at least one NAICS industry with a receipts-based size standard. These results are summarized in Table 1, “Size Status of Businesses in Industries Subject to Receipts-Based Size Standards,” below.

According to Table 2, “Distribution of Business Concerns Subject to Receipts-Based Size Standards by Number of NAICS Codes,” below, the distribution of firms by the number of NAICS codes in the matched data is very similar to that for the overall 2018 SAM data. About 42-44 percent of firms were in only one NAICS code that has a receipts-based size standard, about 35 percent in 2-5 NAICS codes, about 12 percent in 6-10 NAICS codes, and about 8-10 percent in more than 10 NAICS codes. In other words, 56-58 percent of firms were in multiple NAICS codes with receipts-based size standards. Thus, it is quite possible that the proposed change may impact a firm's small business status in multiple industries. For purposes of this analysis, an impacted firm is defined as one that would be impacted by the change in terms of gaining, regaining, extending, or losing small business status in at least one industry with a receipts-based size standard.

A central premise of Public Law 115-324 is that a 5-year annual receipts average (as opposed to a 3-year annual receipts average) would enable some mid-size businesses who have recently exceeded the size standard to regain small business status and some advanced small businesses close to exceeding the size standard to retain their small business status for a longer period. However, this premise would only hold true when businesses' annual revenues are rising. When businesses' annual revenues are declining, due to economic downturns or other factors, the 5-year annual receipts average could be higher than the 3-year annual receipts average, thereby causing small businesses close to their size standards to lose their small business status sooner. To mitigate such negative impacts on small businesses, SBA has decided, in consideration of public comments and the results from its own analysis, to provide a 2-year transition period in which firms will be allowed to elect either a 5-year or 3-year averaging period in calculating their average annual receipts.

By comparing the approximated 5-year annual receipts average with the current receipts-based size standard for each of the 194,686 matched business concerns in each NAICS code subject to a receipts-based size standard, in the proposed rule, SBA identified the following 4 possible impacts from changing the averaging period for annual revenues from 3 years to 5 years:

i. The number of mid-size businesses that have exceeded the size standard and would regain small business status in at least one NAICS industry with a receipts-based size standard (i.e., 3-year average > size standard ≥ 5-year average)—positive impact;

ii. the number of advanced small businesses within 10 percent below the size standard that would have their small business status extended for a longer period in at least one NAICS industry with a receipts-based standard (5-year average < 3-year average ≤ size standard and 0.9*size standard < 3-year average ≤ size standard)—positive impact;

iii. the number of currently small businesses that would lose their small business status in at least one NAICS industry subjected to at least one receipts-based size standard (i.e., 3-year average ≤ size standard < 5-year average)—negative impact; and

iv. the number of advanced small businesses within 10 percent below the size standard that would have their small business status shortened in at least one NAICS industry subject to a receipts-based standard (3-year average < 5-year average ≤ size standard and 0.9*size standard < 3-year average ≤ size standard)—negative impact.

In this final rule, SBA is changing the period for calculation of average annual receipts for all of its as well as other agencies' receipts-based size standards from 3 years to 5 years. The purpose of Public Law 115-324 is to allow small businesses more time to grow and develop competitiveness and infrastructure so that they are better prepared to succeed under full and open competition once they outgrow the size threshold. However, as stated in the proposed rule, a longer 5-year averaging period may not always and necessarily provide relief to every small business concern. As discussed in the proposed rule, when annual revenues are declining or when annual revenues for the latest 3 years are lower than those for the earliest 2 years of the 5-year period, the 5-year average would be higher than the 3-year average, thereby ejecting some advanced small businesses out of their small business status sooner or rendering some small businesses under the 3-year average not small immediately.

In the proposed rule, SBA described 4 different types of impacts on small businesses from changes to the averaging period for annual receipts from 3 years to 5 years as follows: (i) Enabling current large or mid-size businesses to gain small business status (impact i); (ii) enabling current advanced small businesses to lengthen their small business status (impact ii); (iii) causing current small businesses to lose their small business status (impact iii); and (iv) causing current small businesses to shorten their small business status (impact iv).

However, with the SBA's decision to provide a 2-year transition period thereby allowing firms to choose either their 5-year average annual receipts or their 3-year average annual receipts, the two negative impacts (namely impact (iii) and impact (iv)) do not apply to this final rule. Accordingly, this final rule provides the analysis of the two positive impacts (namely impact (i) and impact (ii)) only.

Table 3, ‘Percentage Distribution of Impacted Firms by the Number of NAICS Codes,’ below, provides these results based on the 2018 SAM—2015 SAM matched firms.

It is highly notable that the distribution of impacted firms by the number of NAICS codes, as shown in Table 3, is very different as compared to a similar distribution based on the overall matched and total 2018 SAM data (see Table 2), especially with respect to firms with only one NAICS code and those with more than 5 NAICS codes. For example, as shown in Table 2, above, more than 40 percent of all firms in the overall data were associated with only one NAICS code, as compared to less than 15 percent among impacted firms in Table 3. Similarly, firms with more than 5 NAICS codes accounted for about 20 percent of all firms in the original data, as compared to more than 50 percent among impacted firms. It is also notable that NAICS Sectors 54, 56, and 23 together accounted for more than 70 percent of impacted firms, with Sector 54 (Professional, Scientific and Technical Services) accounting for about 35 percent, followed by Sector 23 (Construction) about 25 percent, and Sector 56 (Administrative and Support, Waste Management and Remediation Services) about 12-13 percent.

Each of these impacts was then multiplied by an applicable factor or ratio, as shown in the last column of Table 1, to obtain the respective impacts corresponding to all firms in 2018 SAM subject to at least one receipts-based size standard. These results are presented below in Table 4, “Impacts from Changing the Averaging Period for Receipts from 3 Years to 5 Years.” The last column of the table shows the percent of firms impacted relative to all business concerns in 2018 SAM.

Because the SAM data only captures businesses that are primarily interested in Federal procurement opportunities, the SAM-based results do not capture the impacts the proposed change may have on businesses participating in various non-procurement programs that apply SBA's receipts-based size standards, such as exemptions from compliance with paperwork and other regulatory requirements.

The Economic Census, combined with the Census of Agriculture and County Business Patterns Reports, provides for each NAICS code information on the number of total small and large businesses subjected to a receipts-based size standard. Based on the matched SAM data, SBA computed percentages of businesses impacted under each impact category for each NAICS industry subject to a receipts-based size standard. By applying such percentages to the 2012 Economic Census tabulation, SBA estimated the number of all businesses impacted under each impact type for each NAICS code subject to a receipts-based size standard. These results are presented in Table 5, “Impacts from Changing the Averaging Period for Receipts from 3 Years to 5 Years (2012 Economic Census),” below.

Currently large or mid-size businesses regaining small business status would get various benefits as small business concerns, including access to Federal set-aside contracts, and exemptions from various compliance and paperwork requirements. With their small business status extended, advanced small businesses would continue to receive such benefits for a longer period. However, the change from 3-year average receipts to 5-year average may also harm some small businesses by causing them to lose or shorten their small business status in at least one receipts-based size standard, thereby depriving them of access to small business assistance, especially Federal set-aside opportunities. To mitigate such impacts, SBA is allowing businesses to elect either the 3-year average annual receipts or the 5-year average annual receipts for 2 years through January 6, 2022. SBA intends to seek comment on implementation in the Business Loan and Disaster Loan Programs in a proposed rule through a separate rulemaking.

For this new regulatory action modifying an existing regulation (such as changing the average annual receipts calculation from 3 years to 5 years), a baseline assuming no change to the regulation (i.e., maintaining the status quo) generally provides an appropriate benchmark for evaluating benefits, costs, or transfer impacts of proposed regulatory changes and their alternatives.

Based on the 2012 Economic Census special tabulations (the latest available), 2012 County Business Patterns Reports (for industries not covered by the Economic Census), and 2012 Agricultural Census tabulations (for agricultural industries), of a total of about 7.2 million firms in all industries with receipts-based size standards, about 96 percent are considered small and 4 percent other-than-small under the 3-year annual receipts average. Similarly, of 346,958 businesses that were subject to at least one receipts-based size standard and eligible for Federal contracting, 87.5 percent were small in at least one NAICS code and 12.5 percent other than small in all NAICS codes.

Based on the data from the Federal Procurement Data System—Next Generation (FPDS-NG) for fiscal years 2015-2017 (the latest available when the proposed rule was prepared), on average, about 88,770 unique firms in industries subject to receipts-based size standards received at least one Federal contract during that period, of which 83 percent were small. Businesses subject to receipts-based standards received $182 billion in average annual Federal contract dollars during that period, of which nearly $64 billion or about 35 percent went to small businesses. Of total dollars awarded to small businesses subject to receipts-based size standards, $45 billion or 71 percent was awarded through various small business set-aside programs and another 29 percent was awarded through non-set aside contracts.

Table 6, “Baseline Analysis of Receipts-Based Size Standards,” below, provides these baseline results. SBA's proposed rule included an estimate of the number and total dollar amount of loans issued through the Business Loan Programs and the Economic Injury Disaster Loan (EIDL) program. These estimates are not presented in this final rule because SBA intends to issue a separate rulemaking to consider changes to size eligibility for the Business Loan and Disaster Loan Programs.

Besides set-aside contracting and financial assistance discussed above, small businesses also benefit through reduced fees, less paperwork, and fewer compliance requirements that are available to small businesses through Federal agencies that use SBA's size standards. However, SBA has no data to estimate the number of small businesses receiving such benefits. Similarly, due to the lack of data, SBA is not able to determine impacts the final rule will have on small businesses participating in other agencies' programs that are subject to their own size standards based on average annual receipts.

Businesses that would regain or expand their small business status can be identified by comparing the estimate of their 5-year receipts average with the size standard. That is, if the 5-year receipts average of a firm currently above the size standard is lower than the applicable size standard, that firm will gain or regain small business status. To estimate the number of small businesses that would benefit by having their small business status extended for a longer period or would be penalized by having their small business status shortened, SBA considered small businesses whose 3-year average annual receipts was within 10 percent below their receipts-based size thresholds. Depending upon whether their annual receipts are growing or declining, small businesses that are not immediately impacted may be impacted, either positively (i.e., gaining small business status) or negatively (i.e., losing small business status) someday as they continue to grow and approach the size standard threshold as in the current 3-year averaging method. However, SBA is not able to quantify such impacts now.

The most significant benefits to businesses from the change in the period for calculation of average annual receipts from 3 years to 5 years include: (i) Enabling some mid-size businesses currently categorized above their corresponding size standards to gain or regain small business status and thereby qualify for participation in Federal assistance intended for small businesses, and (ii) allowing some advanced and larger small businesses close to their size thresholds to lengthen their small business status for a longer period and thereby continue their participation in Federal small business programs. These include Federal procurement programs intended for small businesses. Federal procurement programs provide targeted, set-aside opportunities for small businesses under SBA's various business development and contracting programs, including 8(a)/BD, HUBZone, WOSB, EDWOSB, and SDVOSB programs. Benefits accruing to businesses gaining and extending small business status are presented below in Table 7, “Positive Impacts of Changing the Averaging Period for Receipts from 3 Years to 5 Years.” The results in Table 7 pertain to businesses and industries subject to SBA's receipts-based size standards only.

As shown in Table 7, of 43,444 firms not currently considered small in any receipts-based size standards, 3,260 (or 7.5 percent) would benefit from the proposed change by gaining or regaining small business status under the 5-year receipts average in at least one NAICS industry that is subject to a receipts-based size standard. Additionally, about 3,800 or 1.3 percent of small businesses within 10 percent below size standards would see their annual receipts decrease under the 5-year averaging period, consequently enabling them to keep their small business status for a longer period.

Using the 2012 Economic Census, SBA estimated that about 7,800 or 2.9 percent of currently large businesses would gain or regain small business status and more than 62,800 or 0.9 percent of total small businesses would see their small business status extended for a longer period as the result of this proposed rule. These results are shown in Table 7, below.

Discussion

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2018-0288, dated December 21, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus SAS Model A318, A319, A320 and A321 series airplanes. Model A320-215 airplanes are not certified by the FAA and are not included on the U.S. type certificate data sheet; this AD therefore does not include those airplanes in the applicability. You may examine the MCAI in the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2019-0321.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus SAS Model A318 series airplanes; A319-111, -112, -113, -114, -115, -131, -132, and -133 airplanes; A320-211, -212, -214, -216, -231, -232, -233, -251N, -252N and -271N airplanes; and A321 series airplanes. The NPRM published in the Federal Register on May 9, 2019 (84 FR 20303). The NPRM was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The NPRM proposed to require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations. The FAA is issuing this AD to address fatigue cracking, accidental damage, or corrosion in principal structural elements, which could result in reduced structural integrity of the airplane. See the MCAI for additional background information.

The FAA gave the public the opportunity to participate in developing this final rule. The following presents the comments received on the NPRM and the FAA's response to each comment. Delta Airlines (DAL) stated that it supports the NPRM.

DAL requested that we add a reporting requirement to the proposed AD. DAL recommended that the proposed AD state that all crack findings, along with corrective actions performed, be reported to Airbus via the Airbus Tech Request system within 30 days. DAL commented that the philosophy of the fatigue-related inspections is that they are in places where cracking might be found in the future, and if cracking is found, then the task in Airbus A318/A319/A320/A321 Airworthiness Limitations Section (ALS) Part 2—Damage Tolerant Airworthiness Limitation Items (DT-ALI), Revision 07, dated June 13, 2018, will be removed and become its own service information and AD; therefore, mandatory reporting must be part of this process. DAL also stated that they could not locate information regarding where to submit reports and the timeframe for reporting.

The FAA would like to clarify the intent of the referenced damage-tolerant task in Airbus A318/A319/A320/A321 Airworthiness Limitations Section (ALS) Part 2—Damage Tolerant Airworthiness Limitation Items (DT-ALI), Revision 07, dated June 13, 2018. Unlike airplanes that follow a Supplemental Structural Inspection Program that requires reporting (those with an older certification basis that does not include damage tolerance criteria), the airplanes specified in paragraph (c) of this AD comply with 14 CFR 25.571 damage tolerance criteria. Section 25.571 requires applicants to evaluate all structures that could contribute to catastrophic failure of the airplane with respect to its susceptibility to fatigue cracking, corrosion, and accidental damage. Applicants must establish inspections or other procedures (also referred to as maintenance actions) as necessary to avoid catastrophic failure during the operational life of the airplane based on the results of these evaluations. It is intended that all maintenance actions required to address fatigue cracking, corrosion, and accidental damage are identified in the structural-maintenance program. All inspections and other procedures (e.g., modification times, replacement times) that are necessary to prevent a catastrophic failure due to fatigue are included in the Airworthiness Limitations Section (ALS) of the Instructions for Continued Airworthiness (ICA), as required by 14 CFR 25.1529. Therefore, reporting is not needed to comply with this AD.

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

While airplane manufacturers may benefit from receiving information from the outcome of the ALI inspections, the EASA did not make reporting a requirement in EASA AD 2018-0288. The FAA concurs with the EASA, and therefore, this AD does not include a reporting requirement. However, operators may report the findings, as an option, to Airbus as specified in paragraph 6., “Reporting,” of Section 1 of Airbus A318/A319/A320/A321 Airworthiness Limitations Section (ALS) Part 2—Damage Tolerant Airworthiness Limitation Items (DT-ALI), Revision 07, dated June 13, 2018, that indicates reports should be sent to MPDtask.Reports@airbus.com. This AD has not been changed in this regard.

Airbus requested that AIR-676-19-235, dated June 3, 2019, which is an AMOC for paragraphs (g) and (l)(2)(i) of AD 2018-25-02, Amendment 39-19513 (83 FR 62690, December 6, 2018), be allowed as an AMOC for the requirements of paragraph (j) of the proposed AD.

The FAA agrees with the commenter's request. The agency finds that the provisions of AMOC AIR-676-19-235, which is limited to certain airplanes, are acceptable for all corresponding provisions of this AD. Therefore, the FAA has added paragraph (j)(1)(iii) to this AD to allow AIR-676-19-235, dated June 3, 2019, as an acceptable method of compliance for the corresponding provisions of this AD.

The FAA has determined that Airbus SAS Model A320-252N airplanes were inadvertently omitted from the Applicability of the proposed AD. Therefore, the FAA has updated paragraph (c)(3) of this AD to add those airplanes. Since there are currently no domestic operators of this product, additional notice and opportunity for public comment before issuing this AD are unnecessary.

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

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

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

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

Airbus has issued Airbus A318/A319/A320/A321 Airworthiness Limitations Section (ALS) Part 2—Damage Tolerant Airworthiness Limitation Items (DT-ALI), Revision 07, dated June 13, 2018. This service information describes damage tolerant airworthiness limitations. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 1,463 airplanes of U.S. registry. The FAA estimates the following costs to comply with this AD:

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

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

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

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

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

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

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

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

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

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

Discussion

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian AD CF-2009-11R2, dated May 31, 2018 (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc., Model DHC-8-400 series airplanes. You may examine the MCAI in the AD docket on the internet at https://www.regulations.gov by searching for and locating Docket No. FAA-2019-0479.

The FAA issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2009-09-02, Amendment 39-15888 (74 FR 18121, April 21, 2009) (“AD 2009-09-02”). AD 2009-09-02 applied to certain Bombardier Model DHC-8-400 series airplanes. The NPRM published in the Federal Register on July 12, 2019 (84 FR 33185). The NPRM was prompted by reports of failures of the aft hinge of the MLG forward stabilizer brace due to fatigue cracks. The NPRM proposed to continue to require inspections for damage (including excessive wear, corrosion, foreign object damage, and cracking) of certain MLG forward stabilizer brace assemblies and applicable corrective actions; and repetitive inspections for cracking of both MLG forward stabilizer braces, applicable liquid penetrant inspections for cracking, and corrective actions if necessary. The NPRM also proposed to require installation of an elbow restrictor. The FAA is issuing this AD to address failure of the stabilizer brace, which could result in the collapse of the MLG. See the MCAI for additional background information.

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

Air Line Pilots Association, International (ALPA) stated its support for the NPRM.

Horizon Air requested that paragraphs (h) and (k) of the proposed AD refer specifically to paragraph 3.B., “Procedure,” in the Accomplishment Instructions of the referenced service information rather than “the Accomplishment Instructions.” Horizon Air stated that the “Job-Set Up” and “Close Out” procedures in the Accomplishment Instructions of the applicable service information do not directly correct the unsafe condition.

The FAA agrees with the commenter's request for the reason provided above. The FAA has revised paragraphs (h) and (k) of this AD to require accomplishment of paragraph 3.B., “Procedure,” of the Accomplishment Instructions of the applicable service information.

The FAA has revised this final rule to identify the legal name of the manufacturer, De Havilland Aircraft of Canada Limited, as published in the most recent type certificate data sheet for the affected airplane model.

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

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

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

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

Bombardier has issued the following service information.

• Bombardier Service Bulletin 84-32-69, Revision C, dated January 20, 2011, which describes procedures for replacing the standard elbow fitting with a new restrictor elbow fitting.

• Bombardier Service Bulletin 84-32-76, Revision B, dated August 1, 2018, which describes procedures for replacing the standard elbow fitting with a new restrictor elbow fitting and introduction of a new configuration stabilizer brace assembly.

• Bombardier Repair Drawing 8/4-32-099, Issue 4, dated September 4, 2018, which describes, among other actions, procedures for inspections for cracking of the apex lug stop on the MLG forward stabilizer brace assembly.

• UTC Aerospace Systems Service Concession Request 026-09, Revision H, dated August 29, 2018, which describes, among other actions, procedures for inspections for excessive wear of the apex pins on the MLG forward stabilizer brace assembly.

This AD also requires the following service information, which the Director of the Federal Register approved for incorporation by reference as of May 6, 2009 (75 FR 18121, April 21, 2009).

• Bombardier Q400 All Operator Message 338, dated February 23, 2009.

• Bombardier Repair Drawing 8/4-32-099, Issue 1, dated March 10, 2009.

• Goodrich Service Concession Request 026-09, Revision B, dated March 10, 2009.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

The FAA estimates that this AD affects 54 airplanes of U.S. registry.

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

Process Used by the DON in the Development of the Proposed Revisions

In 2015, the Office of the Deputy Assistant Secretary of the Navy for Environment directed a review of 32 CFR 775.6(e) and (f), which address the DON's procedures for applying CATEXs. A review panel (hereinafter “panel”) was formed to provide administrative support and expertise to inform the efforts. The professionals comprising the panel were current DON environmental practitioners with numerous years of NEPA planning and compliance experience, including the preparation of environmental documentation such as CATEX decision documents, environmental assessments (EAs), environmental impact statements (EISs), findings of no significant impact, and records of decision. The panel was supported by a legal working group comprising experienced environmental law attorneys from the DON's Office of the General Counsel and Office of the Judge Advocate General with advanced education and experience providing legal and policy advice to Federal agency decision makers, managers, and practitioners on environmental planning and compliance responsibilities.

The panel reviewed and analyzed the supporting rationale, scope, applicability, and wording of each existing CATEX and extraordinary circumstance set forth in 32 CFR 775.6(e) and (f). The panel developed and deliberated on each proposed new CATEX and extraordinary circumstance change, balancing the resulting increase in administrative efficiency in NEPA implementation and compliance against the risk of misinterpretation and misapplication. During that process, numerous environmental professionals, representing various constituencies within the DON, supported the panel's review and participated in meetings and conference calls over the course of 18 months to reach agreement on the proposed rule (84 FR 12170).

In accordance with Council on Environmental Quality (CEQ) regulations and CEQ's 2010 CATEX guidance, “Establishing, Applying, and Revising Categorical Exclusions under the National Environmental Policy Act,” the DON substantiated the proposed new and revised CATEXs by reviewing EA and EIS analyses to identify the environmental effects of previously implemented actions; benchmarking other Federal agencies' experiences; and leveraging the expertise, experience, and judgment of DON professional staff. The panel noted that other Department of Defense (DoD) entities and numerous other Federal agencies have CATEXs for activities that are similar in nature, scope, and impact on the human environment as those undertaken by the DON. The panel reviewed many of those CATEXs before proposing changes to 32 CFR 775.6(e) and (f).

In addition, the panel recognized that all Federal agencies, including the DoD as a whole, with very few limitations, must meet the same requirements to consider environmental issues in decision making with an ultimate goal to protect the environment. Based on experience with, or on behalf of, other Federal agencies, the panel determined that the characteristics of many of the DON's activities were not significantly different from those performed by other Federal agencies, including other entities within the DoD.

The CEQ was integral in the process to ensure that proposed changes to the DON's CATEXs meet NEPA requirements. The DON provided the CEQ with proposed draft changes and justifications for each proposed change to 32 CFR 775.6(e) and (f). Many of the changes that the DON is proposing are administrative in nature to clarify application of a particular CATEX. On July 7, 2017, the CEQ concurred with the DON proceeding to rulemaking on these proposed changes.

The DON published the proposed rule (84 FR 12170) on April 1, 2019, and received comments regarding the rule until May 1, 2019. In total, the DON received five (5) comment submissions on the proposed rule from members of the general public, the Natural Resources Defense Council (NRDC), and Buchalter law firm.

In general, the comments received could be placed into one of four (4) categories: (1) Comments beyond the scope of the proposed rule; (2) comments regarding the introductory language change for “extraordinary circumstances” under 32 CFR 775.6(e); (3) comments regarding how the proposed change to 32 CFR 775.6 may interact with the Marine Mammal Protection Act (MMPA); and, (4) comments regarding proposed CATEX #47, which allows for the “modernization (upgrade) of range and training areas, systems, and associated components . . . that support current testing and training levels and requirements.”

The DON received comments expressing disagreement and lack of support for general naval operations, as well as dissatisfaction with Federal protections for marine mammals. The DON also received feedback regarding existing CATEXs, specifically CATEXs #44 and #45 (now numbered #43 and #44 in this final rule). The proposed rule did not change or alter these CATEXs. These comments were deemed to be outside the scope of this rulemaking and are therefore not addressed further.

The DON received comments expressing concern that the proposed modifications to the text of 32 CFR 775.6(e) would “eliminate” the extraordinary circumstances exception to the use of a CATEX, contravening CEQ guidance. The DON stresses that the proposed changes to the criteria disallowing the application of a listed CATEX (hereafter “extraordinary circumstances”) do not eliminate the requirement to demonstrate that an action has no significant effect on the human environment, either individually or cumulatively, prior to applying a CATEX. Rather, the rulemaking provides discretion in circumstances where one or more extraordinary circumstances are present but in which only negligible or insignificant impacts are expected. Under this rulemaking, the decision maker may determine that the CATEX is appropriate, notwithstanding the presence of one or more extraordinary circumstances, based on an evaluation of the action's effects in terms of context and intensity. This change aligns with CEQ's 2010 CATEX guidance (page 6) which allows for the consideration of both “the presence of the factor and the impact on that factor.” Further, this language mirrors the extraordinary circumstances introductory language already contained in similar NEPA regulations of the U.S. Forest Service and the National Oceanic and Atmospheric Administration (NOAA)'s NEPA manual.

Some commenters also expressed concern that the modifications to 32 CFR 775.6(e) could lead to environmental degradation if the DON sought to apply a CATEX under 32 CFR 775.6(f) to an action which on its face appeared to have negligible impacts, but cumulatively or over time could have more substantial negative environmental impacts. Again, consistent with CEQ guidance, the DON's CATEXs can only be applied to actions that, both individually and cumulatively, have no significant impacts on the human environment. Under the new 32 CFR 775.6(e)(2), if a decision is made to apply a CATEX to a proposed action that is more than administrative in nature, the decision must be formally documented consistent with existing Navy and Marine Corps policy.

Some commenters were concerned that the new language proposed under 32 CFR 775.6(e) would allow the DON to apply CATEXs for “routine training and evaluation” and “routine military training” (existing CATEXs renumbered as #43 and #44 in this final rule) to virtually all testing and training activities, thereby circumventing Federal law. The language, however, does not remove the requirement to demonstrate that such training and testing have no significant impacts on the human environment either individually or cumulatively. Moreover, it does not negate the DON's responsibility to obtain legally required permits and/or approvals from regulatory agencies outside of the DON, many of which have their own NEPA review obligation. Finally, if a decision is made to apply a CATEX to a proposed action even though one or more extraordinary circumstances are present, a copy of the executed CATEX decision document must be forwarded to headquarters for review before the action can be implemented. These decisions then face a higher level of scrutiny which ensures the appropriate level of NEPA analysis is completed.

To address the above comments regarding changes to 32 CFR 775.6(e), the DON will adopt the following language under 32 CFR 775.6(e) to clarify its position that application of a CATEX is inappropriate unless the action is determined not to have a significant impact on the human environment either individually or cumulatively: “A categorical exclusion (CATEX), as defined and listed in this regulation and 40 CFR 1508.4, may be used to exclude a proposed action from further analysis. . . Before applying a CATEX, the decision maker must consider whether the proposed action would individually or cumulatively: . . .” (emphasis added).

Further, in response to comments, the DON will also remove the sunset provision previously included in the proposed rule for actions falling under 32 CFR 775.6(e)(1)(v)(A). The proposed rule terminated the requirement to forward CATEXs to headquarters for actions where one or more extraordinary circumstances were present after two years from the date of this final rule. Under the final rule, CATEXs for these actions will be forwarded to the headquarters level for review with no sunset provision. The purpose of this change is to ensure the highest level of scrutiny is dedicated to those actions which impact federally protected species.

Finally, certain commenters took issue with the DON's word choice. Examples of disputed wording include the use of “context and intensity” in 32 CFR 775.6(e) and “scientifically controversial” in 32 CFR 775.6(e)(1)(ii). The consideration of “context and intensity” of an action contemplated for a CATEX where one or more extraordinary circumstances is present is simply meant to provide guidance to decision makers in determining whether an action has the potential for significant effects under 40 CFR 1508.4. As noted previously, the consideration of “context and intensity” when determining whether a CATEX is appropriate aligns with CEQ's 2010 CATEX guidance. The term “scientifically controversial” is in the DON's existing NEPA regulations and has not been altered by this rulemaking.

The DON also received comments expressing concern that the DON would rely on the language changes under 32 CFR 775.6 to circumvent certain procedures, approvals, or authorizations required under the MMPA or other environmental statutes. Changes to the DON's CATEX regulations cannot negate the DON's independent legal responsibilities under other environmental statutes. Rather, the regulatory changes proffered by the DON in this rulemaking more clearly delineate the interplay between the DON NEPA regulations and the MMPA by linking the trigger for extraordinary circumstances to the specific regulatory threshold language of the MMPA. The DON has added language to 32 CFR 775.6(e)(1)(v)(A) to clarify a CATEX will not be used if potential impacts would rise to the level of requiring an Incidental Take Authorization under the MMPA, irrespective of whether an actual authorization is procured unless the DON determines, in accordance § 775.6(e), and after considering context and intensity, that the proposed action would not have significant environmental effects.

Further, the language change to 32 CFR 775.6 in no way affects policy external to the DON. The proposed language does not contravene National Marine Fisheries Service (NMFS) authorization requirements or NOAA NEPA requirements. That is, the DON will still be required to seek MMPA Incidental Take Authorizations from NMFS for activities which trigger NMFS jurisdiction and NOAA's issuance of those authorizations must still comply with its NEPA procedures. The DON will work closely with NMFS to ensure the appropriate level of NEPA analysis is completed to satisfy the NEPA requirements for both agencies.

One commenter was concerned that this proposed new CATEX could enable “later increased and potentially different uses” of DON ranges that would never undergo NEPA analysis. This CATEX covers the modernization (upgrade) of range and training areas, systems, and associated components that support current (emphasis added) training and testing levels and requirements. It would be used for activities such as replacing worn out infrastructure and equipment. The language of this CATEX cannot be used to satisfy NEPA obligations for increased or potentially different uses of the range or training area that would result in additional environmental impacts. No changes were made to the text of the final rule as a result of this comment.

In accordance with the comments section noted above, the DON makes minor edits to the wording of its proposed rule. The DON also makes several minor edits to improve the clarity, grammar, consistency and brevity of the regulations overall including a change which deletes language from CATEX #22 that contradicts DON's changes to extraordinary circumstances criteria regarding how to account for adverse effects on historic properties.

Thereafter, for the reasons given in the proposed rule and in this document, the DON adopts the proposed rule as a final rule, with the changes discussed in this document.

Authorities for this rule are 5 U.S.C. 301, NEPA, and 40 CFR parts 1500-1508. Under 5 U.S.C. 301, the head of a military department may prescribe regulations for the government of the department, the conduct of its employees, the distribution and performance of its business, and the custody, use, and preservation of its records, papers, and property. As noted above, NEPA requires Federal agencies to analyze their proposed actions to determine if they could have significant environmental effects. The CEQ implementing regulations (40 CFR 1507.3) require Federal agencies to adopt supplemental NEPA implementing procedures, including agency-specific CATEXs, either in the form of agency policy or a regulation, and to provide opportunity for public review prior to adoption.

Executive Orders 13563 and 12866 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, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated a “significant regulatory action,” although not economically significant, under section 3(f) of Executive Order 12866. Accordingly, it has been reviewed by the Office of Management and Budget (OMB).

Under the Congressional Review Act, a major rule may not take effect until at least 60 days after submission to Congress of a report regarding the rule. A major rule is one that would have an annual effect on the economy of $100 million or more; or a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. This final rule is not a major rule because it does not reach the economic threshold or have other impacts as required under the Congressional Review Act.

This final rule is not subject to the requirements of Executive Order 13771 (82 FR 9339, February 3, 2017) because it is related to agency organization, management, or personnel.

The CEQ does not direct agencies to prepare a NEPA analysis before establishing agency procedures that supplement the CEQ regulations for implementing NEPA. DON NEPA procedures assist in the fulfillment of its responsibilities under NEPA, but are not final determinations of what level of NEPA analysis is required for particular actions. The requirements for establishing agency NEPA procedures are set forth at 40 CFR 1505.1 and 1507.3. The determination that establishing agency NEPA procedures does not require NEPA analysis and documentation has been upheld in Heartwood, Inc. v. U.S. Forest Service, 73 F. Supp. 2d 962, 972-73 (S.D. III. 1999), aff'd, 230 F.3d 947, 954-55 (7th Cir. 2000).

This regulatory action does not contain a collection-of-information requirement subject to review and approval by the OMB under the Paperwork Reduction Act.

The DON has determined that this action is not subject to the relevant provisions of the Regulatory Flexibility Act of 1980 (5 U.S.C. 605(b)).

This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This rule does not impose any mandates on small entities. This action addresses the DON's internal procedures for implementing the procedural requirements of NEPA.

The DON has determined that this action does not contain policies with federalism or “takings” implications as those terms are defined in Executive Orders 13132 and 12630, respectively. This action does not have federalism implications. It 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 action contains no Federal mandates for state and local governments and does not impose any enforceable duties on state and local governments. This action addresses only internal DON procedures for implementing NEPA.

Accordingly, the DON amends 32 CFR part 775 as follows:

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

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

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

This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127 and 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and Orders under TSCA. Importers of chemicals subject to these SNURs must certify compliance with the SNUR requirements. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, any persons who export or intend to export a chemical substance that is the subject of this rule on or after January 6, 2020 are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) (see 40 CFR 721.20), and must comply with the export notification requirements in 40 CFR part 707, subpart D.

The docket includes information considered by the Agency in developing the proposed and final rules. The docket for this action, identified by the docket identification (ID) number listed at the top of this document, is available at http://www.regulations.gov or at the Office of Pollution Prevention and Toxics Docket (OPPT Docket), Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPPT Docket is (202) 566-0280. Please review the visitor instructions and additional information about the docket available at http://www.epa.gov/dockets.

EPA is finalizing these SNURs under TSCA section 5(a)(2) for 28 substances which were the subject of PMNs. These SNURs require persons who intend to manufacture or process any of these chemical substances for an activity that is designated as a significant new use to notify EPA at least 90 days before commencing that activity.

EPA is not finalizing one proposed SNUR at 40 CFR 721.11173 for the chemical substances P-15-442, P-15-443, P-15-444, P-15-445, P-15-446, P-15-447, P-15-525, P-15-526, P-15-527, and P-15-528, because the Agency is currently reviewing data submitted in support of a request to modify the underlying TSCA section 5(e) Order that forms the basis for the proposed SNUR. EPA will finalize that proposed SNUR after the data has been reviewed and any changes to the Order and/or SNUR have been considered and identified. In addition, the Agency has modified the underlying Order for the SNUR at 40 CFR 721.11174 to add the substances described in PMNs P-18-193, P-18-194, P-18-195, P-18-196, P-19-124, P-19-125, P-19-126, P-19-127, P-19-128, and P-19-129. All terms of the Order and proposed SNUR remain the same.

In the Federal Register of October 10, 2018 (83 FR 50872) (FRL-9984-67), EPA proposed a SNUR for 28 chemical substances to be added to 40 CFR part 721 subpart E. The comment period closed on November 9, 2018. More information on the specific chemical substances subject to this final rule can be found in the Federal Register documents for the direct final SNUR of October 10, 2018 (83 FR 50838) (FRL-9984-65). This direct final SNUR was withdrawn on December 7, 2018 (83 FR 63066) (FRL-9987-43) due to adverse public comments related to SNURs identified in the document. The record for the SNUR was established in the docket under docket ID number EPA-HQ-OPPT-2018-0649. That docket includes information considered by the Agency in developing the proposed and final rules, public comments submitted for the rule, and EPA's responses to public comments received on the proposed rule.

TSCA section 5(a)(2) (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the four TSCA section 5(a)(2) factors listed in Unit III. Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B) requires persons to submit a significant new use notice (SNUN) to EPA at least 90 days before they manufacture or process the chemical substance for that use (15 U.S.C. 2604(a)(1)(B)(i)).

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

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

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

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

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

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

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

EPA received public comments from three entities on the proposed rule. The Agency's responses are described in a separate Response to Public Comments document that is available in the docket for this rule. As described in the Response to Public Comments document, EPA made a minor change to the final rule to be consistent with the requirements of the TSCA Section 5(e) Order for P-17-257 (40 CFR 721.11179).

EPA is establishing significant new use and recordkeeping requirements for 28 chemical substances in 40 CFR part 721, subpart E. In Unit IV. of the original direct final SNUR of October 10, 2018 (83 FR 50838), EPA provides the following information for each chemical substance:

• PMN number.

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

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

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

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

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

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

These final rules include 28 PMN substances that are subject to orders issued under TSCA section 5(e)(1)(A), as required by the determinations made under TSCA section 5(a)(3)(B). Those Orders require protective measures to limit exposures or otherwise mitigate the potential unreasonable risk. The proposed SNURs would identify as significant new uses any manufacturing, processing, use, distribution in commerce, or disposal that does not conform to the restrictions imposed by the underlying Orders, consistent with TSCA section 5(f)(4).

During review of the PMNs submitted for the chemical substances that are subject to these SNURs, EPA concluded that regulation was warranted under TSCA section 5(e), pending the development of information sufficient to make reasoned evaluations of the health or environmental effects of the chemical substances. The basis for such findings is outlined in Unit IV. of the original direct final SNUR of October 10, 2018 (83 FR 50838). Based on these findings, TSCA section 5(e) Orders requiring the use of appropriate exposure controls were negotiated with the PMN submitters. As a general matter, EPA believes it is necessary to follow TSCA section 5(e) Orders with a SNUR that identifies the absence of those protective measures as Significant New Uses to ensure that all manufacturers and processors—not just the original submitter—are held to the same standard.

EPA is issuing these SNURs because the Agency wants:

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

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

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

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

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

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

When chemical substances identified in this rule are added to the TSCA Inventory, EPA recognizes that, before the rule is effective, other persons might engage in a use that has been identified as a significant new use. However, TSCA section 5(e) Orders have been issued for all the chemical substances, and the PMN submitters are prohibited by the TSCA section 5(e) Orders from undertaking activities which will be designated as significant new uses. The identities of 27 chemical substances subject to this rule have been claimed as confidential for a chemical substance covered by this action. Based on this, the Agency believes that it is highly unlikely that any of the significant new uses described in the regulatory text of this rule are ongoing.

Furthermore, EPA designated October 10, 2018 (the date of public release of the proposed and direct final rules) as the cutoff date for determining whether the new use is ongoing. The objective of EPA's approach has been to ensure that a person could not defeat a SNUR by initiating a significant new use before the effective date of the final rule.

In the unlikely event that a person began commercial manufacture or processing of the chemical substances for a significant new use identified as of October 10, 2018, that person will have to cease any such activity upon the effective date of the final rule. To resume their activities, these persons will have to first comply with all applicable SNUR notification requirements and wait until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.

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

In the absence of a rule, Order, or consent agreement under TSCA section 4 covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to them or reasonably ascertainable (see 40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing under 40 CFR part 721, subpart E. Unit IV. of the original direct final SNUR (83 FR 50838) lists potentially useful information for all SNURs listed here. Descriptions of this information is provided for informational purposes. The potentially useful information identified in Unit IV. of the original direct final rule will inform EPA's evaluation in the event that someone submits a SNUN for the significant new use. Companies who are considering submitting a SNUN are encouraged, but not required, to develop the information on the substance. EPA strongly encourages persons, before performing any testing, to consult with the Agency. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing on vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialogue with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h).

In some of the TSCA section 5(e) Orders for the chemical substances regulated under this rule, EPA has established production volume limits in view of the lack of data on the potential health and environmental risks that may be posed by the significant new uses or increased exposure to the chemical substances. These limits cannot be exceeded unless the PMN submitter first submits the results of specified tests that would permit a reasoned evaluation of the potential risks posed by these chemical substances. The SNURs contain the same production volume limits as the TSCA section 5(e) Orders. Exceeding these production limits is defined as a significant new use. Persons who intend to exceed the production limit must notify the Agency by submitting a SNUN at least 90 days in advance of commencement of non-exempt commercial manufacture or processing.

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

The potentially useful information identified in Unit IV. of the original direct final SNUR of October 10, 2018 (83 FR 50838) may not be the only means of addressing the potential risks of the chemical substance. However, submitting a SNUN without any test data or other information may increase the likelihood that EPA will take action under TSCA section 5(e) or 5(f). EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to conduct the appropriate tests.

SNUN submitters should be aware that EPA will be better able to evaluate SNUNs which provide detailed information on the following:

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

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

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

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

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

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

EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers and processors of the chemical substances subject to this rule. EPA's complete economic analysis is available in the docket under docket ID number EPA-HQ-OPPT-2018-0649.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Therefore, 40 CFR parts 9 and 721 are amended as follows:

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

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

This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127 and 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and Orders under TSCA. Importers of chemicals subject to these SNURs must certify compliance with the SNUR requirements. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, any persons who export or intend to export a chemical substance that is the subject of this rule on or after January 6, 2020 are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) (see 40 CFR 721.20), and must comply with the export notification requirements in 40 CFR part 707, subpart D.

The docket includes information considered by the Agency in developing the proposed and final rules. The docket for this action, identified by the docket identification (ID) number listed at the top of this document, is available at http://www.regulations.gov or at the Office of Pollution Prevention and Toxics Docket (OPPT Docket), Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPPT Docket is (202) 566-0280. Please review the visitor instructions and additional information about the docket available at http://www.epa.gov/dockets.

EPA is finalizing these SNURs under TSCA section 5(a)(2) for 29 chemical substances that are the subject of PMNs. These SNURs require persons who intend to manufacture or process any of these chemical substances for an activity that is designated as a significant new use to notify EPA at least 90 days before commencing that activity.

In the Federal Register of March 19, 2019 (84 FR 99996) (FRL-9986-83), EPA proposed a SNUR for these chemical substances in 40 CFR part 721, subpart E. More information on the specific chemical substances subject to this final rule can be found in the Federal Register documents for the proposed rule.

The record for the SNUR was established in the docket under docket ID number EPA-HQ-OPPT-2018-0697. That docket includes information considered by the Agency in developing the proposed and final rules, public comments submitted for the rule, and EPA's responses to public comments received on the proposed rule.

TSCA section 5(a)(2) (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the four TSCA section 5(a)(2) factors listed in Unit III. Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B) requires persons to submit a significant new use notice (SNUN) to EPA at least 90 days before they manufacture or process the chemical substance for that use (15 U.S.C. 2604(a)(1)(B)(i)). TSCA furthermore prohibits such manufacturing or processing from commencing until EPA has conducted a review of the notice, made an appropriate determination, and taken such actions as are required in association with that determination (15 U.S.C. 2604(a)(1)(B)(ii)). In the case of a determination other than not likely to present unreasonable risk, the applicable review period must also expire before manufacturing or processing for the new use may commence.

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

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

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

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

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

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

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

EPA received public comments from seven entities on the proposed rule. The Agency's responses are described in a separate Response to Public Comments document contained in the public docket for this rule, EPA-HQ-OPPT-2018-0697. As described in the Response to Public Comments document, EPA is finalizing the SNURs as proposed, as the only changes were correcting some CFR citations in the regulatory text.

EPA is establishing significant new use and recordkeeping requirements for these chemical substances in 40 CFR part 721, subpart E. In Unit IV. of the proposed rule (84 FR 9999; March 19, 2019), EPA provides the following information for each chemical substance:

• PMN number.

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

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

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

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

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

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

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

Where EPA determined that the PMN substance may present an unreasonable risk of injury to human health via inhalation exposure, the underlying TSCA section 5(e) Order usually requires that potentially exposed employees wear specified respirators unless actual measurements of the workplace air show that air-borne concentrations of the PMN substance are below the New Chemical Exposure Limit (NCEL). The comprehensive NCELs provisions in TSCA section 5(e) Orders include requirements addressing performance criteria for sampling and analytical methods, periodic monitoring, respiratory protection, and recordkeeping. No comparable NCEL provisions currently exist in 40 CFR part 721, subpart B, for SNURs. Therefore, for these cases, the individual SNURs in 40 CFR part 721, subpart E, will state that persons subject to the SNUR who wish to pursue NCELs as an alternative to the 40 CFR 721.63 respirator requirements may request to do so under 40 CFR 721.30. EPA expects that persons whose 40 CFR 721.30 requests to use the NCELs approach for SNURs that are approved by EPA will be required to comply with NCELs provisions that are comparable to those contained in the corresponding TSCA section 5(e) Order.

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

EPA is issuing these SNURs because the Agency wants:

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

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

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

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

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

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

When chemical substances identified in this rule are added to the TSCA Inventory, EPA recognizes that, before the rule is effective, other persons might engage in a use that has been identified as a significant new use. However, TSCA section 5(e) Orders have been issued for all the chemical substances, and the PMN submitters are prohibited by the TSCA section 5(e) Orders from undertaking activities which will be designated as significant new uses. The identities of 23 of the 29 chemical substances subject to this rule have been claimed as confidential. Based on this, the Agency believes that it is highly unlikely that any of the significant new uses described in the regulatory text of this rule are ongoing.

Furthermore, EPA designated August 27, 2018 (the date of public release of the original direct final and proposed rules) as the cutoff date for determining whether the new use is ongoing. The objective of EPA's approach has been to ensure that a person could not defeat a SNUR by initiating a significant new use before the effective date of the final rule.

In the unlikely event that a person began commercial manufacture or processing of the chemical substances for a significant new use identified as of August 27, 2018, that person will have to cease any such activity upon the effective date of the final rule. To resume their activities, these persons will have to first comply with all applicable SNUR notification requirements and wait until EPA has conducted a review of the notice, made an appropriate determination on the notice, and has taken such actions as are required with that determination.

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

In the absence of a rule, Order, or consent agreement under TSCA section 4 covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to or reasonably ascertainable (40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing, under 40 CFR part 721, subpart E. In Unit IV. of the original proposed rule (84 FR 9999; March 19, 2019), lists potentially useful information to EPA's evaluation.

Companies who are considering submitting a SNUN are encouraged, but not required, to develop the information on the substance, which may assist with EPA's analysis of the SNUN. EPA strongly encourages persons, before performing any testing, to consult with the Agency. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing on vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialog with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h).

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

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

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

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

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

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

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

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

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

EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers and processors of the chemical substances subject to this rule. EPA's complete economic analysis is available in the docket under docket ID number EPA-HQ-OPPT-2018-0697.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Therefore, 40 CFR parts 9 and 721 are amended as follows:

Section 553 of the APA, 5 U.S.C. 553(b)(3)(B), provides that, when an agency for good cause finds that notice and public procedure are impracticable, unnecessary, or contrary to the public interest, the agency may issue a rule without providing notice and an opportunity for public comment. The EPA has determined that there is good cause for making this final agency action without prior proposal and opportunity for comment because no significant EPA judgment is involved in making a finding of failure to submit SIPs, or elements of SIPs, required by the CAA, where states have made no submissions or incomplete submissions, to meet the requirement. Thus, notice and public procedure are unnecessary. The EPA finds that this constitutes good cause under 5 U.S.C. 553(b)(3)(B).

The EPA has established a docket for this action under Docket ID No. EPA-HQ-OAR-2019-0603. All documents in the docket are listed and publicly available at http://www.regulations.gov. Publicly available docket materials are also available in hard copy at the Air and Radiation Docket and Information Center, EPA/DC, William Jefferson Clinton West Building, Room 3334, 1301 Constitution Avenue NW, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744 and the telephone number for the Office of Air and Radiation Docket and Information Center is (202) 566-1742. For additional information about the EPA's public docket, visit the EPA Docket Center homepage at: http://www.epa.gov/epahome/dockets.htm.

The table below lists the states that failed to make a complete interstate transport SIP submittal addressing CAA section 110(a)(2)(D)(i)(I) requirements for the 2015 ozone NAAQS. For questions related to specific states mentioned in this document, please contact the appropriate EPA Regional office:

CAA section 110(a) imposes an obligation upon states to submit SIPs that provide for the implementation, maintenance, and enforcement of a new or revised NAAQS within 3 years following the promulgation of that NAAQS. CAA section 110(a)(2) lists specific requirements that states must meet in these SIP submissions, as applicable. The EPA refers to this type of SIP submission as an “infrastructure” SIP because it ensures that states can implement, maintain and enforce the new or revised air standards. Within these requirements, CAA section 110(a)(2)(D)(i) contains requirements to address interstate transport of NAAQS pollutants. A SIP revision submitted for this sub-section is referred to as an “interstate transport SIP.” In turn, CAA section 110(a)(2)(D)(i)(I) requires that such a plan contain adequate provisions to prohibit emissions from the state that will contribute significantly to nonattainment of the NAAQS in any other state (“prong 1”) or interfere with maintenance of the NAAQS in any other state (“prong 2”). Interstate transport prongs 1 and 2, also called collectively the “good neighbor” provision, are the requirements relevant to this findings document.

Pursuant to CAA section 110(k)(1)(B), the EPA must determine no later than 6 months after the date by which a state is required to submit a SIP whether a state has made a submission that meets the minimum completeness criteria established pursuant to CAA section 110(k)(1)(A). These criteria are set forth at 40 CFR part 51, appendix V. The EPA refers to the determination that a state has not submitted a SIP submission that meets the minimum completeness criteria as a “finding of failure to submit.” If the EPA finds a state has failed to submit a SIP to meet its statutory obligation to address CAA section 110(a)(2)(D)(i)(I), then pursuant to CAA section 110(c)(1), the EPA has not only the authority, but the obligation, to promulgate a FIP within 2 years to address the CAA requirement. This finding, therefore, starts a 2-year “clock” for promulgation by the EPA of a FIP, in accordance with CAA section 110(c)(1), unless prior to such promulgation the state submits, and the EPA approves, a submittal from the state to meet the requirements of CAA section 110(a)(2)(D)(i)(I). Even where the EPA has promulgated a FIP, the EPA will withdraw that FIP if a state submits and the EPA approves a SIP satisfying the relevant requirements. The EPA notes this action does not start a mandatory sanctions clock pursuant to CAA section 179 because this finding of failure to submit does not pertain to a part D plan for nonattainment areas required under CAA section 110(a)(2)(I) or a SIP call pursuant to CAA section 110(k)(5).

On October 1, 2015, the EPA promulgated a new 8-hour primary and secondary ozone NAAQS of 70 parts per billion (ppb), which is met when the 3-year average of the annual fourth highest daily maximum 8-hour concentration does not exceed 70 ppb.1 Pursuant to the 3-year period provided in CAA section 110(a)(1), infrastructure SIPs addressing the revised standard were due on October 1, 2018.

On September 5, 2019, the EPA announced via its website its intention to make findings that certain states have failed to submit complete interstate transport SIPs for the 2015 ozone NAAQS by November 22, 2019.2

On September 30, 2019, the Sierra Club filed a complaint in the United States District Court for the District of Columbia (D.C. District Court) alleging that the EPA had not fulfilled its mandatory duty to make findings of failure to submit interstate transport SIPs pursuant to CAA section 110(a)(2)(D)(i)(I) with respect to the 2015 ozone NAAQS for twelve states: Arkansas, Hawaii, Louisiana, Maine, Maryland, Mississippi, New Mexico, Pennsylvania, Rhode Island, Utah, Vermont, and Virginia.3 On October 29, 2019, the States of New Jersey and Connecticut filed a complaint in the D.C. District Court alleging that the EPA had not fulfilled its mandatory duty to make findings of failure to submit interstate transport SIPs addressing interstate transport in CAA section 110(a)(2)(D)(i)(I) with respect to the 2015 ozone NAAQS for two states: Virginia and Pennsylvania.4

To fulfill its statutory obligations, the EPA is taking this action for all states that have failed to submit complete SIPs addressing CAA section 110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS, not just those states named in the complaints. As explained below, in total, seven states have failed to submit complete SIPs while forty-three states and the District of Columbia have submitted complete SIPs addressing CAA section 110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS.

The EPA has included in the docket for this action its correspondence with states regarding the completeness of their SIP submissions. SIPs may be considered complete by either of two methods. First, the EPA may make a determination that a SIP is complete under the “completeness criteria” set out at 40 CFR part 51, appendix V. See CAA section 110(k)(1). Second, a SIP may be deemed complete by operation of law if the EPA has failed to make such a determination by 6 months after receipt of the SIP submission. See CAA section 110(k)(1)(B).

Five states failed to make any SIP submittal addressing interstate transport for the 2015 ozone NAAQS: Maine, New Mexico, Pennsylvania, Rhode Island, and Virginia. All of these states were identified in the Sierra Club complaint.

The EPA has evaluated the SIP submittals of two states, South Dakota and Utah, for completeness pursuant to the criteria in 40 CFR part 51, appendix V, and concluded that these are incomplete SIP submissions.5 On November 21, 2019, the EPA sent letters to these two states explaining our incompleteness determination. These letters are included in the docket for this action. As explained in those letters, the completeness criteria under 40 CFR part 51, appendix V, section 2.1(g), require a certification that public hearing(s) were held in accordance with the information provided in the state's public notice and the State's laws and constitution, if applicable and consistent with the public hearing requirements in 40 CFR 51.102. Under § 51.102(a), states must either hold a public hearing or provide the public the opportunity to request a public hearing. South Dakota and Utah did not provide the necessary certification under section 2.1(g) of appendix V that a public hearing was held or that they had provided the opportunity for the public to request a public hearing in accordance with 40 CFR 51.102(a). As a result, the EPA determined that these SIP submissions are incomplete. Where the EPA determines that a SIP submission does not meet the appendix V completeness criteria, “the State shall be treated as not having made the submission. . . .” CAA section 110(k)(1)(C). Accordingly, the EPA is finding in this document that South Dakota and Utah have failed to submit complete SIP revisions addressing CAA section 110(a)(2)(D)(i)(I) as to the 2015 ozone NAAQS. These states may, if they choose, resubmit to the EPA complete SIPs, which the EPA will review and act upon at a later date.

In all other cases, the EPA has determined that the SIP submittals are complete or they have been deemed complete by operation of law. In particular, the six remaining states identified in Sierra Club's complaint filed in the D.C. District Court have made complete SIP submittals addressing the good neighbor provision for the 2015 ozone NAAQS: Arkansas, Hawaii, Louisiana, Maryland, Mississippi, and Vermont. As a result, there is no longer a basis to make findings of failure to submit for these states.

The EPA is issuing national findings of failure to submit interstate transport SIPs addressing the requirements of CAA section 110(a)(2)(D)(i)(I) as to the 2015 ozone NAAQS, for all states that have not made complete submissions as of the date of this document.

The EPA is making findings of failure to submit for seven states. The EPA finds the following states have not submitted complete interstate transport SIPs to meet the requirements of CAA section 110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS: Maine, New Mexico, Pennsylvania, Rhode Island, South Dakota, Utah, and Virginia. Notwithstanding these findings, and the associated obligation of the EPA to promulgate FIPs for these states within two years of this finding, the EPA intends to continue to work with states subject to these findings in order to provide assistance as necessary to help them develop approvable SIP submittals in a timely manner.

This document is making a procedural finding that certain states have failed to submit a SIP to address CAA section 110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS. The EPA did not conduct an environmental analysis for this action because it would not directly affect the air emissions of particular sources. Because this action will not directly affect the air emissions of particular sources, it does not affect the level of protection provided to human health or the environment. Therefore, this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations.

This action is not a significant regulatory action and was, therefore, not submitted to the Office of Management and Budget (OMB) for review.

This action is not an Executive Order 13771 regulatory action because it finds that seven states failed to submit a SIP to meet their statutory obligation to address CAA section 110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS.

This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act. This final action does not establish any new information collection requirement apart from what is already required by law. This finding relates to the requirement in the CAA for states to submit SIPs under section 110(a)(2)(D)(i)(I) of the CAA for the 2015 ozone NAAQS.

This action is not subject to the RFA. The RFA applies only to rules subject to notice and comment rulemaking requirements under the Administrative Procedure Act (APA), 5 U.S.C. 553 or any other statute. This action is not subject to notice and comment requirements because the agency has invoked the APA “good cause” exemption under 5 U.S.C. 553(b). I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. The action is a finding that the named states have not made the necessary SIP submission for interstate transport to meet the requirements under section 110(a)(2)(D)(i)(I) of the CAA.

This action does not contain any unfunded mandate as described in UMRA 2 U.S.C. 1531-1538 and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local or tribal governments or the private sector.

This action does not have federalism implications. It 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 action does not have tribal implications as specified in Executive Order 13175. This action finds that seven states have failed to complete the requirement in the CAA to submit SIPs under section 110(a)(2)(D)(i)(I) of the CAA for the 2015 ozone NAAQS. No tribe is subject to the requirement to submit a transport SIP under section 110(a)(2)(D)(i)(I) of the CAA for the 2015 ozone NAAQS. Thus, Executive Order 13175 does not apply to this action.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it is a finding that certain states have failed to submit a complete SIP that satisfies interstate transport requirements under section 110(a)(2)(D)(i)(I) of the CAA for the 2015 ozone NAAQS and does not directly or disproportionately affect children.

This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

This rulemaking does not involve technical standards.

The EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income, or indigenous populations. In finding that certain states have failed to submit a complete SIP that satisfies the interstate transport requirements under section 110(a)(2)(D)(i)(I) of the CAA for the 2015 ozone NAAQS, this action does not adversely affect the level of protection provided to human health or the environment.

This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Section 307(b)(l) of the CAA indicates which federal Courts of Appeal have venue for petitions of review of final actions by the EPA under the CAA. This section provides, in part, that petitions for review must be filed in the Court of Appeals for the District of Columbia Circuit if: (i) The agency action consists of “nationally applicable regulations promulgated, or final action taken, by the Administrator,” or (ii) such action is locally or regionally applicable, but “such action is based on a determination of nationwide scope or effect and if in taking such action the Administrator finds and publishes that such action is based on such a determination.”

This final action is nationally applicable. To the extent a court finds this final action to be locally or regionally applicable, the EPA finds that this action is based on a determination of “nationwide scope or effect” within the meaning of CAA section 307(b)(1). This final action consists of findings of failure to submit required interstate transport SIPs for the 2015 ozone NAAQS from seven states located in four of the ten EPA Regional offices and five different federal judicial circuits. This final action is also based on a common core of factual findings concerning the receipt and completeness of the relevant SIP submittals. For these reasons, this final action is nationally applicable or, alternatively, to the extent a court finds this action to be locally or regionally applicable, the Administrator has determined that this final action is based on a determination of nationwide scope or effect for purposes of CAA section 307(b)(1).

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 District of Columbia Circuit within 60 days from the date this final action is published in the Federal Register. Filing a petition for reconsideration by the Administrator of this final action does not affect the finality of the action for the purposes of judicial review nor does it extend the time within which a petition for judicial review must be filed and shall not postpone the effectiveness of such rule or action. Thus, any petitions for review of this action must be filed in the Court of Appeals for the District of Columbia Circuit within 60 days from the date this final action is published in the Federal Register.

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2018-0623 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 3, 2020. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2018-0623, by one of the following methods:

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

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

• Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.html. Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets.

In the Federal Register of December 21, 2018 (83 FR 65660) (FRL-9985-67), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 8E8692) by IR-4, IR-4 Project Headquarters, Rutgers, The State University of New Jersey, 500 College Road East, Suite 201 W, Princeton, NJ 08540. The petition requested that 40 CFR part 180 be amended by establishing tolerances for residues of the propamocarb (propyl N-[3-(dimethylamino)propyl]carbamate in or on the following raw agricultural commodities: Guava at 0.05 parts per million (ppm); starfruit at 0.05 ppm; leafy greens subgroup 4-16A at 150 ppm; vegetable, tuberous and corm, subgroup 1C at 0.30 ppm; and vegetable, fruiting, group 8-10 at 4.0 ppm. The petition also requested to amend 40 CFR 180.499 by removing the established tolerances for the residues of propamocarb in or on lettuce, head at 50 ppm; lettuce, leaf at 90 ppm; potato at 0.30 ppm; and vegetable, fruiting, group 8 at 2.0 ppm. That document referenced a summary of the petition prepared by Bayer CropScience, the registrant, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notice of filing.

EPA is establishing tolerances that vary slightly from what was requested to be consistent with Organization for Economic Cooperation and Development (OECD) Rounding Class Practice.

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

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

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

Although propamocarb is a carbamate fungicide, it doesn not inhibit cholinesterase like many other carbamate pesticides, such as N-methyl carbamates. Neurotoxic effects include decreased motor activity following acute exposure and vacuolization of the choroid plexus (ventricles of the brain which produce cerebral spinal fluid) following subchronic and chronic durations. Other effects observed are indicative of toxicity to the digestive and gastro-intestinal (GI) tracts in dogs (chronic erosive gastritis, vacuolization of the salivary gland and stomach), and the eye (hyporeflectivity of the fundus, retinal degeneration, and vacuolization of the retinal gland). In all species, decreased body weights, body-weight gains, and food consumption were observed following subchronic and chronic exposure.

Effects in the route-specific dermal and inhalation studies were primarily portal-of-entry effects. Dermal exposure caused dermal irritation in rats and rabbits at relatively high doses (greater than 500 mg/kg/day). Inhalation exposure caused labored breathing and the appearance of red material around the nose. Systemic effects were observed following inhalation exposure at similar doses that caused portal-of-entry effects; these included kidney cysts and changes in hematological parameters.

There was no evidence of increased quantitative pre- or postnatal susceptibility in the toxicity database for propamocarb-HCl in rats or rabbits. There was an increased qualitative susceptibility for propamocarb-HCl in rats. In the developmental rat studies, fetal effects included increased death, increased incidences of minor skeletal anomalies, increased incidences of small fetus, inter-atrial septal defects, and hemorrhage in the ears, upper GI tract, and nasopharynx/sinuses. Maternal effects consisted of decreased absolute body-weights, food consumption, post-implantation loss, and mortality. In rabbits there was an increased incidence of post-implantation loss in one of the two available studies, and no fetal effects in the second study. In the rat 2-generation reproduction studies, offspring effects consisted of decreased weights in both studies, as well as death, decreased viability and lactation indices and litter size at the limit dose (1,000 mg/kg/day) in one study. Parental effects were consistent with those previously described for adults. Reproductive effects consisted of increased vacuolization and decreased weight of the epididymides, decreased sperm counts and motility, and abnormal sperm morphology.

The Agency has classified propamocarb-HCl as “not likely to be carcinogenic to humans” by all routes of exposure based upon lack of evidence of carcinogenicity in rats and mice.

Specific information on the studies received and the nature of the adverse effects caused by propamocarb as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in the document titled “Propamocarb Hydrochloride (HCl). Human Health Risk Assessment for Proposed Uses on Leafy Green Subgroup 4-16A, Guava, and Starfruit; and Crop Conversions for Fruiting Vegetable Group 8 to Crop Group 8-10, and Potato to Subgroup 1C (Tuberous and Corm Vegetables Subgroup)” on pages 28-33 in docket ID number EPA-HQ-OPP-2018-0623.

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

A summary of the toxicological endpoints for propamocarb used for human risk assessment is discussed in Unit III.B. of the final rule published in the Federal Register of February 7, 2017 (82 FR 9519) (FRL-9957-68).

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to propamocarb, EPA considered exposure under the petitioned-for tolerances as well as all existing propamocarb tolerances in 40 CFR 180.499. EPA assessed dietary exposures from propamocarb in food as follows:

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

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

ii. Chronic exposure. In conducting the chronic dietary exposure assessment, EPA used the food consumption data from the USDA 2003-2008 NHANES/WWEIA. As to residue levels in food, EPA used tolerance-level residues and assumed 100 PCT for all commodities.

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

iv. Anticipated residue and PCT information. EPA did not use anticipated residue or PCT information in the dietary assessment for propamocarb. Tolerance level residues and 100 PCT were assumed for all food commodities.

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

Based on the Surface Water Concentration Calculator (SWCC) and Pesticide Root Zone Model Ground Water (PRZM GW), the estimated drinking water concentrations (EDWCs) of propamocarb for acute exposures are 4,860 parts per billion (ppb) for surface water and 73 ppb for ground water. The EDWCs of propamocarb for chronic exposures are 385 ppb for surface water and 70 ppb for ground water.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For the acute dietary risk assessment, the water concentration value of 4,860 ppb was used to assess the contribution to drinking water. For the chronic dietary risk assessment, the water concentration of value 385 ppb was used to assess the contribution to drinking water.

3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to nonoccupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets). Propamocarb is registered for use on golf course turf, which may result in dermal post-application exposures. No dermal hazard was identified in the toxicity database, so there is no need to conduct a quantitative residential exposure assessment.

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

Unlike other pesticides for which EPA has followed a cumulative risk approach based on a common mechanism of toxicity, EPA has not made a common mechanism of toxicity finding as to propamocarb-HCl and any other substances and propamocarb-HCl does not appear to produce a toxic metabolite produced by other substances. Although a carbamate, propamocarb-HCl is not an N-methyl carbamate and does not cause cholinesterase inhibition. Thus, it was not included in the N-methyl carbamate cumulative risk assessment. For the purposes of this action, therefore, EPA has not assumed that propamocarb-HCl has a common mechanism of toxicity with other substances.

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

2. Prenatal and postnatal sensitivity. There was no evidence of increased quantitative pre- or postnatal susceptibility in the toxicity database for propamocarb-HCl in rats or rabbits. There was an increased qualitative susceptibility for propamocarb-HCl in rats. In the developmental rat studies, fetal effects included increased death, increased incidences of minor skeletal anomalies, increased incidences of small fetus, inter-atrial septal defects, and hemorrhage in the ears, upper GI tract, and nasopharynx/sinuses. Maternal effects consisted of decreased absolute body-weights, food consumption, post-implantation loss, and mortality. In rabbits there was an increased incidence of post-implantation loss in one of the two available studies, and no fetal effects in the second study. In the rat 2-generation reproduction studies, offspring effects consisted of decreased weights in both studies, as well as death, decreased viability and lactation indices and litter size at the limit dose (1,000 mg/kg/day) in one study. Parental effects were consistent with those previously described for adults. Reproductive effects consisted of increased vacuolization and decreased weight of the epididymides, decreased sperm counts and motility, and abnormal sperm morphology.

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

i. The toxicity database for propamocarb is complete.

ii. There are two guidelines acute neurotoxicity (ACN) and two subchronic neurotoxicity (SCN) studies for propamocarb-HCl. There was evidence of neurotoxicity (decreased motor activity and vacuolization of the choroid plexus) in several studies following propamocarb-HCl exposure, including the ACN and SCN studies; however, concern is low since the effects are well-characterized with clear NOAEL/LOAEL values and the selected endpoints are protective of the observed effects.

iii. There is no evidence of increased quantitative pre- or post-natal susceptibility following exposure to propamocarb-HCl. There is evidence of increased qualitative susceptibility in one of the rat studies in the database; however, concern for these effects is low because: (1) The effects are well characterized, (2) clear NOAELs were established, (3) the endpoints selected are protective of these effects, and (4) the effects were seen in the presence of maternal/parental toxicity.

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

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

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to propamocarb will occupy 42% of the aPAD for all infants, the population group receiving the greatest exposure.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to propamocarb from food and water will utilize 53% of the cPAD for females 13 to 49 years old, the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of propamocarb is not expected.

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

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

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

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

An adequate gas chromatography/nitrogen-phosphorus detection (GC/NPD) method is available for enforcing the proposed tolerances. The method has undergone a successful independent laboratory validation and petition method validation and is currently listed in the Pesticide Analytical Manual (PAM) Vol. II.

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

Codex does not have maximum residue limits (MRLs) for guava and starfruit so harmonization is not an issue.

Codex does have MRLs for leaf and head lettuce at 100 ppm which is different than the U.S. tolerance being established on the leafy greens subgroup 4-16A. EPA is not harmonizing the U.S. tolerance with the Codex MRL because based on available residue data and using the OECD MRL calculation procedure, the tolerance value should be 150 ppm. EPA uses the OECD MRL calculation procedure in order to ensure that the tolerance value is not underestimated.

Codex has MRLs on eggplant at 0.3 ppm, bell pepper at 3 ppm and tomato at 2 ppm. The U.S. tolerance of 4 ppm on the fruiting vegetable group 8-10 is not harmonized with the Codex MRLs for the individual crops. Because EPA has data supporting the establishment of the crop groups and no data that indicate a need to establish separate individual commodities, the effect is that tolerances for individual commodities are not harmonized with Codex MRLs.

Codex has a potato MRL established 0.3 ppm and is harmonized with the U.S. tolerance of 0.3 ppm on the tuberous and corm vegetable subgroup 1C.

Therefore, tolerances are established for residues of propamocarb (propyl N-[3-(dimethylamino)propyl]carbamate in or on guava at 0.05 ppm; leafy greens subgroup 4-16A at 150 ppm; starfruit at 0.05 ppm; vegetable, fruiting, group 8-10 at 4 ppm; and vegetable, tuberous and corm, subgroup 1C at 0.3 ppm.

Additionally, the following tolerances are withdrawn from 40 CFR 180.499 as unnecessary due to the newly established tolerances: Lettuce, head at 50 ppm; lettuce, leaf at 90 ppm; potato at 0.30 ppm; and vegetable, fruiting, group 8 at 2.0 ppm.

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

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

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

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

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

Therefore, 40 CFR chapter I is amended as follows:

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2018-0162 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 3, 2020. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2018-0162, by one of the following methods:

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

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

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

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

In the Federal Register of August 14, 2018 (83 FR 40272) (FRL-9981-10), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 8E8665) by IR-4, IR-4 Project Headquarters, Rutgers, The State University of New Jersey, 500 College Road East, Suite 201 W, Princeton, NJ 08540. The petition requested that 40 CFR part 180 be amended by establishing tolerances for residues of fenpyroximate determined by measuring only the sum of fenpyroximate, (E)-1,1-dimethylethyl 4-[[[[(1,3-dimethyl-5-phenoxy-1H-pyrazol-4-yl)methylene]amino]oxy]methyl]benzoate and its Z-isomer, (Z)-1,1-dimethylethyl 4-[[[[(1,3-dimethyl-5-phenoxy-1H-pyrazol-4-yl)methylene]amino]oxy]methyl] benzoate, calculated as the stoichiometric equivalent of fenpyroximate in or on the raw agricultural commodities: banana at 1.0 parts per million (ppm); blackeyed pea, succulent shelled at 0.40 ppm; broad bean, succulent shelled at 0.40 ppm; bushberry subgroup 13-07B at 3.0 ppm; caneberry subgroup 13-07A at 3.0 ppm; chickpea, succulent shelled at 0.40 ppm; cottonseed subgroup 20C at 0.10 ppm; cowpea, succulent shelled at 0.40 ppm; crowder pea, succulent shelled at 0.40 ppm; goa bean, pods, succulent shelled at 0.40 ppm; lablab bean, succulent shelled at 0.40 ppm; leaf petiole vegetable subgroup 22B at 4.0 ppm; lima bean, succulent shelled at 0.40 ppm; nut, tree, group 14-12 at 0.10 ppm; southern pea, succulent shelled at 0.40 ppm; soybean, edible, succulent shelled at 0.40 ppm; squash/cucumber subgroup 9B at 0.40 ppm; succulent bean, succulent shelled at 0.40 ppm; and velvet bean, succulent shelled at 0.40 ppm. The petition also requested to remove the established tolerances for residues of fenpyroximate in or on the following raw agricultural commodities: Bean, snap, succulent at 0.40 ppm; cotton, undelinted seed at 0.10 ppm; cucumber at 0.40 ppm; nut, tree, group 14 at 0.10 ppm; and pistachio at 0.10 ppm. That document referenced a summary of the petition prepared by Nichino America, the registrant, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notice of filing.

Pursuant to its authority in FFDCA section 408(d)(4)(A)(i), EPA is establishing tolerances that vary slightly from what the petitioner requested. The reasons for these changes are located in Unit IV.C.

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

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

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

Following repeated oral exposures to fenpyroximate, general systemic toxicity was observed (no specific target organ/tissue identified). The most common effect observed across studies and species was decreased body weight. In dogs, clinical signs, such as diarrhea, torpor, and emaciation, and slight bradycardia were observed at similar or higher doses than those that elicited adverse decreases in body weight.

In the rat neurotoxicity battery, effects in the subchronic neurotoxicity study were limited to decreased body weights at the highest doses tested (16-18 mg/kg/day). In the acute neurotoxicity study, decreased motor activity (both sexes) and auditory startle response (females only) were observed in the absence of neuropathological findings. There were no effects seen in the delayed acute neurotoxicity study in hens up to the limit dose (5,000 mg/kg).

Following repeated dermal exposure, body weight decrements were only observed at the limit dose (1,000 mg/kg/day) in the presence of clinical signs consisting of red nose and mouth/nasal discharge in females. Increased liver weights and hepatocellular necrosis were also reported in females.

In the 4-week inhalation study in rats, clinical signs (rales and labored breathing), increased lung weights, and histopathological findings in the nasal turbinates (squamous metaplasia and atrophy of respiratory and/or olfactory mucosa) were observed. Body-weight decrements were not observed following repeated exposure via the inhalation route.

There was no evidence of increased susceptibility following fenpyroximate exposure. There were no effects observed in the rat and rabbit developmental toxicity studies up to the highest doses tested (25 mg/kg/day and 5 mg/kg/day in the rat and rabbit, respectively). In the reproduction toxicity study, offspring and parental effects (decreased body weights for both lifestages) were observed at the same dose.

Fenpyroximate is classified as “not likely to be carcinogenic to humans” based on lack of evidence of carcinogenicity in rats and mice.

Specific information on the studies received and the nature of the adverse effects caused by fenpyroximate as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in the document titled “Fenpyroximate: Human Health Draft Risk Assessment for Registration Review and a Petition to Establish Tolerances for Residues in/on the Banana; Leaf Petiole Vegetable Subgroup 22B; Caneberry Subgroup 13-07A; Bushberry Subgroup 13-07B; Squash/Cucumber Subgroup 9B; and Succulent Shelled Beans; and Crop Group Conversions for Nut, Tree, Group 14-12; and Cottonseed Subgroup 20C” on pages 37-41 in docket ID number EPA-HQ-OPP-2018-0162.

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

A summary of the toxicological endpoints for fenpyroximate used for human risk assessment is shown in Table 1 of this unit.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to fenpyroximate, EPA considered exposure under the petitioned-for tolerances as well as all existing fenpyroximate tolerances in 40 CFR 180.566. EPA assessed dietary exposures from fenpyroximate in food as follows:

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

Such effects were identified for fenpyroximate. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) National Health and Nutrition Examination Survey, What We Eat in America, (NHANES/WWEIA; 2003-2008). As to residue levels in food, EPA assumed 100 percent crop treated (PCT) and tolerance-level residues using default processing factors for all commodities excluding apple, pear, and grape juice (0.11X); grape, raisin (2.7X); orange, grapefruit, tangerine, lemon, and lime juice (0.06X); tomato paste (1.0X) and puree (1.0X); dried plum (1.0X); and peppermint and spearmint oil (0.08X).

ii. Chronic exposure. In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA NHANES/WWEIA (2003-2008). As to residue levels in food, EPA used percent crop treated estimates for some commodities and tolerance-level residues using default processing factors for all commodities excluding apple, pear, and grape juice (0.11X); grape, raisin (2.7X); orange, grapefruit, tangerine, lemon, and lime juice (0.06X); tomato paste (1.0X) and puree (1.0X); dried plum (1.0X); and peppermint and spearmint oil (0.08X).

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

iv. Anticipated residue and PCT information. Section 408(b)(2)(F) of FFDCA states that the Agency may use data on the actual percent of food treated for assessing chronic dietary risk only if:

• Condition a: The data used are reliable and provide a valid basis to show what percentage of the food derived from such crop is likely to contain the pesticide residue.

• Condition b: The exposure estimate does not underestimate exposure for any significant subpopulation group.

• Condition c: Data are available on pesticide use and food consumption in a particular area, and the exposure estimate does not understate exposure for the population in such area.

In addition, the Agency must provide for periodic evaluation of any estimates used. To provide for the periodic evaluation of the estimate of PCT as required by FFDCA section 408(b)(2)(F), EPA may require registrants to submit data on PCT.

The Agency estimated the PCT for existing uses as follows:

100 PCT was assumed for the acute analyses. The chronic analysis incorporated the following average PCT: Apples, 5.0%; apricots, 1.0%; avocados, 1.0%; beans (fresh), 1.0%; cantaloupes, 2.5%; cherries, 5.0%; corn, 1.0%; cotton, 1.0%; grapefruit, 10%; grapes, table, 2.5%; grapes, raisin, 5.0%; grapes, wine, 5.0%; lemons, 2.5%; oranges, 10%; peaches, 1.0%; pears, 10%; pecans, 5.0%; peppers, 10%; plums, 5.0%; prunes, 1.0%; strawberries, 5.0%; tangerines, 5.0%; tomatoes, 1.0%; and watermelons, 1.0%.

In most cases, EPA uses available data from United States Department of Agriculture/National Agricultural Statistics Service (USDA/NASS), proprietary market surveys, and California Department of Pesticide Regulation (CalDPR) Pesticide Use Reporting (PUR) for the chemical/crop combination for the most recent 10 years. EPA uses an average PCT for chronic dietary risk analysis and a maximum PCT for acute dietary risk analysis. The average PCT figures for each existing use are derived by combining available public and private market survey data for that use, averaging across all observations, and rounding up to the nearest 5%, except for those situations in which the average PCT is less than 1% or less than 2.5%. In those cases, the Agency would use less than 1% or less than 2.5% as the average PCT value, respectively. The maximum PCT figure is the highest observed maximum value reported within the most recent 10 years of available public and private market survey data for the existing use and rounded up to the nearest multiple of 5%, except where the maximum PCT is less than 2.5%, in which case, the Agency uses less than 2.5% as the maximum PCT.

The Agency believes that the three conditions discussed in Unit III.C.1.iv. have been met. With respect to Condition a, PCT estimates are derived from Federal and private market survey data, which are reliable and have a valid basis. The Agency is reasonably certain that the percentage of the food treated is not likely to be an underestimation. As to Conditions b and c, regional consumption information and consumption information for significant subpopulations is taken into account through EPA's computer-based model for evaluating the exposure of significant subpopulations including several regional groups. Use of this consumption information in EPA's risk assessment process ensures that EPA's exposure estimate does not understate exposure for any significant subpopulation group and allows the Agency to be reasonably certain that no regional population is exposed to residue levels higher than those estimated by the Agency. Other than the data available through national food consumption surveys, EPA does not have available reliable information on the regional consumption of food to which fenpyroximate may be applied in a particular area.

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

Based on the Pesticide Water Calculator (PWC) and Pesticides in Flooded Applications Model (PFAM), the estimated drinking water concentrations (EDWCs) of fenpyroximate for acute exposures are estimated to be 18.8 parts per billion (ppb) for surface water and 43.92 ppb for ground water, and for chronic exposures are estimated to be 4.74 ppb for surface water and 43.42 ppb for ground water.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For the acute dietary risk assessment, the water concentration value of 43.92 ppb was used to assess the contribution to drinking water. For the chronic dietary risk assessment, the water concentration of value 43.42 ppb was used to assess the contribution to drinking water.

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

Fenpyroximate is not registered for any specific use patterns that would result in residential exposure.

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

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

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

2. Prenatal and postnatal sensitivity. There was no evidence of increased quantitative or qualitative susceptibility in the developmental toxicity studies in rabbits or rats or the reproduction toxicity study in rats.

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

i. The toxicity database for fenpyroximate is complete.

ii. Although decreased motor activity and startle response were observed in the acute neurotoxicity study in rats, concern is low since: (1) There was no evidence of neurotoxicity in the rest of the fenpyroximate toxicological database, including the subchronic neurotoxicity study and the acute neurotoxicity study in hens; (2) clear NOAEL/LOAEL values were identified for the effects observed in the rat acute neurotoxicity study; and (3) the selected endpoints are protective of the observed effects. Therefore, there is no residual uncertainty concerning neurotoxicity and no need to require a developmental neurotoxicity study.

iii. There is no evidence that fenpyroximate results in increased susceptibility in utero rats or rabbits in the prenatal developmental studies or in young rats in the 2-generation reproduction study.

iv. There are no residual uncertainties identified in the exposure databases. The dietary analysis is unrefined for acute dietary exposures, partially refined for chronic dietary exposures, and both acute and chronic dietary analyses incorporated upper bound modeled drinking water residues. Therefore, the dietary assessment is unlikely to underestimate exposure.

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

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to fenpyroximate will occupy 8.7% of the aPAD for children 1 to 2 years old, the population group receiving the greatest exposure.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to fenpyroximate from food and water will utilize 60% of the cPAD for children 1 to 2 years old, the population group receiving the greatest exposure. There are no residential uses for fenpyroximate.

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

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

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

Adequate enforcement methodology (gas chromatography method with nitrogen/phosphorus detection (GC/NPD), Method S19) is available to enforce the tolerance expression. Method S19 has passed an Agency validation and has a limit of quantitation (LOQ) of 0.05 ppm for the combined residues of fenpyroximate and M-1 in snap beans and avocados. A data-gathering liquid chromatography/mass spectroscopy/mass spectroscopy (LC/MS/MS) method is also available.

The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: residuemethods@epa.gov.

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

Codex MRLs are established for residues of fenpyroximate per se in tree nuts at 0.05 ppm, squash at 0.06 ppm, and cucumber at 0.3 ppm. These are lower than the tolerances that are being established in the United States. Harmonization with the Codex MRLs is not possible because the U.S. tolerance expression includes an additional isomer and the U.S. use patterns require higher numerical values.

EPA is establishing all the tolerances at different levels than petitioned for in order to be consistent with the Agency's rounding class practice, which is based on the rounding procedures of the Organisation for Economic Co-operation and Development. Also, although the petitioner has petitioned for the removal of the existing tolerance for residues in “Bean, snap, succulent,” this tolerance is being retained in order to support the currently labeled use on this crop.

Therefore, tolerances are established for residues of fenpyroximate in or on Banana at 1 ppm; Blackeyed pea, succulent shelled at 0.4 ppm; Broad bean, succulent shelled at 0.4 ppm; Bushberry subgroup 13-07B at 3 ppm; Caneberry subgroup 13-07A at 3 ppm; Chickpea, succulent shelled at 0.4 ppm; Cottonseed subgroup 20C at 0.1 ppm; Cowpea, succulent shelled at 0.4 ppm; Crowder pea, succulent shelled at 0.4 ppm; Goa bean, pods, succulent shelled at 0.4 ppm; Lablab bean, succulent shelled at 0.4 ppm; Leaf petiole vegetable subgroup 22B at 4 ppm; Lima bean, succulent shelled at 0.4 ppm; Nut, tree, group 14-12 at 0.1 ppm; Southern pea, succulent shelled at 0.4 ppm; Soybean, edible, succulent shelled at 0.4 ppm; Squash/cucumber subgroup 9B at 0.4 ppm; Succulent bean, succulent shelled at 0.4 ppm; and Velvet bean, succulent shelled at 0.4 ppm.

Additionally, the following existing tolerances are removed as unnecessary due to the establishment of the above tolerances: Cotton, undelinted seed; Cucumber; Nut, tree, group 14; and Pistachio.

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

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

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

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

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

Therefore, 40 CFR chapter I is amended as follows:

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2018-0644 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing and must be received by the Hearing Clerk on or before February 3, 2020. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2018-0644, by one of the following methods:

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

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

• Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.html. Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets.

In the Federal Register of March 18, 2018 (84 FR 9737) (FRL-9989-71), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 8E8701) by IR-4, Rutgers, The State University of New Jersey, 500 College Road East, Suite 201 W. Princeton, NJ 08540. The petition requested that 40 CFR part 180.593 be amended by establishing tolerances for residues of the insecticide etoxazole, (2-(2,6-difluorophenyl)-4-[4-(1,1-dimethylethyl)-2-ethoxyphenyl]-4,5-dihydrooxazole), in or on the following sugar beet commodities: Roots at 0.02 parts per million (ppm); dried pulp at 0.04 ppm; and leaves at 1 ppm. In addition, the petition requested tolerances for etoxazole residues in or on the leaves of many other commodities at 1 ppm. That document referenced a summary of the petition prepared by Valent U.S.A. Corporation, the registrant, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notice of filing.

Based upon review of the data supporting the petition, EPA is establishing tolerances that vary from what the petitioner requested, in accordance with section 408(d)(4)(A)(i). The reasons for these changes are explained in Unit IV.C.

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

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

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

The effects in the etoxazole database show liver toxicity in all species tested (enzyme release, hepatocellular swelling and histopathological indicators), and the severity does not appear to increase with time. In rats only, there were effects on incisors (elongation, whitening, and partial loss of upper and/or lower incisors). There is no evidence of neurotoxicity or immunotoxicity. No toxicity was seen at the limit dose in a 28-day dermal toxicity study in rats.

No increased quantitative or qualitative susceptibilities were observed following in utero exposure to rats or rabbits in the developmental studies; however, offspring toxicity was more severe (increased pup mortality) than maternal toxicity (increased liver and adrenal weights) at the same dose (158.7 milligram/kilogram/day (mg/kg/day)) in the rat reproduction study indicating increased qualitative susceptibility. Etoxazole is not mutagenic and not likely to be carcinogenic based on the lack of carcinogenicity effects in the database.

Specific information on the studies received and the nature of the adverse effects caused by etoxazole as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document, “Etoxazole: Human Health Risk Assessment for Registration Review and a Proposed Section 3 Use on Sugar Beets” at pages 33-37 in docket ID number EPA-HQ-OPP-2018-0644.

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

A summary of the toxicological endpoints for etoxazole used for human risk assessment is shown in Table 1 of this unit.

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to etoxazole, EPA considered exposure under the petitioned-for tolerances as well as all existing etoxazole tolerances in 40 CFR 180.593. EPA assessed dietary exposures from etoxazole in food as follows:

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

No such effects were identified in the toxicological studies for etoxazole; therefore, a quantitative acute dietary exposure assessment is unnecessary.

ii. Chronic exposure. In conducting the chronic dietary exposure assessment, EPA used the Dietary Exposure Evaluation Model software with the Food Commodity Intake Database (DEEM-FCID), Version 3.16. This software uses food consumption data from the USDA National Health and Nutrition Examination Survey, What We Eat in America (NHANES/WWEIA; 2003-2008). As to residue levels in food, EPA assumed tolerance-level residues and 100% crop treated (PCT) for all food commodities. EPA's 2018 default processing factors were used except in cases where adequate processing data were available. In the cases where there was no significant concentration, the default processing factors were set to 1.

iii. Cancer. Based on the data summarized in Unit III.A., EPA has classified etoxazole as “not likely” to be carcinogenic to humans. Therefore, a dietary exposure assessment for the purpose of assessing cancer risk is unnecessary.

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

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

Etoxazole residues of concern in drinking water, which were used in the dietary exposure assessment for this new use, include the parent and two major metabolites, R-8 and R-13. Based on the First Index Reservoir Screening Tool (FIRST), and Pesticide Root Zone Model Ground Water (PRZM GW) models, the estimated drinking water concentrations (EDWCs) of etoxazole for chronic exposures are estimated to be 4.761 parts per billion (ppb) for surface water and <0.01 ppb for ground water.

Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For the chronic dietary exposure and risk assessment, the water concentration of value 4.761 ppb was used to assess the contribution to drinking water.

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

Etoxazole is not registered for any specific use patterns that would result in residential exposure.

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

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

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

2. Prenatal and postnatal sensitivity. No increased quantitative or qualitative susceptibilities were observed following in utero exposure to rats or rabbits in the developmental studies. There is evidence of increased qualitative offspring susceptibility in the rat reproduction study, but the concern is low since: (1) The effects in pups are well-characterized with a clear NOAEL; (2) the selected endpoints are protective of the doses where the offspring toxicity is observed; and (3) offspring effects occur in the presence of parental toxicity.

3. Conclusion. Based on the available hazard and exposure database for etoxazole, EPA recommends that the FQPA SF be reduced to 1X for all exposure scenarios relevant to the current safety assessment.

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

i. The toxicity database for etoxazole is complete including acceptable developmental toxicity studies in rats and rabbits, a two-generation reproduction study in rats, and acute and subchronic neurotoxicity studies in rats.

ii. There is no evidence of neurotoxicity in the etoxazole database including guideline acute and subchronic neurotoxicity studies.

iii. There are no residual uncertainties for pre- and/or post-natal toxicity. The observed qualitative postnatal susceptibility is protected for by the selected endpoints.

iv. There are no residual uncertainties identified in the exposure databases. Adequate data are available to determine the nature and magnitude of the residue in all proposed/registered crops and in livestock. The current dietary exposure analysis assumed 100 PCT, tolerance-level residues, modeled drinking water estimates, and in the absence of empirical data, default processing factors. Therefore, the dietary exposure analysis is conservative and unlikely to underestimate exposure. There are no registered residential uses for etoxazole.

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

1. Acute risk. An acute aggregate risk assessment takes into account acute exposure estimates from dietary consumption of food and drinking water. No adverse effect resulting from a single oral exposure was identified and no acute dietary endpoint was selected. Therefore, etoxazole is not expected to pose an acute risk.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to etoxazole from food and water will utilize 3.6% of the cPAD for the U.S. population and 15% of the cPAD for children 1-2 years old, the population group receiving the greatest exposure. There are no residential uses for etoxazole.

3. Short- and Intermediate term risks. Short- and intermediate-term aggregate exposure takes into account short- and intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Short- and intermediate-term risk is assessed based on short- or intermediate-term residential exposure plus chronic dietary exposure. Because there is no short- or intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess short- or intermediate-term risks), no further assessment of short- or intermediate- term risk is necessary. EPA relies on the chronic dietary risk assessment for evaluating short- and intermediate-term risk for etoxazole.

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

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

Adequate enforcement methodology, Valent Method RM-37, gas chromatography/mass-selective detector (GC/MSD) or GC/nitrogen-phosphorus detector (NPD), is available for enforcing the current plant and livestock tolerances.

The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: residuemethods@epa.gov.

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

There are no Codex MRLs for residues of etoxazole in/on sugar beet commodities.

EPA concluded that a separate tolerance for etoxazole residues in or on Beet, sugar, dried pulp is not needed because available processing data indicate that quantifiable residues of etoxazole are unlikely to occur in sugar beet processed commodities following an application at the maximum use rate. In addition, EPA is not establishing any tolerances for residues on plant leaves (other than the tolerance on beet, sugar, leaves) because the petitioner withdrew its request for those tolerances. At this time, those tolerances are not necessary.

Therefore, a tolerance is established for residues of etoxazole, (2-(2,6-difluorophenyl)-4-[4-(1,1-dimethylethyl)-2-ethoxyphenyl]-4,5-dihydrooxazole), in or on Beet, sugar, leaves at 1 ppm and Beet, sugar, roots at 0.02 ppm.

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

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

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

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

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

Therefore, 40 CFR chapter I is amended as follows:

Regulations governing the Atlantic bluefish fishery are found in 50 CFR 648.160 through 648.167. These regulations require annual specification of a commercial quota that is apportioned among the coastal states from Maine through Florida. The process to set the annual commercial quota and the percent allocated to each state is described in § 648.162 and the initial 2019 allocations were published on March 12, 2019 (84 FR 8826).

The final rule implementing Amendment 1 to the Bluefish Fishery Management Plan published in the Federal Register on July 26, 2000 (65 FR 45844), and provided a mechanism for transferring bluefish quota from one state to another. Two or more states, under mutual agreement and with the concurrence of the NMFS Greater Atlantic Regional Administrator, can request approval to transfer or combine bluefish commercial quota under § 648.162(e)(1)(i) through (iii). The Regional Administrator must first approve any such transfer based on the criteria in § 648.162(e).

North Carolina is transferring 150,000 lb (63 mt) of bluefish commercial quota to Rhode Island through mutual agreement of the states. This transfer was requested to ensure that Rhode Island would not exceed its allocated 2019 state quota. The revised bluefish quotas for 2019 are: North Carolina, 2,321,746 lb (1,053 mt); and Rhode Island, 674,874 lb (306 mt).

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