This is a summary of the revisions to OMB's Guidance for Federal financial assistance published April 22, 2024 (89 FR 30046).

In the document published by OMB in the Federal Register in April, instruction 1 at 89 FR 30107 attempted to change the heading of title 2 from “Grants and Agreements” to “Federal Financial Assistance.” However, unlike chapters, subchapters, and parts, which are under the direct control of an agency (1 CFR 21.8), each CFR title is arranged by subject matter and only the Director of the Federal Register can establish new or update existing titles (1 CFR 8.2). Therefore, instead of directly changing the heading and subject matter of title 2, the Director of OMB has communicated the request to change the heading of title 2 to the Director of the Federal Register.

Subtitle A of title 2 has been specifically assigned to OMB, so, in this case, the subtitle heading is treated as an OMB chapter or part heading. Therefore, instructions 2 and 4 in OMB's April document are both acceptable instructions, which will be implemented.

In paragraph I(a)(2)(i) of appendix A to 2 CFR part 170, OMB mistakenly stated that the “entity or Federal agency” must report subawards described in paragraph (a)(1) of the award term to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). OMB intended to state that the “recipient” is responsible for such reporting to FSRS. The technical correction is consistent with the prior version of the award term in appendix A to 2 CFR part 170, which is directed at recipients—but refers to them throughout as “you.” In the revised version of the award term, OMB generally replaced the word “you” with “recipient” throughout for greater clarity, but inadvertently included the wrong terms in this particular instance. Consistent with 2 CFR 170.220(a), the award term is directed at recipients, and recipients are responsible for reporting subawards in FSRS. Thus, through this document, OMB replaced “entity or Federal agency” with “recipient” in paragraph (a)(1) of the award term.

In the introductory text for the definitions in part 184, which implements the Build America, Buy America Act (BABA), Public Law 117-58, OMB incorporated the meanings of acronyms and definitions from 2 CFR 200.0 and 200.1. 88 FR 57750, 57788. OMB did this to incorporate the meanings of terms such as “Federal award,” “subaward,” “Federal agencies,” “recipient,” and others, which are used in the same way in both parts 184 and 200. However, the document published by OMB in the Federal Register in April 2024 revising part 200 adjusted the meanings and thresholds for the terms “equipment” and “supply,” which OMB does not intend to apply under part 184. 89 FR 30046, 30139-44. OMB has amended the introductory text before the definitions in § 184.3 to clarify that the definitions of “equipment” and “supply” are not incorporated under part 184.

Based on the use of “expenditures” at § 184.8 (Exemptions to the Buy America Preference), OMB has also amended the introductory text to exclude the definition of “expenditures” from part 200. The use of that term in § 184.8 ( i.e., “expenditures for assistance”) refers to expenditures of funds by a Federal agency “for assistance,” as opposed to the definition in § 200.1, which refers to expenditures “by a recipient or subrecipient to a project or program for which a Federal award is received.” 89 FR 30046, 30139.

OMB is not providing revised definitions of the terms “equipment,” “supply,” or “expenditure” through this document, but merely clarifying that the definitions from § 200.1 do not apply under part 184.

In the document published by OMB in the Federal Register in August 2023 establishing 2 CFR part 184, which implements BABA, Public Law 117-58, OMB explained how the term Federal financial assistance, as defined at 2 CFR 200.1, should be applied under part 184. 88 FR 57750, 57774. The preamble explained that, through issuance of the final guidance, OMB did not modify the existing guidance in M-22-11 on the proper application of that term for the purposes of BABA. Specifically, OMB explained that the existing guidance in OMB Memorandum M-22-11 was based on the definition of Federal financial assistance at section 70912(4)(A) of BABA, providing that the term has the meaning given in “section 200.1 of title 2, Code of Federal Regulations (or successor regulations).” Based on certain forms of assistance listed in section 200.1, Memorandum M-22-11 established the policy that, for the purposes of BABA, Federal financial assistance means “assistance that non-Federal entities receive or administer in the form of grants, cooperative agreements, non-cash contributions or donations of property, direct assistance, loans, loan guarantees, and other types of financial assistance.” (Emphasis added) Section 70912(4)(B) of BABA also provides that the term Federal financial assistance includes, but is not limited to, all expenditures “by a Federal agency to a non-Federal entity [for assistance] for an infrastructure project,” except that it does not include certain specified expenditures relating to a major disaster or emergency. Based on the policy in Memorandum M-22-11, which applied BABA to loans and loan guarantees, the part 184 preamble explained how the definition from BABA 70912(4)(A) and 2 CFR 200.1 should be applied for the purposes of part 184. 88 FR 57750, 57774.

OMB subsequently rescinded and replaced Memorandum M-22-11 on October 25, 2023, by issuing Memorandum M-24-02. Memorandum M-24-02 continues to provide that, for the purposes of BABA, Federal financial assistance means “assistance that non-Federal entities receive or administer in the form of grants, cooperative agreements, non-cash contributions or donations of property, direct assistance, loans, loan guarantees, and other types of financial assistance.”

To clarify how the term “Federal financial assistance” is applied for purposes of BABA under part 184, OMB has added a new paragraph to the definition at § 200.1 specifically addressing this topic based on the part 184 preamble and associated OMB guidance memoranda. This revision is intended to reduce any ambiguity in the 2 CFR text on which forms of Federal financial assistance are included for purposes of part 184. The revision is consistent with OMB's existing policy with respect to BABA applicability to loans and loan guarantees, which is reflected in the part 184 preamble and associated policy memoranda.

In the document published by OMB in the Federal Register in April, OMB explained in the preamble at 89 FR 30095 that, in the proposed guidance, “OMB proposed revising section 200.431 on fringe benefits to require recipients and subrecipients to allocate payments for unused leave as general administrative expenses or include them in a fringe benefit rate with cognizant agency approval.” In its response to comments at 89 FR 30095, OMB stated that it revised paragraph (b)(3)(i) of § 200.431 “to remove the requirement that agencies must include certain costs in fringe benefit rates only with the approval of the cognizant agency for indirect costs.” (Emphasis added) OMB explained that it made this change in recognition “that some recipients might not have a cognizant agency for indirect costs.” However, in removing the requirement to obtain cognizant agency approval, OMB also inadvertently removed the option to include these payments in a fringe benefit rate under any circumstances, which—as the preamble text reflected—was not its intent. Thus, through this document, OMB inserted the following text at the end of paragraph (b)(3)(i) of § 200.431: “or included in the fringe benefit rate.”

In addition, OMB further revised paragraph (b)(3)(i) of § 200.431 through this document to replace the word “must” with “should” in the instruction to either allocate these payments for unused leave as a general administrative expense to all activities or include them in fringe benefit rates. This revision is consistent with prior OMB guidance on this topic in the “2 CFR Frequently Asked Questions” (2 CFR FAQ) published on May 3, 2021, which was a source of the text at paragraph (b)(3)(i) of § 200.431. See 2 CFR FAQ, at Q-104. All payments for unused leave must still be allocated in accordance with the cost principles in subpart E. See, e.g., 2 CFR 200.401(a). Paragraph (b)(3)(i), as revised, continues to describe the two options that will generally be used for these types of payments under subpart E.

In FR Doc. 2024-07496, appearing at 89 FR 30046 in the Federal Register of April 22, 2024, on page 30108, in the first column, remove instruction 1 for title 2.

For the reasons stated in the preamble, the Office of Management and Budget corrects 2 CFR chapters I and II by making the following correcting amendments:

The regulations in 7 CFR part 305, “Phytosanitary Treatments,” set out phytosanitary treatment requirements for certain plants, fruits, vegetables, and other articles before they may be imported or moved interstate to prevent the spread of agricultural pests into or within the United States. In 7 CFR part 319, subpart H, §§ 319.37-1 through 319.37-23, sets out requirements for importation of live plants intended to be planted or replanted. Subpart L, §§ 319.56-1 through 319.56-12, provides requirements for importation of fruits and vegetables into the United States.

The Animal and Plant Health Inspection Service (APHIS) maintains a publicly searchable database, “Agricultural Commodity Import Requirements,” or ACIR, 1 that allows users to find import and treatment requirements for all agricultural commodities. APHIS intends ACIR eventually to be the official location for import and treatment requirements for all agricultural commodities.

Prior to development of the ACIR database, APHIS' Plant Protection and Quarantine (PPQ) import and treatment requirements were maintained across several manuals and the Fruits and Vegetables Import Requirements (FAVIR) database. In September 2022, FAVIR was retired and all information about specific fruit and vegetable import requirements were relocated to ACIR. PPQ import requirements for cut flowers and greenery, seeds not for planting, miscellaneous and processed products, and later in 2022, plants for planting, were also relocated from their respective manuals to ACIR. In early 2023, treatment schedules and other information from the PPQ Treatment Manual were relocated to ACIR.

Parts 305 and 319 of the current regulations contain web links to FAVIR, PPQ's Plants for Planting Manual, and the PPQ Treatment Manual. These links either redirect persons to the ACIR database or to manuals that are no longer to be updated, as the information in these sources has been moved to ACIR. In order to provide updated web links to direct readers to the ACIR database, it is necessary to amend the regulations through rulemaking.

In § 305.1, the definition of PPQ Treatment Manual contains a link that currently directs readers to the manual. We are removing that web link and replacing it with one that links directly to the treatments section within ACIR. We are also amending the definition by removing the current mailing address for requesting a hard copy of the PPQ Treatment Manual and adding an updated mailing address. 2 In accordance with our legal obligations, we maintain this service for persons who may not have access to the internet.

We are also amending § 319.5(c) by removing “Commodity Import Analysis and Operations” from the address to which information about export commodities is to be sent. This amendment reflects an internal administrative change.

In § 319.37-2, we are revising the definition of Plants for Planting Manual by replacing the web link currently in the definition with one that links directly to the plants for planting section of the ACIR database. We are also updating the mailing address in the definition for persons requesting a hard copy of the manual.

As noted above, the import requirements for fruits and vegetables have been moved from FAVIR to ACIR. Accordingly, we are updating § 319.56-4(c)(1) by replacing the current web link with a link directly to the ACIR database.

This rule updates APHIS' regulations in order to ensure that references to manuals, web addresses, postal addresses, and nomenclature are accurate. Therefore, APHIS considers there to be good cause pursuant to 5 U.S.C. 553 to find that an opportunity for public comment is unnecessary and contrary to the public interest, and this rule may be made effective less than 30 days after publication in the Federal Register . Further, since this rule ensures that regulations will refer to the correct web addresses and postal addresses used by the Agency, APHIS considers the rule to relate to internal agency management within the U.S. Department of Agriculture, and it is, accordingly, exempt from the provisions of Executive Orders 12866 and 12988. Finally, this action is not a rule as defined by the Regulatory Flexibility Act (5 U.S.C. 501), and as such is exempt from the provisions of that Act.

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 2 CFR chapter IV.)

This rule contains no reporting or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ).

Accordingly, we are amending 7 CFR parts 305 and 319 as follows:

The 504 Loan Program is an SBA financing program authorized under title V of the Small Business Investment Act of 1958, 15 U.S.C. 695 et seq. The core mission of the 504 Loan Program is to provide long-term financing to small businesses for the purchase or improvement of land, buildings, and major equipment, in an effort to facilitate the creation or retention of jobs and local economic development. Under the 504 Loan Program, loans are made to small business applicants by Certified Development Companies (“CDCs”), which are certified and regulated by SBA to promote economic development within their community. In general, a project in the 504 Loan Program (a “504 Project”) includes: A loan obtained from a private sector lender with a senior lien covering at least 50 percent of the project cost; a loan obtained from a CDC (a “504 Loan”) with a junior lien covering up to 40 percent of the total cost (backed by a 100 percent SBA-guaranteed debenture); and a contribution from the Borrower of at least 10 percent equity.

In addition, the 504 Loan Program may be used to refinance debt under two options authorized under section 502(7)(B) and (C) of the Small Business Investment Act of 1958. First, if a 504 Project involves the expansion of the small business, any amount of existing indebtedness that does not exceed 100 percent of the project cost of the expansion may be refinanced and added to the project's cost (Debt Refinancing with Expansion) under the conditions set forth in section 502(7)(B) and the implementing regulations. See 13 CFR 120.882(e) and (f). Second, debt refinancing is available for a 504 Project that does not involve the expansion of the small business under the requirements set forth in section 502(7)(C) and 13 CFR 120.882(g) (Debt Refinancing without Expansion).

On July 29, 2021, SBA published in the Federal Register an interim final rule implementing section 328(a) of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act), enacted December 27, 2020, Public Law 116-260, which revised the conditions and requirements for refinancing 504 loan debt (“Debt Refinancing in the 504 Loan Program interim final rule” or “interim final rule”). 86 FR 40775 (July 29, 2021). SBA subsequently issued a final rule on October 12, 2023, finalizing the interim final rule and implementation of section 328 of the Economic Aid Act (“Debt Refinancing in the 504 Loan Program final rule” or “final rule”). 88 FR 70580 (October 12, 2023).

With the prior rulemaking the Agency included statutorily required mandatory changes to the 504 loan program, with one omission, as the statutory change limiting the loan dollar volume of 504 refinancing loans without expansion to 50% of the CDC's prior portfolio, as required by section 328(a)(2)(A) of the Economic Aid Act, was not included. In addition, during the prior rulemaking the National Associate of Development Companies (NADCO), a 504 Loan Program trade association, along with many of its member CDCs, requested additional changes to the 504 loan program. Since these changes went beyond those mandated by the Economic Aid Act, they were not implemented at the time since the Agency's objective was to implement the statutory changes directly and expeditiously without variation. Some of the changes recommended by the trade association required careful consideration by each impacted SBA office, had the potential for risk shifting in the 504 portfolio, had a potential impact on other SBA programs such as the 7(a) program, or had a potential for impact on the 504 subsidy rate and consequently were held for future rule making. The comments were nonetheless consistent with lender round table feedback from three major lender conferences.

Commenters, requested that SBA: increase eligibility for 504 debt refinance with expansion and 504 debt refinance without expansion; update the eligibility standards for more flexibility; remove requirements that are not required by statute and which create an additional barrier to debt restructuring and relief for 504 small business borrowers; raise the loan to value requirement on debt refinancing without expansion projects; align the “substantially all” standard for 504 debt refinancing with expansion with the 504 debt refinancing without expansion standard; and eliminate the 10% substantial benefit test on 504 debt refinancing with expansion and 504 debt refinancing without expansion on refinancing other government debt.

Congress' long-established policy is that SBA stimulate and supplement the flow of long-term loan funds which small business concerns need for the sound financing of their business operations and for their growth, expansion, and modernization, including with the refinancing of existing loan debt. 15 U.S.C. 661. Businesses are facing increasing operating costs due to inflation, global supply chain challenges, and increases in building costs and supplies which are above pre-pandemic levels. The impact of multiple Federal Reserve interest rate increases  1 from March 2022 to February 2024 has prompted a request for expedient SBA action on behalf of small business borrowers. The 504 loan program has a long-term fixed interest rate for 40% of the project to help small businesses refinance conventional loans or government based programs, which are generally based on a variable rate. This results in significant cost savings for the small business borrower and assists small businesses with managing costs by providing a predictable expense with a fixed interest rate.

Further, as the interim final rule was released July 29, 2021, and as the final rule was released October 12, 2023, SBA could not have anticipated the impact on policy of the Federal Reserve interest rate policy during the prior rulemaking. Since the publication of the Debt Refinancing in the 504 Loan Program final rule, SBA's Office of Financial Assistance (OFA) has received input on the impact of the rising interest rate environment on 504 debt refinancing. For example, SBA received feedback on the difficulty of SBA applicants in meeting the 10% substantial benefit test to borrowers, and CDCs have asked for a revision of this standard as it was not required in statute and was adopted through regulations.

As described in the section-by-section analysis below, SBA is issuing this direct final rule to correct the omission described above and to implement changes to 504 debt refinancing in response to public comments provided during the prior rulemaking and industry input both before and following the prior rulemaking.

In general, SBA publishes a rule for public comment before issuing a final rule, in accordance with the Administrative Procedure Act. 5 U.S.C. 553. The Administrative Procedure Act provides an exception to this standard rulemaking process, however, when an agency finds good cause to adopt a rule without prior public participation. 5 U.S.C. 553(b)(3)(B). The good cause requirement is satisfied when prior public participation is impracticable, unnecessary, or contrary to the public interest. SBA is publishing this rule as a direct final rule because public participation is unnecessary. SBA views this as a non-controversial administrative action because all technical corrections and updates are consistent with public comments received throughout the previous rulemaking process. This rule will be effective on the date shown in the DATES section unless SBA receives significant adverse comment on or before the deadline for comments. Significant adverse comments are comments that provide strong justifications why the rule should not be adopted or for changing the rule. SBA does not expect to receive any significant adverse comments because these technical corrections and updates are consistent with broad stakeholder comments received during the prior previous rulemaking process. Further, because some of the changes in this rule are prescribed by statute, SBA does not expect significant adverse comments.

If SBA receives significant adverse comment, SBA will publish a document in the Federal Register withdrawing this rule before the effective date. If SBA receives no significant adverse comments, the rule will be effective 45 days after publication without further notice.

Subsequent to the publication of the Debt Refinancing in the 504 Loan Program final rule SBA identified a drafting omission that must be corrected to ensure the corresponding regulation aligns with the Economic Aid Act. Section 328(a) of the Economic Aid Act had repealed section 521(a) of title V of division E of the Consolidated Appropriations Act of 2016. Section 521(a), in part, limited a CDC's financings so that in any fiscal year no more than 50 percent of the CDC's financings were for debt refinancing not involving expansion, a requirement implemented by SBA regulations at 13 CFR 120.882(g)(10). Consequently, the Debt Refinancing in the 504 Loan Program final rule should have deleted the regulation at 13 CFR 120.882(g)(10).

SBA has included in this direct final rule the correction and is removing 50% cap for debt refinancing without expansion to align with the Economic Aid Act, thereby removing the current inconsistency between Agency regulations and the statute. This change will provide certainty to CDCs that their debt refinancing loans are no longer capped at 50% of the total dollar amount of the CDC's 504 loans approved, thereby increasing debt refinancing opportunities for small business concerns.

Currently, if an application for a 504 debt refinancing without expansion project includes a request to finance Eligible Business Expenses (as described in 13 CFR 120.882(g)(6)(ii)), the portion of the refinancing project provided by the 504 loan and the third party loan may be no more than 85% of the fair market value of the fixed assets that will serve as collateral and the Borrower may receive no more than 20% of the fair market value of the eligible fixed assets securing the debt to be refinanced for Eligible Business Expenses. SBA is removing these restrictions in regulation in order to expand eligibility for more small businesses to access debt refinancing under the 504 loan program. SBA will review comments received in response to this direct final rule and will consider further policy changes are needed.

Under current regulations, one of the conditions of a 504 debt refinancing with expansion project is that substantially all (85% or more) of the proceeds of the indebtedness were used to acquire land, including a building situated on that land, to construct a building on that land, or to purchase equipment. The previous 504 debt refinancing rulemaking modified the 504 debt refinancing without expansion “substantially all” standard in the Qualified Debt definition by lowering the threshold from 85% to 75%. The effect was that this lowered standard only applied to 504 debt refinancing without expansion because the term “Qualified Debt” is only used in the context of 504 debt refinancing without expansion and not 504 debt refinancing with expansion.

SBA received input from NADCO and during lender round tables that this inconsistency of 75% for 504 debt refinancing without expansion and 85% for 504 debt refinancing with expansion is confusing and that it would be helpful to have a consistent standard between the debt refinancing with expansion and debt refinancing without expansion options for CDCs, third party lenders, and small businesses seeking 504 loan program assistance. Based on public comments received, SBA is making the “substantially all” standard consistent between the two programs by revising § 120.882(e)(1) to lower the “substantially all” standard from 85% to 75% for 504 debt refinancing with expansion. SBA will review comments received in response to this direct final rule and will consider further policy changes are needed to further expand the standard.

Under current regulations, a debt refinancing without expansion project may include a request to finance eligible business expenses, which are limited to the operating expenses of the business. Debt is generally not included as an eligible business expense, except for certain types of unsecured debt. On occasion SBA Applicants have debt that has been secured by the same Eligible Fixed Assets securing the qualified debt that is the subject of the 504 debt refinancing project (“Other Secured Debt”). Under current regulations Other Secured Debt may not be part of the 504 debt refinancing project. As a result, the borrower, even with 504 financing, may be subject to debt and liens that are not in the best risk portfolio interest of the Agency. Including Other Secured Debt as an Eligible Business Expense is in alignment with 504 loan program goals, and the flexibility to include Other Secured Debt would further assist the small business in restructuring its outstanding debt. Even so, SBA will not consider Other Secured Debt that was incurred for capital expenditures as an Eligible Business Expense because such expenditures are not the day-to-day expenses of a business and SBA does not believe Congress intended that such expenditures be included as an Eligible Business Expense. Further, while a secured business line of credit may be an Eligible Business Expense, such Other Secured Debt will only be eligible as part of a 504 debt refinance without expansion financing provided any existing liens are subordinated to the 504 loan.

Under current regulations at 13 CFR 120.882(e)(5) and (g)(3)(iii), 504 debt refinancing must provide a “substantial benefit” to the borrower. For purposes of 504 debt refinancing a “substantial benefit” means that the portion of the new installment amount attributable to the debt being refinanced must be at least 10 percent less than the existing installment amount. In its public comments for the prior rulemaking, NADCO noted that because of the high interest rate environment and the large number of interest rate increases in recent year, the 10% substantial benefit test is overly burdensome for the 504 small business borrower. NADCO requested that SBA remove this test to provide the small business borrower the maximum opportunity to respond to market conditions.

SBA's concerns about portfolio risk for both the 504 and 7(a) programs led SBA to adopt the 10% substantial benefit test for the 504 loan program to provide parity with the 7(a) program's 10% substantial benefit test. There are substantial differences, however, between the programs that would obviate the necessity to anchor the 504 loan program to the 7(a) loan program's 10% substantial benefit test. For example, SBA's motivation for adopting a 10% substantial benefit test in 7(a) stemmed from the concern with using limited 7(a) program authority for refinancing, especially for other 7(a) loans already considered to be on reasonable terms, and the concern over the risk of considerable 7(a) secondary market distortions. Meanwhile, the 504 Loan Program has ample authority for debt refinancing and adding restrictions on 504 refinancing at the same level of 7(a) refinancing restrictions would be overly burdensome on the 504 small business borrower. The result is that many small businesses are prevented from refinancing into a more favorable longer term fixed-rate product and must remain with their variable rate loan in a rising rate environment.

SBA is therefore revising 13 CFR 120.882(e)(5) and (g)(3)(iii) to remove the 10% substantial benefit test for both debt refinancing with expansion and debt refinancing without expansion, while maintaining the requirement that the 504 small business borrowers must have documented benefit in the restructuring of debt.

The Office of Management and Budget (OMB) has determined that this rule does not constitutes a “significant regulatory action” for purposes of Executive Orders 12866. This direct final rule implements specific statutory provisions in section 328(a)(2)(A) and implements additional changes to debt refinancing in SBA's 504 loan program.

As shown in Tables 1A and 1B below, during the five-year period spanning fiscal year (FY) 2018 and FY 2024 (year-to-date (YTD) through May), a total of 47,252 504 loans were approved for a total gross approval amount as of May 31, 2024, of $43,003,577,000. In addition, during the past six fiscal years, SBA approved an average of 235 debt refinance with expansion loans per year with an average annual dollar volume of $305,542,333 and approved an average of 441 debt refinance without expansion loans per year with an average annual dollar volume of $470,209,333. In 2020, the Economic Aid Act increased the amount of existing indebtedness eligible for a debt refinance with expansion project from 50 percent of the project cost to 100 percent of the project cost which appears to have impacted loan size. The tables are arranged in order to convey the data while staying within the margin parameters of the Federal Register notice guidelines and are an update to the data provided in the 504 Debt Refinancing final rule published October 12, 2023. As this direct final rule, in part, is intended to correct drafting errors and provide eligibility clarifications in the prior final rule, SBA has updated data on through May 31, 2024, and included data reported through September 30, 2023 (last full fiscal year), in the final rule.

Prior to the change increasing the amount of existing indebtedness eligible for a debt refinance with expansion project from 50 percent of the project cost to 100 percent of the project cost, of the debt refinance with expansion loans, only 16 refinanced a debt that equaled 50 percent of the expansion costs. If these borrowers had been able to refinance 100 percent of the expansion costs instead of 50 percent, and assuming that all these borrowers did so, these borrowers would have been able to borrow $15 million more over five years, or about $3 million more annually. Since the passage of the Economic Aid Act, there have been 4,312 refinancing 504 loans approved of which 1,507 were debt refinancing with expansion and 2,933 were debt refinancing without expansion. In dollars approved, this is a combined amount of 504 refinancing loans totaling $5,145,239,0000 of which $1,990,192,000 was for refinancing with expansion and $3,155,047,000 was for refinancing without expansion.

This direct final rule is necessary to implement the Economic Aid Act in full and provide economic relief to small businesses still adversely impacted by COVID-19. SBA anticipates that making these changes to the 504 debt refinancing programs will continue to result in benefits to small businesses by providing greater flexibility to restructure debt.

To assess the impact of the interim final rule, SBA evaluated 504 loan activity (including the number of loans and dollar volume of both debt refinance with expansion and debt refinance without expansion) between August 2018 and May 2024. Because the interim final rule was published on July 29, 2021, with immediate effectiveness, the first full month during which the modifications to 504 debt refinancing were available was August 2021, with August 2021 through July 2022 being the first 12-month period during which the modifications to 504 debt refinancing were available to 504 applicants. SBA divided the data into five cohorts of 12 months each, with the first cohort beginning in August 2018 and the last cohort beginning February 2024. See Tables 2A and 2B.

As an appropriate baseline for evaluation of the impacts of the direct final rule that would be made permanent in this rule, SBA considers the state of 504 lending for debt refinance with expansion and without expansion before July 2021. SBA examines the 12-month periods from August 1, 2018, through July 31, 2019, to the period from August 1, 2022, to July 31, 2023, noting that external influences from the pandemic and from payments made on behalf of borrowers by SBA under section 1112 of the Coronavirus Aid Recovery, and Economic Security Act (section 1112 payments) that ended in September 2021 occurred. The section 1112 payments required SBA to make principal and interest payments on 504 loans for certain periods of time depending on the when the 504 loan was approved, which would have made a 504 loan an attractive option for small businesses and consequently would have increased 504 loan volume. Further, interest rates on 504 loans in these two periods differ, from a range of approximately 4.0 to 5.0 percent in the earlier period to rates up to 7.0 percent in the later period, as do rates on alternatives to 504 loans. These changes mean that lending total volume by fiscal year comparisons may not be appropriate for assessment of impact. The current direct final rule is a drafting correction update for the previous final rule with the estimates of activity updated accordingly. The chart below also provided in the current rulemaking below shows these percentages for five August-July cohorts prior to the final rule published October 12, 2023. It is still current as the July 2024 data is not yet available.

As indicated in the chart, the percentages of 504 debt refinancing loans with and without expansion are in the recent period returning to the levels seen prior to the publication of the interim final rule in July 2021. For debt refinancing without expansion, the August 2020-July 2021 period was elevated, and the August 2021-July 2022 cohort was an outlier, but the next 12 months settled to a percentage that was at a level consistent with the periods before the interim final rule and not indicative of a significant impact. These two cohorts with higher 504 debt refinancing percentages occurred during the pandemic and were covered, at least in part, by section 1112 payments. The 12-month percentages of 504 debt refinancing with expansion did not vary widely.

The interim final rule increased the amounts on 504 debt refinancing with and without expansion. Aggregate 504 lending over the period in question ranged from approximately $5 billion to almost $9.25 billion, with total 504 lending in the latest 12-month cohort at about $6.6 billion. Even in the unlikely scenario of the prior rulemaking was the sole cause of an increase in total 504 lending from the low volume in the examined period of $5 billion (in 2018-19) to the latest 12-month total of $6.6 billion, the incremental impact, as indicated by changes in the percentage of total lending accounted for by each, is under $100 million.

Executive Order 13563, Improving Regulation and Regulatory Review (January 18, 2011), requires agencies to adopt regulations through a process that involves public participation, and to the extent feasible, base regulations on the open exchange of information and perspectives from affected stakeholders and the public as a whole. SBA has developed this rule in a manner consistent with these requirements, and the public will have the opportunity to provide comments following the publication of this rule.

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

This rule does not have Federalism implications as defined in Executive Order 13132. 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, as specified in the Executive order. As such it does not warrant the preparation of a Federalism Assessment.

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

Subtitle E of the Small Business Regulatory Enforcement Fairness Act of 1996, also known as the Congressional Review Act, 5 U.S.C. 801 et seq., generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. SBA will submit a report containing this rulemaking and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States. This rulemaking has been reviewed and determined not to meet the criteria set forth in 5 U.S.C. 804(2).

In order to implement the Economic Aid Act, SBA determined that it was necessary to modify SBA Form 1244, Application for Section 504 Loans, which is currently approved under OMB Control Number 3245-0071, to conform the form to the revised requirements for debt refinancing loans. The changes did not add any new burdens for the respondents, rather, in some instances, the revisions will result in reduced burden as applicants and CDCs no longer have to submit certain information.

(a) SBA will need to revise Form 1244 page 9 to add “Other Secured Debt” as a line item in the sources and uses document.

(b) SBA will need to revise Form 1244 Exhibit instructions in standard operating procedure (SOP) 50 10 7.1 to require a 75% substantial benefit for refinancing with expansion to match the last form change for refinancing with expansion. This revision did not change the information the CDC is required to collect, only the form instructions. No further changes are necessary.

When an agency issues a rulemaking, the Regulatory Flexibility Act (RFA), 5 U.S.C. 601-612, requires the agency to “prepare and make available for public comment an initial regulatory analysis” which will “describe the impact of the proposed rule on small entities.” The RFA requires such analysis only where notice and comment rulemaking are required. As discussed above, SBA has found good cause that notice and public procedure are impracticable, unnecessary, or contrary to the public interest. Accordingly, SBA is not required to conduct a regulatory flexibility analysis and is publishing this rule as a direct final rule without advance notice and public comment. Further, section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the proposed rulemaking is not expected to have a significant economic impact on a substantial number of small entities. SBA is nonetheless providing the following abbreviated analysis.

The changes in this direct final rule would, in part, be a drafting correction to 13 CFR 120.882. While there will be minor changes to SBA Form 1244, and the burden hours to the small business concern and the Certified Development Company will remain the same. There are no anticipated additional compliance costs. Furthermore, SBA does not anticipate that the additional changes to the Eligible Project costs for 504 loans regulations would have a significant impact to a substantial number of small businesses. This is because only a small percentage of each year's 504 loans involve debt refinancing without expansion. Each loan represents a unique small business borrower because these borrowers are only eligible to refinance their debt once in a fiscal year with the 504 Loan Program, and therefore do not have multiple 504 debt refinancing without expansion loans in any given year. Based on the average number of 504 loans from FY 2021-2023, only 13% involved debt refinancing without expansion. Specifically, in FY2021, out of 9,676 loans, 693 loans or 7% were for debt refinancing without expansion. In FY 2022, this figure was 829 out of 9,254 or 9% 504 loans, while in FY 2023, 1,005 out of 4,451 or 23% of 504 loans were for debt refinancing without expansion. While the percentage of the 504 loan portfolio involving debt refinancing without expansion increased by 20% from FY 2021 to 2023, this increase was due in part to section 1112 payments, and in part to a rapidly increasing interest rate environment. Because section 1112 payments have sunset, SBA believes that the 504 debt refinancing without expansion volume will return to the pre-section 1112 level of less than 10% of small entities. As such, SBA concludes that the rule will not impact a substantial number of small entities.

While the economic implications of the direct final rule are small and the data do not reveal a significant economic impact on a substantial number of small entities, SBA anticipates a refinancing growth rate more in alignment with pre-pandemic levels, with some adjustment to the economic impact because the final rule will expand program eligibility. In its final rule issued October 12, 2023, SBA analyzed potential growth scenarios of up to 30% growth in the 504 loan program, and even using this impact model (actual growth has never exceeded 15% in any prior fiscal year) the total of 504 debt refinance without expansion projects as a percentage of either number of loans or dollar volume of loans is not estimated to exceed 16% of the overall portfolio. As this is a direct final rule update to correct drafting issues with the previous final rule, the data provided at that time is still relevant. When this percentage is applied to the estimated number of loans (small businesses impacted), this would result in less than 1,100 small businesses impacted. SBA estimates that the average monthly savings for small businesses that refinance their existing loans through the 504 loan program would be between $7,000 to $8,300 per month, with a total estimated savings over the life of the loan of between $202,000 to $227,000. SBA determined this estimate based on the historical average of a 504 debt refinancing without expansion loan averaging $1,000,000 for each small business applicant. SBA used the 504 June 2024 interest rates to calculate both the monthly and total loan savings to each small business concern. The lower end of the $202,000 to $227.0000 range reflects the economic impact if a small business concern refinanced for 20 years, while the higher end reflects the economic impact of a small business concern refinanced for 25 years. Small business concerns do not use 10 year 504 loans for debt refinancing without expansion, as their goal is to lower their payments by not only taking advantage of the 504 loan program's fixed interest rate, but also the longer 20 and 25-year loan terms available.

Accordingly, for the reasons stated in the preamble, SBA amends 13 CFR part 120 as follows:

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

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

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

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

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

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

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

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

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

This rule amends 14 CFR part 97 by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Air Missions (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, pilots do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained on FAA form documents is unnecessary. This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

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

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

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

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

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

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

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

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

Following the decision of the U.S. Supreme Court in United States v. Arthrex, Inc., 141 S. Ct. 1970, 1986 (2021) (“ Arthrex ”), on June 29, 2021, the USPTO implemented an interim process for Director Review of final written decisions in AIA proceedings. To promote the accuracy, consistency, and integrity of PTAB decision-making in AIA proceedings, the USPTO then issued an updated “Interim Process for Director Review” on April 22, 2022. The updated interim process set forth guidance for parties who wished to request Director Review. This guidance increased clarity as the Office continued to update and improve the process based on experience and initial stakeholder feedback. The USPTO subsequently issued a Request for Comments (RFC) seeking public input on Director Review. 87 FR 43249-52 (July 20, 2022); 87 FR 58330 (Sept. 26, 2022) (extending comment period). Based on experience and in light of stakeholder feedback received in response to the RFC, on July 24, 2023, the USPTO modified the interim Director Review process to allow parties to request Director Review of decisions on institution in AIA proceedings. The USPTO then issued a Notice of Proposed Rulemaking (NPRM) on April 16, 2024, taking into consideration the feedback received in response to the RFC. Following the proposed rule and solicitation of public comments, 89 FR 26807 (Apr. 16, 2024), this final rule implements, in regulation, key aspects of the processes used for Director Review.

This final rule provides that a party to an AIA proceeding may request Director Review in that proceeding of any: (1) decision on institution, (2) final decision, 1 (3) decision granting rehearing of a decision on institution or a final decision, or (4) other decision concluding an AIA proceeding. In addition, the final rule provides that the Director may sua sponte (on their own initiative) initiate a review of such decisions. The final rule also sets forth the timing and format of a party's request for Director Review. The final rule addresses the impact of Director Review on the underlying proceeding at the PTAB, as well as the time by which an appeal to the U.S. Court of Appeals for the Federal Circuit must be filed. The final rule also provides that the Director may delegate a review.

On September 16, 2011, Congress enacted the AIA (Pub. L. 112-29, 125 Stat. 284 (2011)). The AIA established the PTAB, 2 which is made up of administrative patent judges (APJs) and four statutory members, namely the Director, the Deputy Director, the Commissioner for Patents, and the Commissioner for Trademarks. 35 U.S.C. 6(a). The Director is appointed by the President, by and with the advice and consent of the Senate. 35 U.S.C. 3(a)(1). APJs are appointed by the Secretary of Commerce in consultation with the Director. Id. section 6(a). The PTAB hears and decides ex parte appeals of adverse decisions by examiners in applications for patents, applications for reissue, and reexamination proceedings, and conducts proceedings under the AIA, including inter partes reviews (IPRs), post grant reviews (PGRs), and derivation proceedings, all in panels of at least three members. Id. sections 6(b), (c). Under the statute, the Director designates the members of each panel. Id. section 6(c). The Director has delegated that authority to the Chief Judge of the PTAB. See PTAB Standard Operating Procedure 1 (Rev. 16) (SOP 1), Assignment of Judges to Panels, available at www.uspto.gov/sites/default/files/documents/sop1_r16_final.pdf.

35 U.S.C. 6(c) states that “[o]nly the Patent Trial and Appeal Board may grant rehearings” of Board decisions. In Arthrex, the Supreme Court held that the Appointments Clause of the Constitution (art. II, sec. 2, cl. 2) and the supervisory structure of the USPTO require the Director, a principal officer of the United States, to have the ability to review the PTAB's final written decisions in IPR proceedings. See Arthrex, 141 S. Ct. at 1986. The Court determined that “35 U.S.C. 6(c) is unenforceable as applied to the Director insofar as it prevents the Director from reviewing the decisions of the PTAB on [the Director's] own.” Id. at 1987. The Court added that:

Id. The Court thus held that “the Director has the authority to provide for a means of reviewing PTAB decisions” in IPR proceedings and “may review final PTAB decisions and, upon review, may issue decisions . . . on behalf of the Board.” Id. Additionally, the Court in Arthrex made clear that “the Director need not review every decision of the PTAB,” nor did it require the Director to accept requests for review or issue a decision in every case. Id. at 1988. Instead, “[w]hat matters is that the Director have the discretion to review decisions rendered by APJs.” Id.; see Arthrex, Inc. v. Smith & Nephew, Inc., 35 F.4th 1328, 1338 (Fed. Cir. 2022) (noting same); CyWee Grp. Ltd. v. Google LLC, 59 F.4th 1263, 1268 (Fed. Cir. 2023) (“[T]he Appointments Clause was intended to prevent unappointed officials from wielding too much authority, not to guarantee procedural rights to litigants, such as the right to seek rehearing from the Director.” (quoting Piano Factory Grp., Inc. v. Schiedmayer Celesta GmbH, 11 F.4th 1363, 1374 (Fed. Cir. 2021)).

Following the Arthrex decision, on June 29, 2021, the USPTO implemented an interim process for Director Review of final written decisions in IPR or PGR proceedings and published Arthrex Questions and Answers (Q&As), available on a USPTO web page. 3 On April 22, 2022, the USPTO published two web pages to replace the Arthrex Q&As. Specifically, the USPTO published an “Interim Process for Director Review” web page, 4 setting forth more details on the interim process and additional suggestions and guidance for parties who wish to request Director Review. The updated interim process guidance increased clarity as the Office continued to update and improve the interim Director Review process based on experience and initial stakeholder feedback. The USPTO also published a web page providing the status of all Director Review requests, available at www.uspto.gov/patents/patent-trial-and-appeal-board/status-director-review-requests (status web page). The Director Review status web page includes a spreadsheet that is updated monthly and presents additional information about the proceedings in which Director Review has been granted.

On July 20, 2022, the USPTO issued an RFC  5 on Director Review, Precedential Opinion Panel (POP) review, 6 and the internal circulation and review of PTAB decisions. 87 FR 43249-52. 7 Based on experience and in light of stakeholder feedback received in response to the RFC, on July 24, 2023, the USPTO modified the interim Director Review process to allow parties to request Director Review of decisions on institution in AIA proceedings, and to introduce a process by which the Director may delegate review of a Board decision to a Delegated Rehearing Panel (DRP). See “Revised Interim Director Review Process” web page (available at www.uspto.gov/patents/ptab/decisions/revised-interim-director-review-process ) (Director Review web page);  8 “Delegated Rehearing Panel” web page (available at www.uspto.gov/patents/ptab/decisions/delegated-rehearing-panel ). The USPTO made additional updates to the interim Director Review process on September 18, 2023, (updating processes related to Director Review of PTAB decisions on remand from the Director), January 19, 2024, (updating processes related to requests for rehearing of Director Review decisions), and April 16, 2024, (providing step-by-step instructions on how to file a request for Director Review).

As noted above, on July 20, 2022, the Office published an RFC on Director Review, POP review, and the internal circulation and review of PTAB decisions. 87 FR 43249-52. The USPTO received 4,377 comments from intellectual property organizations, trade organizations, other organizations, and individuals, on all aspects of the RFC, including twelve specific responses to questions 2-12 related to Director Review or POP review. All comments are publicly available at the Federal eRulemaking Portal at www.regulations.gov/docket/PTO-P-2022-0023/comments. A summary of the pertinent comments is available in the NPRM at www.regulations.gov/document/PTO-P-2024-0014-0001. 89 FR 26807 (Apr. 16, 2024).

On April 16, 2024, after careful consideration of the public input received in response to the RFC, the USPTO published a notice of proposed rulemaking to set forth key aspects of the processes used for Director Review. See 89 FR 26807. The notice of proposed rulemaking provided for a 60-day comment period.

The Office received a total of 12 comments from eleven organizations and one individual. The Office appreciates the thoughtful comments representing views from various public stakeholder communities. The comments are publicly available at the Federal eRulemaking Portal at www.regulations.gov/document/PTO-P-2024-0014-0001.

Commenters were generally supportive of the proposed rule and agreed that the rule would promote the accuracy, consistency, and integrity of PTAB decision-making in AIA proceedings. Some commenters suggested expanding the scope of Director Review, for example, to include decisions on ex parte appeals and reexamination appeals. A summary of the comments and the Office's responses are provided below. The Office's responses address the comments that are directed to the proposals set forth in the NPRM. Any comments directed to topics beyond the scope of the NPRM are not addressed.

Comment 1: Four commenters suggested adding formal standards of review to the rule, with various standards proposed. Two commenters recommended expressly incorporating the standards of review currently set forth in the interim Director Review process. A third commenter recommended a de novo standard of review for any questions of law and a more deferential standard of clear error for questions of fact with respect to final written decisions. The same commenter also recommended applying a deferential standard, such as abuse of discretion, for review of decisions granting institution. A fourth commenter recommended the rule specify de novo review for all Director Review decisions.

Response: The Office appreciates these thoughtful comments, but does not adopt the suggestions at this time. The Supreme Court's Arthrex decision necessitates that the Director be able to review decisions in AIA proceedings but Arthrex does not limit or prescribe the manner or standard by which the Director conducts that review. Moreover, the comments identify different standards of review and do not identify a single consensus approach. The rule provides the Director with flexibility as to the standards of review to be applied in the Director Review process. The Office will continue to provide guidance on any applicable standard through the Director Review web page consistent with the final rule.

Comment 2: One commenter suggested adding a provision to the rule to state that Director Review decisions will be made precedential only when the Director determines that there is a compelling need to set binding policy. Another commenter likewise expressed support for a rule that Director Review decisions are not precedential by default.

Response: The Office appreciates the comments, but does not adopt the suggestion to include a provision in the rule related to the designation of Director Review decisions. Currently, Director Review decisions are, by default, routine decisions as set forth in Standard Operating Procedure 2, and are designated precedential only at the Director's determination. See PTAB Standard Operating Procedure 2 (Rev. 11) (SOP 2), Designation or De-designation of Decisions as Precedential or Informative, available at www.uspto.gov/sites/default/files/documents/20230724_ptab_sop2_rev11_.pdf; see also Revised Interim Director Review Process web page section 5.B. To date, the Office has designated only seven Director Review decisions as precedential. The rule provides the Director with flexibility as to designation of Director Review decisions.

Comment 3: One commenter suggested adding a provision to the rule requiring that a request for Director Review set forth the reason(s) why the requester believes the decision for which review is sought presents an: (a) abuse of discretion, (b) important issue of law or policy, (c) erroneous finding of material fact, and/or (d) erroneous conclusion of law. The commenter suggested that the requester be required to highlight issues of exceptional importance, conflicts between Board decisions, or issues relating to application of law to matters before the Board.

Response: The Office appreciates the comment, but does not adopt the suggestion. Although issue identification by a requester is helpful and encouraged, especially where a Director Review request presents multiple issues, the Office does not find it necessary to impose such a requirement by rule. Implementation details relating to the manner of filing a request for Director Review, including possible issues to address in a Director Review request, are provided on the Director Review web page and will continue to be reflected on a new Director Review web page consistent with the final rule.

Comment 4: One commenter recommended limiting sua sponte Director Review to issues of exceptional importance, resolving conflicts between Board decisions, and/or matters of certainty and consistency in the application of law to matters before the Board.

Response: The Office appreciates the comment, but declines to limit the Director's ability to grant sua sponte review by rule. Consistent with Arthrex, the rule provides the Director with flexibility in initiating sua sponte review. The Office will continue to provide guidance on any applicable standard for sua sponte review through the Director Review web page consistent with the final rule.

Comment 5: One commenter recommended adding a provision to the rule to explain that the phrase “any interlocutory decision rendered by the Board in reaching that decision,” in § 42.75(a), shall be construed broadly to include any interlocutory decision that plausibly affected the outcome of the proceeding before the Board. The commenter suggested that such actions must be open to Director Review and that the Director must have broad discretion to review interlocutory decisions from the Board.

Response: The Office appreciates the comment, but does not adopt the recommendation. Consistent with the comment, the final rule expressly states that the Director may review “any interlocutory decision rendered by the Board” in reaching a decision for which Director Review may be requested or initiated. Further clarification of the phrase, or its broad language “any,” is unnecessary.

Comment 6: Several commenters suggested revising the rule to allow parties to request Director Review of proceedings other than inter partes review and post grant review including, e.g., derivations and appeals from ex parte examination, ex parte reexaminations, and reissue applications, potentially with different pages limits for these requests. Two commenters identified public policy benefits associated with expansion of Director Review, in part because the Director is a principal officer of the United States. One commenter promoted merging the Appeals Review Panel  9 and Director Review procedures. Another commenter suggested that the Supreme Court's Arthrex decision requires Director Review of ex parte PTAB decisions, and cited to the Supreme Court's remand of In re Boloro Glob. Ltd., 963 F.3d 1380 (Fed. Cir. 2020), In re Bottomline Techs. (de), Inc., No. 2020-1161 (Fed. Cir. Aug. 4, 2020), and others, in support.

Response: The Office appreciates these comments regarding the types of proceedings for which Director Review may be requested and the Office adopts these suggestions in part at this time. The Supreme Court's decision in Arthrex concerned AIA trial proceedings. 141 S. Ct. 1970, 1987. This rule is promulgated under Chapter 42, directed to trial practice before the Board. Consistent with current practice, the rule permits Director Review of derivation proceedings. The rule has been amended to expressly reference the derivation statute. Additionally, consistent with these comments regarding expansion, the Office has further amended the rule to expressly indicate that Director Review is available for any other decision concluding an AIA proceeding such as, for example, a decision terminating the proceeding, e.g., due to a grant of adverse judgment, or a dismissal of the proceeding. This expansion is consistent with the reasoning of Arthrex, which requires the Director to be able to review final decisions of the Board in AIA proceedings. The Office does not adopt the suggestion to expand Director Review to include review of PTAB decisions in appeals of ex parte examination (including appeals from reexamination or reissue applications) or reexamination at this time.

Comment 7: One commenter suggested that the Director entirely delegate the Director Review function to a delegatee office, similar to how petitions to the Director are handled during the patent examination process. The commenter expressed concern that involvement by the Director in disputes between private parties overly politicizes patents, causes a loss of confidence in the patent system, and takes up too much of the Director's time. The commenter suggested that the Director should rarely, if ever, intervene in individual cases. The commenter recommended that review by the Director be reserved for rare cases where perceived defects could not be adequately corrected by the delegatee office.

Response: The Office appreciates the comment, but does not adopt the suggestion at this time. The rule allows the Director to delegate review at the Director's discretion. In order to provide the Director a flexible approach to delegation, the Office declines to require delegation of all cases, or to a specific delegatee Office.

Comment 8: One commenter suggested limiting requests for Director Review to only final written decisions to avoid straining Office and party resources. Another commenter suggested limiting requests for Director Review of decisions under 35 U.S.C. 314 or 324 to only denials of institution to prevent disruption of the AIA trial process, when trial has been instituted, and to provide an option for review in cases where appeal is not available.

Response: The Office appreciates these thoughtful comments regarding the available scope of Director Review; however, these suggestions are not adopted. The Office modified the interim Director Review process to allow parties to request Director Review of all decisions on institution under 35 U.S.C. 135, 314, or 324 in AIA proceedings on July 24, 2023. Since then, as of August 1, 2024, the Office has received requests for Director Review of 49 final written decisions and 115 decisions on institution. Of the 115 requests for decisions on institution, 74 requests were directed to denials of institution and 41 requests were directed to grants of institution. The Office's experience with the interim Director Review process indicates that the Office is not strained or overburdened by permitting parties to request Director Review of institution decisions. Even with the addition of requests for Director Review of institution decisions, the Director has continued to issue decisions as to whether to grant or deny the request for Director Review, on average, in less than two months.

Further, the Office declines to limit requests for Director Review of institution decisions to denials of institution. Providing both parties the opportunity to request Director Review following an institution decision best aligns with the Office's priority to promote the accuracy, consistency, and integrity of PTAB decision-making in AIA proceedings.

Comment 9: Two commenters suggested adding various time limits for Director Review. One commenter recommended adding a 30-day deadline within which the Director shall issue a decision granting, denying, or delegating a party's request for Director Review. The same commenter also recommended establishing a three-month deadline from the date of the Director Review request for completion of Director Review but allowing exceptions upon a showing of good cause. A second commenter also recommended adding a deadline by which Director Review must conclude, but did not propose a specific time limit. The same commenter suggested that a rule setting forth a time limit would provide parties with timing certainty, e.g., for purposes of an appeal or to lift a stay in a parallel proceeding.

Response: The Office appreciates these comments, but does not adopt the suggestions at this time. The rule allows parties to request Director Review from the Board's decision on institution, final decision, grant of rehearing of such a decision, or other decision concluding an AIA proceeding. Given the breadth of issues that may be presented for Director Review, a uniform time limit for Director Review, whether for determinations to grant Director Review or for the issuance of Director Review decisions, would not be appropriate. Although some requests for Director Review can be disposed of within a predictable timeframe, others require more time, as dictated by the facts of the proceeding. The rule, therefore, provides the Director with necessary flexibility to carefully review and decide Director Review requests. The Office notes that the rule provides a time frame in which the Director will typically initiate sua sponte Director Review, providing the parties guidance regarding whether the Director will review a Board decision absent a request. The Office further notes that since it expanded the interim Director Review process to permit requests from institution decisions, the Director has issued decisions as to whether to grant or deny the request for Director Review, on average, in less than two months. The Office will continue to provide status updates as to pending requests for Director Review on the Director Review status web page.

Comment 10: One commenter suggested amending the rule to require that the Director remand a decision denying institution of a PGR to a different panel if the Director identifies an abuse of discretion, failure to address an issue, or an erroneous finding of fact or law.

Response: The Office appreciates the thoughtful comment but does not adopt this suggestion. The final rule sets forth the Director Review process, but does not address paneling or repaneling procedures at the Board. Thus, the suggested procedure for repaneling cases is outside the scope of the rule. Further, the Director's involvement in the paneling or repaneling of any specific proceeding before the PTAB prior to issuance of a decision is controlled by PTAB SOP 1 and 37 CFR 43.3(d). In particular, the Director's authority under 35 U.S.C. 6(c) has been delegated to the PTAB Chief Judge and the Director is not involved in directing or otherwise influencing the paneling or repaneling of any specific proceeding before the PTAB prior to issuance of the panel decision. See SOP 1, 37 CFR 43.3(d).

Comment 11: One commenter requested that the Office provide a mechanism for parties seeking a good cause extension of time under § 42.75(c)(1).

Response: The Office appreciates the suggestion but declines to implement it in the rule. The rule allows for an extension of time upon a showing of good cause and, consistent with Board practice, the burden is on the requesting party to provide good cause as to why the extension should be granted. Cf. 37 CFR 42.20(c) (“The moving party has the burden of proof to establish that it is entitled to the requested relief.”). Also consistent with Board practice, any request for an extension of time must be made sufficiently in advance of the due date for submitting a Director Review request.

Comment 12: One commenter suggested amending the rule to permit amicus briefing whenever the Director grants a request with respect to an important issue of law or policy. Another commenter suggested adopting a policy to presumptively allow the filing of amicus briefs in Director Review cases. These commenters suggest that routinely allowing amicus briefs will ensure that any member of the public with an interest in an issue can provide input. In the commenters' view, members of the public may be in a better position to perceive potential impacts and policy implications raised by a request.

Response: The Office appreciates these thoughtful comments, but the suggestions are not adopted. Although the Office agrees that amicus briefs may provide helpful input on important issues of law and policy, Director Review decisions are generally based on the existing record of a proceeding and typically do not need amicus briefing. The Director retains the authority to request amicus briefing, where deemed appropriate, and has requested such briefing in certain cases. Permitting amicus briefing in all cases may introduce unnecessary delays in the Director Review process.

Comment 13: One commenter suggested increasing transparency in the Director Review process. The commenter specifically suggested that the Office provide additional detail regarding the Director's authority to delegate review under proposed § 42.75(f), the Director's decision-making process, and the identity of members of the Director's Advisory Committee.

Response: The Office appreciates the thoughtful comment but does not adopt this suggestion. The Director Review web page provides details about the Director's delegation of review, the decision-making process, and the Advisory Committee. For example, as discussed on the Director Review web page, the Director makes all Director Review decisions, unless the Director delegates review. When delegating review, the Director will expressly identify the delegated decision-maker(s). The Director may be assisted by an Advisory Committee during the Director Review process. The Director Review web page describes, in detail, the role of the Advisory Committee and its composition. The Advisory Committee typically comprises members from various business units of the USPTO, including: Office of the Under Secretary (not including the Director or Deputy Director), Patent Trial and Appeal Board (not including members of the panel for each case under review), Office of the Commissioner for Patents (not including the Commissioner for Patents or any persons involved in the examination of the challenged patent), Office of the General Counsel (which includes the Office of the Solicitor), and Office of Policy and International Affairs. The Advisory Committee evaluates requests for Director Review and provides a single recommendation to the Director that includes a consensus recommendation from various business units of the Office, or notes differing views among the Advisory Committee members.

Upon careful consideration of the public comments, the Office adopts the provisions in the proposed rule with a few minor changes in the rule language, as discussed below.

In this final rule, the Office modifies § 42.75(a), (d), and (e) to expressly provide for Director Review of derivation proceedings under 35 U.S.C. 135. Such review is consistent with the interim process and the NPRM, although the specific statutory subsection was not identified in the rule language. Similarly, in the final rule, the Office modifies § 42.75(a) to expressly defines “final decision” as including both final written decisions under 35 U.S.C. 318, 328, and also final decisions under 35 U.S.C. 135.

The Office also modifies § 42.75(a), (d), and (e) to expressly provide for Director Review of any other decision concluding a proceeding brought under 35 U.S.C. 135, 311, or 321, consistent with the Supreme Court's holding in Arthrex. See Arthrex, 141 S. Ct. at 1987 (“The Director accordingly may review final PTAB decisions and, upon review, may issue decisions [themselves] on behalf of the Board.”). For example, the Director may elect to review a Board decision that dismisses an AIA proceeding or terminates an AIA proceeding, e.g., through the grant of adverse judgment.

Finally, the Office modifies § 42.75(d) to provide that an underlying Board decision does not become final if there is an extension of time for a party to file a request for Director Review, in order to conform to the language of paragraph (d) with the language of paragraph (c)(1).

This final rule amends part 42 to set forth regulations governing the procedures for Director Review of decisions in AIA proceedings. The USPTO issues this final rule to promote the accuracy, consistency, and integrity of PTAB decision-making in AIA proceedings.

The USPTO adds § 42.75(a) to set forth the general availability of Director Review for any decision on institution under 35 U.S.C. 135, 314, or 324, any final decision under 35 U.S.C. 135, 318 or 328, any decision granting rehearing of such a decision, or any other decision concluding a proceeding brought under 35 U.S.C. 135, 311, or 321; and to expressly define “final decision.”

The USPTO adds § 42.75(b) to set forth sua sponte Director Review.

The USPTO adds § 42.75(c) to set forth party requests for Director Review and the requirements of such requests.

The USPTO adds § 42.75(d) to specify the finality of decisions subject to Director Review.

The USPTO adds § 42.75(e) to specify the process for Director Review and the availability for appeal of a Director Review decision of certain Board decisions.

The USPTO adds § 42.75(f) to permit delegation of a review by the Director.

The USPTO adds § 42.75(g) to specify provisions regarding communications with the Office.

Under the Director Review process set forth in this final rule, a party may only request Director Review of: (1) a decision on whether to institute an AIA trial, (2) a final decision in an AIA proceeding, (3) a panel decision granting a request for rehearing of a decision on whether to institute a trial or a final decision in an AIA proceeding, or (4) any other decision concluding an AIA proceeding, for example, a termination due to a grant of adverse judgment under 37 CFR 42.73(b). In accordance with this final rule, the Director may also grant review of those same decisions sua sponte.

The Director Review web page further explains that parties must file their request for Director Review in the Patent Trial and Appeal Case Tracking System and must also send an email to the Director at Director_PTABDecision_Review@uspto.gov . As described on the Director Review web page, third parties may not request Director Review or communicate with the USPTO concerning the Director Review of a particular case unless the Director invites them to do so.

As set forth in this final rule, in the course of reviewing such a decision on Director Review, the Director may review any interlocutory decision rendered by the Board in reaching that decision.

Moreover, under this final rule, parties are limited to requesting either: (1) Director Review or (2) rehearing by the original panel, but may not request both. As described on the Director Review web page, requests for both Director Review and panel rehearing of the same decision are treated as a request for Director Review only. However, as set forth in this final rule, parties may request Director Review of a decision by a panel granting rehearing of a prior PTAB decision on institution or final decision. “[G]ranting rehearing” here means that the rehearing decision modifies the holding or result of the underlying decision in some fashion. For example, where a Board panel changes the determination of a final written decision for certain claims from unpatentable to not unpatentable in a rehearing decision, the petitioner may file a Request for Director Review of that new determination as to those claims. As another example, rehearing is not “granted” if the panel: (1) provides a decision addressing the arguments in the request for rehearing but does not modify the underlying holding or result, or (2) denies the request for rehearing without further explanation. In this situation, Director Review of the rehearing decision is not available.

As set forth on the Director Review web page, each request for Director Review is considered by an Advisory Committee that assists the Director. The Advisory Committee has at least 11 members and includes representatives from various business units within the USPTO who serve at the discretion of the Director. The Advisory Committee currently is chaired by a Director Review Executive and comprises members from the Office of the Under Secretary (not including the Director or Deputy Director); the Patent Trial and Appeal Board (not including members of the original panel for each case under review); the Office of the Commissioner for Patents (not including the Commissioner for Patents or any persons involved in the examination of the challenged patent); the Office of the General Counsel (which includes the Office of the Solicitor); and the Office of Policy and International Affairs. The Advisory Committee meets periodically to evaluate each request for Director Review. 10 Advisory Committee meetings may proceed with fewer than all members in attendance, as long as a quorum of seven members is present. The Advisory Committee presents the Director with a recommendation. The recommendation includes either a consensus from the various members of the Advisory Committee, or notes differing views among the Advisory Committee members.

The Director also receives each Director Review request, the underlying decision, and associated arguments and evidence. The Director determines whether to grant or deny the request for Director Review, or to delegate the review of a Board decision. The Director may also consult others in the USPTO as needed, so long as those individuals consulted do not have a conflict of interest. Although the Advisory Committee and other individuals in the USPTO may advise the Director on whether a decision warrants review, the Director has sole discretion to resolve each request for Director Review. The Director's decision on each request will be communicated to the parties in the proceeding. Furthermore, Director Review grants and delegations will be posted on the Director Review status web page. Other determinations, such as Director Review denials, dismissals, and withdrawals, will be cataloged and posted on the Director Review status web page spreadsheet.

Pursuant to this final rule, in addition to allowing parties to request Director Review of certain decisions, the Director may order sua sponte Director Review. Sua sponte Director Review is typically reserved for issues of exceptional importance, and the Director retains the authority to initiate review sua sponte of any issue in the proceeding, as the Director deems appropriate. As explained in SOP 4, an internal post-issuance review team at the PTAB reviews issued decisions and, if warranted, flags certain AIA decisions as potential candidates for sua sponte Director Review. See PTAB SOP 4, 11 at 1, 5. In addition, and as described on the Director Review web page, the Director may also convene the Advisory Committee to make recommendations on decisions that the Director is considering for sua sponte Director Review. If the Director initiates a sua sponte review, the parties will be given notice and may be given an opportunity for briefing. The public will also be notified, and the Director may request amicus briefing. If briefing is requested, the procedures to be followed will be set forth.

The final rule sets forth that absent exceptional circumstances (which might include a remand from the Federal Circuit for the purpose of Director Review), the Director may initiate sua sponte review at any point within 21 days after the expiration of the period for filing a request for rehearing, pursuant to § 42.71(d), as appropriate to the type of decision ( i.e., a decision on institution or a final written decision) for which review is sought.

The final rule also sets forth that a decision on institution, a final decision, a decision granting rehearing of such decision on institution of a final decision, or any other decision concluding an AIA proceeding shall become the decision of the agency unless Director Review is requested or sua sponte review is initiated. Moreover, upon denial of a request for Director Review of such a decision, the Board's decision becomes the final agency decision.

The final rule sets forth that, by default, a request for Director Review or the initiation of sua sponte Director Review resets the time for appeal until all issues on Director Review are resolved. A request for Director Review or the initiation of sua sponte Director Review does not stay or delay the time for the parties to take action in the underlying proceeding before the PTAB, unless the Director orders otherwise. The final rule sets forth that if the Director grants a Director Review, the Director will issue an order or decision that will be made part of the public record, subject to any confidentiality requirements. A grant of Director Review that is not withdrawn will conclude with the issuance of a decision or order providing the Director's reasoning in the case.

The final rule sets forth that a party may appeal a Director Review decision of a final decision, rehearing thereof, or other appealable decision concluding an AIA proceeding, to the United States Court of Appeals for the Federal Circuit using the same procedures for appealing other PTAB decisions under 35 U.S.C. 141(c), 141(d), 319. Director Review decisions on decisions on institution are not appealable.

The final rule set forth that the Director may, at their discretion, delegate the review of a Board decision in an AIA proceeding.

As described on the Director Review web page, decisions made on Director Review are not precedential by default, but may be designated as precedential by the Director. See also SOP 2. Additional implementation details of the Director Review process are provided on the Director Review web page. On the rule's effective date, a new Director Review web page reflecting the content of the rule will supersede the Revised Interim Director Review Process page.

As of August 1, 2024, the USPTO has received 382 compliant requests for Director Review under the interim process. Of those requests, the Director Review process was completed for 369 requests. Of the 369 completed requests, 24 requests were granted, two requests were delegated to the DRP, six requests were withdrawn, and the remaining 337 requests were denied. Additionally, sua sponte Director Review was initiated in 36 cases.

Since July 24, 2023, when the interim process for Director Review was expanded to allow for requests of decisions on institution, the majority of requests received have been from decisions on institution. Specifically, between July 24, 2023, and August 1, 2024, 49 requests were received for review of final written decisions and 115 requests for review of decisions on institution.

A. Administrative Procedure Act: The changes in this final rule involve rules of agency practice and procedure, and/or interpretive rules, and do not require notice-and-comment rulemaking. See Perez v. Mortg. Bankers Ass'n, 135 S.Ct. 1199, 1204 (2015) (explaining that interpretive rules “advise the public of the agency's construction of the statutes and rules which it administers” and do not require notice-and-comment rulemaking when issued or amended); Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (stating that 5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), do not require notice-and-comment rulemaking for “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice”); and JEM Broadcasting Co. v. F.C.C., 22 F.3d 320, 328 (D.C. Cir. 1994) (explaining that rules are not legislative because they do not “foreclose effective opportunity to make one's case on the merits”).

Nevertheless, the USPTO has chosen to seek public comment before implementing this rule to benefit from the public's input.

B. Regulatory Flexibility Act: For the reasons set forth in this final rule, the Senior Counsel for Regulatory and Legislative Affairs, Office of General Law, USPTO, has certified to the Chief Counsel for Advocacy of the Small Business Administration that the changes set forth in this final rule would not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 605(b).

This final rule sets forth expressly the rules governing Director Review. The changes do not create additional procedures or requirements or impose any additional compliance measures on any party beyond the interim process for Director Review, nor do these changes cause any party to incur additional costs. Therefore, any requirements resulting from these changes are of minimal or no additional burden to those practicing before the Board.

For the foregoing reasons, the changes in this final rule will not have a significant economic impact on a substantial number of small entities.

C. Executive Order 12866 (Regulatory Planning and Review): This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (September 30, 1993), as amended by Executive Order 14094 (April 6, 2023).

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

E. Executive Order 13132 (Federalism): This rulemaking pertains strictly to Federal agency procedure and does not contain policies with federalism implications sufficient to warrant the preparation of a Federalism Assessment under Executive Order 13132 (August 4, 1999).

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

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

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

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

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

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

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

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

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

O. Paperwork Reduction Act of 1995: The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3549) requires that the Office consider the impact of paperwork and other information collection burdens imposed on the public. This rulemaking does not add any additional information requirements or fees for parties before the Board. Therefore, the Office is not resubmitting collection packages to OMB for its review and approval because the revisions in the final rule do not materially change the information collections approved under OMB control number 0651-0069.

Notwithstanding any other provision of law, no person is required to respond to, nor shall any person be subject to, a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number.

P. E-Government Act Compliance: The USPTO is committed to compliance with the E-Government Act to promote the use of the internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes.

For the reasons set forth in the preamble, the USPTO amends 37 CFR part 42 as follows:

On December 12, 2022, the Pennsylvania Department of Environmental Protection (PADEP) submitted a revision to its SIP establishing RACT requirements for the 2008 and 2015 ozone NAAQS to control VOC emissions from sources covered by EPA's 2016 CTG for the oil and gas industry. On September 8, 2023, PADEP submitted, on behalf of Allegheny County Health Department (ACHD), a revision to the Allegheny County SIP (Allegheny County SIP submission/submittal) incorporating by reference (IBR) the aforementioned Pennsylvania regulations.

On June 28, 2024 (89 FR 53932), EPA published a notice of proposed rulemaking (NPRM) for the Commonwealth of Pennsylvania and Allegheny County. In the NPRM, EPA proposed approval of Pennsylvania's SIP submittal and ACHD's SIP submittal. The formal SIP revisions were submitted by Pennsylvania on December 12, 2022 and by PADEP on behalf of ACHD on September 8, 2023. 1 The Pennsylvania submittal establishes RACT requirements for the 2008 and 2015 ozone NAAQS for each category of VOC sources in Pennsylvania covered by EPA's October 27, 2016 “Final Control Techniques Guidelines for the Oil and Natural Gas Industry” (EPA's 2016 Oil and Gas CTG) (81 FR 74798). The Allegheny County, Pennsylvania submittal addresses the same CTG by incorporating the Pennsylvania regulations into the Allegheny County SIP with minor changes to reference Allegheny County's existing regulations. These SIP revisions were submitted to meet the requirement in CAA section 182(b)(2)(A) and (B) that states with ozone nonattainment areas classified as Moderate or above must revise their SIPs to include provisions to implement RACT for each category of VOC sources covered by a CTG document. CAA section 184(b)(1)(B) also extends this RACT obligation to all areas of states within the Ozone Transport Region (OTR). The entire state of Pennsylvania is within the OTR (See CAA section 184(a)), and has one ozone nonattainment area classified as moderate or above. 2 A more complete discussion of the purpose and history of these SIP revisions can be found in EPA's NPRM.

Pennsylvania's and Allegheny County's SIP submissions included two separate sets of nearly identical regulations for two types of oil and natural gas sources as defined by Pennsylvania and Allegheny County: “conventional” oil and gas sources, and “unconventional” oil and gas sources. EPA's 2016 Oil and Gas CTG does not distinguish between the two types of sources. Despite being separate, both regulations (Regulation #7-544, entitled “Control of VOC Emissions from Unconventional Oil and Natural Gas Sources,” and Regulation #7-580, entitled “Control of VOC Emissions from Conventional Oil and Natural Gas Sources,”)  3 are nearly identical and have no technical differences. 4 ACHD is incorporating by reference the requirements of regulations 7-544 and 7-580 into Allegheny County's regulations. 5

Regulation #7-580 amends 25 Pennsylvania Code (Pa. Code) Chapter 129 by adding provisions (sections 129.131 through 129.140) imposing RACT-level controls for VOC emissions from certain sources within “conventional” oil and natural gas operations, including recordkeeping and reporting requirements. Regulation #7-544 amends 25 Pa. Code Chapters 121 and 129 by adding provisions (sections 129.121 through 129.130) imposing RACT-level VOC emissions controls for certain sources in “unconventional” oil and natural gas operations, including recordkeeping and reporting requirements. Both sets of regulations apply to similar sources of VOC emissions, including pneumatic controllers, diaphragm pumps, compressors, fugitive emission components, and storage vessels within certain areas.

EPA reviewed Pennsylvania's and Allegheny County's SIP submissions containing regulations establishing RACT requirements for categories of sources identified in EPA's 2016 Oil and Gas CTG for both the 2008 and 2015 Ozone NAAQS, and proposed to approve these submissions as SIP revisions in our June 28, 2024 NPRM. A full discussion of EPA's rationale for approving these SIP submissions is available in the NPRM and also in the EPA's technical support document (TSD) accompanying the NPRM, which is in the docket for this action. EPA's analysis included a discussion of PADEP's economic feasibility analyses for sources covered by the CTG recommendations and of PADEP's comparison of their regulations to those adopted by other states and localities. EPA's analysis also compared requirements for testing, recordkeeping, and reporting of information in PADEP's oil and gas regulations to the 2016 Oil and Gas CTG's recommendations. Other specific requirements of the RACT SIPs and the rationale for EPA's proposed action are explained in more detail in the NPRM and the TSD. The NPRM and TSD are available in the docket for this rule at www.regulations.gov, Docket ID Number EPA-R03-OAR-2023-0300.

EPA received two comments on the proposed rulemaking. One of the comments is not relevant to this action and will not be addressed. Our response to the relevant comment is below. Both comments are available in the docket for this action.

Comment: One commentor was supportive of the proposed revisions. They outlined the impact of air quality on daily life and the impact of reducing VOCs. Overall, the commentor supported the action.

Response: EPA thanks the commentor for this supportive comment.

EPA is approving Pennsylvania's December 12, 2022 SIP submittal and Allegheny County's September 8, 2023 SIP submittal as satisfying the CAA requirement to implement RACT for each category of VOC sources covered by EPA's 2016 Oil and Gas CTG, as required by CAA section 182(b)(1)(B) for Moderate ozone nonattainment areas, and also for any VOC sources covered by the EPA 2016 Oil and Gas CTG for states in the Ozone Transport Region, as required by CAA section 184(b)(1)(B), for both the 2008 and 2015 ozone NAAQS.

Specifically, as they appeared in the Pennsylvania Bulletin on December 10, 2022 (52 Pa. B. 7635, and 52 Pa. B. 7587), Pennsylvania added sections 129.121-130 and amended section 121.1 to support the chapter 129 amendments. Additionally, Pennsylvania added sections 129.131-129.140. Furthermore, ACHD IBRed the regulations found at the Pennsylvania Bulletin (52 Pa. B. 7635, and 52 Pa. B. 7587) published on December 10, 2022, into Article XXI of its regulations, creating a new section, § 2105.87. The SIP revision does not include the last sentence of section 2105.87a, which is noted in strikethrough in ACHD's submittal.

In this document, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of Pennsylvania's amendments made to 25 Pa. Code Chapter 121 and 129 (relating to general provisions; and standards for sources), and also Allegheny County's incorporation by reference of Pennsylvania's amendments, as described in sections II and IV of this preamble. EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region III Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information). Therefore, these materials have been approved by EPA for inclusion in the SIP, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rule of EPA's approval, and will be incorporated by reference in the next update to the SIP compilation. 6

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

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

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

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

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

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

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

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

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

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

Executive Order 12898 (Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations, 59 FR 7629, Feb. 16, 1994) directs Federal agencies to identify and address “disproportionately high and adverse human health or environmental effects” of their actions on minority populations and low-income populations to the greatest extent practicable and permitted by law. EPA defines environmental justice (EJ) as “the fair treatment and meaningful involvement of all people regardless of race, color, national origin, or income with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.” EPA further defines the term fair treatment to mean that “no group of people should bear a disproportionate burden of environmental harms and risks, including those resulting from the negative environmental consequences of industrial, governmental, and commercial operations or programs and policies.”

PADEP and Allegheny County did not evaluate environmental justice considerations as part of its SIP submittals; the CAA and applicable implementing regulations neither prohibit nor require such an evaluation. EPA did not perform an EJ analysis and did not consider EJ in this action. Consideration of EJ is not required as part of this action, and there is no information in the record inconsistent with the stated goal of E.O. 12898 of achieving environmental justice for people of color, low-income populations, and Indigenous peoples.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 2, 2024. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action pertaining to reasonably available control technology requirements for the 2008 and 2015 ozone NAAQS related to EPA's 2016 oil and gas control technique guidelines may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

For the reasons stated in the preamble, the EPA amends 40 CFR part 52 as follows:

States that have received final approval from the EPA under section 9004(b) of RCRA, 42 U.S.C. 6991c(b), must maintain a UST program that is no less stringent than the Federal program. When the EPA revises the regulations that govern the UST program, States must revise their programs to comply with the updated regulations and submit these revisions to the EPA for approval. Most commonly, States must change their programs because of changes to the EPA's regulations in title 40 of the Code of Federal Regulations (CFR) part 280. States can also initiate changes on their own to their UST programs and these changes must then be approved by the EPA.

In accordance with 40 CFR 281.51(a), North Carolina submitted a complete program revision application (State Application) seeking approval of changes to its UST Program. The State Application was submitted on October 22, 2018, and amended on February 22, 2023, May 4, 2023, and June 24, 2024. The program revisions described in the State Application correspond to the EPA final rule published on July 15, 2015 (80 FR 41566), which revised the 1988 UST regulations and the 1988 State program approval (SPA) regulations (2015 Federal Revisions). As required by 40 CFR 281.20, the State Application contains the following: a transmittal letter from the Governor requesting approval; a description of the UST Program and operating procedures; a demonstration of the State of North Carolina's procedures to ensure adequate enforcement; a Memorandum of Agreement outlining the roles and responsibilities of the EPA and the implementing agency; an Attorney General's Statement; and copies of all relevant North Carolina statutes and regulations. The EPA has reviewed the State Application and has determined that the revisions to North Carolina's UST Program are no less stringent than the corresponding Federal requirements in subpart C of 40 CFR part 281, and that the North Carolina UST Program continues to provide adequate enforcement of compliance. Therefore, the EPA grants North Carolina final approval to operate its UST Program with the revisions described in the State Application, and as outlined below. The North Carolina Department of Environmental Quality (DEQ) (formerly the North Carolina Department of Environment and Natural Resources) is the lead implementing agency for the UST Program in North Carolina, except in Indian country as noted below in Section I.I.

Section 9004(b) of RCRA, 42 U.S.C. 6991c(b), as amended, allows the EPA to approve State UST programs to operate in lieu of the Federal program. With this approval, the changes described in the State Application will become part of the approved North Carolina UST Program, and therefore will be federally enforceable. North Carolina will continue to have primary enforcement authority and responsibility for its State UST Program. This action does not impose additional requirements on the regulated community because the regulations being approved by this rule are already in effect in the State of North Carolina, and are not changed by this action. This action merely approves the existing North Carolina regulations as being no less stringent than the 2015 Federal Revisions and rendering them federally enforceable.

The EPA is publishing this direct final rule without a prior proposed rule because we view this as a noncontroversial action and we anticipate no adverse comment. North Carolina addressed all comments it received during its comment period when the rules and regulations being considered in this document were proposed at the State level.

Along with this direct final rule, the EPA is simultaneously publishing a separate document in the “Proposed Rules” section of this Federal Register that serves as the proposal to approve North Carolina's UST Program revisions and provides an opportunity for public comment. If the EPA receives comments that oppose this approval, the EPA will withdraw this direct final rule by publishing a document in the Federal Register before it becomes effective. The EPA will make any further decision on approval of the State Application after considering all comments received during the comment period. The EPA will then address all public comments in a later final rule. You may not have another opportunity to comment. If you want to comment on this approval, you must do so at this time.

On January 16, 1998, North Carolina submitted a complete State program approval application seeking approval of its UST Program under subtitle I of RCRA. Effective August 14, 2001, the EPA granted final approval for North Carolina to administer its UST Program in lieu of the Federal UST program and incorporated by reference and codified the federally approved North Carolina UST Program (66 FR 32564 and 32566, June 15, 2001). As a result of the EPA's approval, these provisions became subject to the EPA's corrective action, inspection, and enforcement authorities under RCRA sections 9003(h), 9005, and 9006, 42 U.S.C. 6991b(h), 6991d, and 6991e, and other applicable statutory and regulatory provisions.

In order to be approved, each State program revision application must meet the general requirements in 40 CFR 281.11 (General Requirements), and the specific requirements in 40 CFR part 281, subpart B (Components of a Program Application), subpart C (Criteria for No Less Stringent), and subpart D (Adequate Enforcement of Compliance).

As more fully described below, North Carolina has made changes to its UST Program to reflect the 2015 Federal Revisions. These changes are included in North Carolina's UST Rules at North Carolina Administrative Code (N.C.A.C.), Title 15A, Chapter 2, Subchapter 2N (2023), and the North Carolina General Statutes (N.C.G.S.) sections 143-215.94NN through 143-215.94UU (2018). The EPA is approving North Carolina's changes because they are no less stringent than the Federal UST program, and because the revised North Carolina UST Program will continue to provide for adequate enforcement of compliance as required by 40 CFR 281.11(b) and part 281, subparts C and D, after this approval.

DEQ continues to be the lead implementing agency for the UST Program in North Carolina. DEQ has broad statutory and regulatory authority to regulate the installation, operation, maintenance, and closure of USTs, as well as UST releases, under the Chapter 143 of the N.C.G.S., Article 21A, Parts 2A (Leaking Petroleum Underground Storage Tank Cleanup), 2B (Underground Storage Tank Regulation), and 2D (Training of Underground Storage Tank Operators) (2018); and Title 15A of the North Carolina Administrative Code, Chapter 2, Subchapters 2L, 2N, 2O, and 2P (2023).

The following North Carolina authorities provide authority for compliance monitoring as required pursuant to 40 CFR 281.40: N.C.G.S. sections 143-215.3(a) through (d), 143-215.79, 143-215.94T; N.C.G.S. section 143B-282; and 15A N.C.A.C. 02N .0101(b) and .0405.

The following North Carolina authorities provide authority for enforcement response as required pursuant to 40 CFR 281.41: N.C.G.S. sections 143-215.2, 143-215.3(a), 143.215.3(c), 143-215.3(f), 143-215.6A, 143-215.94F, 143-215.94J, 143-215.94K, 143-215.94U, 143-215.94V(b) through (h), 143-215.94W, 143-215.94X, 143-215.94Y, and 143-215.94TT; N.C.G.S. section 143B-282; and 15A N.C.A.C. 02N .0101(b).

The following North Carolina authorities provide authority for enabling public participation in the State enforcement process, including citizen intervention and filing of complaints, required pursuant to 40 CFR 281.42: Rule 24(a)(2) of the North Carolina Rules of Civil Procedure (2024); and N.C.G.S. sections 150B-23 and 143-215.94L. Further, through a Memorandum of Agreement between DEQ and the EPA, effective October 12, 2018, North Carolina maintains procedures for receiving and ensuring proper consideration of information about violations submitted by the public, and DEQ will not oppose citizen intervention on the ground that the applicant's interest is adequately represented by the State. The following North Carolina authorities provide authority for enabling the sharing of information in the State files obtained or used in the administration of the North Carolina UST Program with the EPA as required by 40 CFR 281.43: N.C.G.S. sections 132-1 through 132-1.14. Further, through the Memorandum of Agreement between DEQ and the EPA, effective October 12, 2018, North Carolina agrees to furnish the EPA, upon request, any information in State files obtained or used in the administration of the State UST Program.

To qualify for final approval, revisions to a State's UST program must be no less stringent than the 2015 Federal Revisions. In the 2015 Federal Revisions, the EPA addressed UST systems deferred in the 1988 UST regulations, and added, among other things: new operation and maintenance requirements; secondary containment requirements for new and replaced tanks and piping; operator training requirements; and a requirement to ensure UST system compatibility before storing certain biofuel blends. In addition, the EPA removed past deferrals for emergency generator tanks, field constructed tanks, and airport hydrant systems. North Carolina adopted all of the required 2015 Federal Revisions in Title 15A of the North Carolina Administrative Code, Chapter 2, Subchapter 2N (2023), and N.C.G.S. sections 143-215.94NN through 143-215.94UU (2018).

As part of the State Application, the North Carolina Attorney General has certified that the State regulations provide for adequate enforcement of compliance and meet the no less stringent criteria in 40 CFR part 281, subparts C and D. The EPA is relying on this certification, in addition to the analysis submitted by the State, in approving the State's changes.

States may enact laws that are more stringent than their Federal counterparts. See RCRA section 9008, 42 U.S.C. 6991g. When an approved State program includes requirements that are considered more stringent than those required by Federal law, the more stringent requirements become part of the federally approved program in accordance with 40 CFR 281.12(a)(3)(i). The EPA has determined that some of North Carolina's regulations are considered more stringent than the Federal program, and upon approval, they will become part of the federally approved North Carolina UST Program and therefore federally enforceable.

In addition, States may enact laws which are broader in scope than their Federal counterparts in accordance with 40 CFR 281.12(a)(3)(ii). State requirements that go beyond the scope of the Federal program are not part of the federally approved program and the EPA cannot enforce them. Although these requirements are enforceable by the State in accordance with North Carolina law, they are not Federal RCRA requirements. The EPA considers the following North Carolina requirements to be broader in scope than the Federal program and therefore not part of the federally approved State UST Program:

General Statutes of North Carolina, Chapter 143; Article 21, Part 1. Organization and Powers Generally; Control of Pollution (2018) .

(i) N.C.G.S. section 143-215.3(e), insofar as it provides for the granting of variances which are not available to UST owners and operators as these terms are defined in 40 CFR 280.12.

General Statutes of North Carolina, Chapter 143; Article 21A, Part 2A. Leaking Petroleum UST Tank Cleanup (2018).

(ii) N.C.G.S. section 143-215.94A(2)c., as to the definition of “Commercial underground storage tank,” insofar as it includes certain heating oil tanks and connected piping that are excluded by the Federal program.

(iii) N.C.G.S. section 143-215.94B, insofar as it provides for the creation of the Commercial Leaking Petroleum Underground Storage Tank Cleanup Fund (State Fund) and criteria for the expenditure of funds.

(iv) N.C.G.S. section 143-215.94C, insofar as it requires owners and operators to pay an annual operating fee to the State Fund.

(v) N.C.G.S. sections 143-215.94E(b) through (k), insofar as these provisions relate to the State Fund.

(vi) N.C.G.S. section 143-215.94G, insofar as it provides for DEQ to perform cleanups and provides for reimbursement from the State Fund.

(vii) N.C.G.S. section 143-215.94N, insofar as it relates to the State Fund.

(viii) N.C.G.S. section 143-215.94P, insofar as it provides for the creation of the Groundwater Protection Loan Fund and promulgation of regulations regarding such fund.

General Statutes of North Carolina, Chapter 143; Article 21A, Part 2D. Training of UST Operators (2018).

(ix) N.C.G.S. section 143-215.94OO(4), as to the definition of “Underground storage tank system” or “tank system,” insofar as it includes dispensers as part of the system.

General Statutes of North Carolina, Chapter 143B; Article 7, Part 1. General Provisions (2018).

(x) N.C.G.S. section 143B-279.9, insofar as it regulates releases from sources that are not underground storage tanks and entities that are not owners and operators as these terms are defined in 40 CFR 280.12.

(xi) N.C.G.S. section 143B-279.11, insofar as it regulates releases from sources that are not underground storage tanks and entities that are not owners and operators as these terms are defined in 40 CFR 280.12.

North Carolina Administrative Code, Title 15A—Environmental Quality; Chapter 2, Environmental Management; Subchapter 2L, Groundwater Classification and Standards (2023).

(i) 15A N.C.A.C. 02L .0100, including .0101 through .0115, insofar as these provisions provide general considerations for groundwater classification and standards.

(ii) 15A N.C.A.C. 02L .0200, including .0201 through .0202, insofar as these provisions establish underground water classifications and quality standards.

(iii) 15A N.C.A.C. 02L .0300, including .0301 through .0319, insofar as these provisions assign underground water classifications.

(iv) 15A N.C.A.C. 02L .0403, insofar as it defines a “responsible party” to include persons other than owners and operators as these terms are defined in 40 CFR 280.12.

(v) 15A N.C.A.C. 02L .0415, insofar as it regulates releases from sources other than underground storage tank systems.

(vi) 15A N.C.A.C. 02L .0500, including .0501 through .0515, insofar these provisions regulate aboveground storage tanks and sources.

North Carolina Administrative Code, Title 15A—Environmental Quality; Chapter 2, Environmental Management; Subchapter 2N, Underground Storage Tanks (2023).

(vii) 15A N.C.A.C. 02N .0201(1), insofar as it regulates underground storage tanks containing de minimis concentrations of regulated substances.

(viii) 15A N.C.A.C. 02N .0203(a)(1), as to the definition of “UST system” or “Tank system,” insofar as it includes dispensers as part of the system.

(ix) 15A N.C.A.C. 02N .0504(c), insofar as it relates to the permitting of monitoring wells.

(x) 15A N.C.A.C. 02N .0802, insofar as it regulates underground storage tanks containing de minimis amounts of regulated substances.

(xi) 15A N.C.A.C. 02N .0901(d), insofar as it requires dispensers to have more than under-dispenser containment.

North Carolina Administrative Code, Title 15A—Environmental Quality; Chapter 2, Environmental Management; Subchapter 2P, Leaking Petroleum Underground Storage Tank Cleanup Funds (2023).

(xii) 15A N.C.A.C. 02P, including .0101 through .0408, except .0302, insofar as these provisions relate to the State Fund and the collection of annual operating fees.

The EPA's approval of North Carolina's UST Program does not extend to Indian country as defined in 18 U.S.C. 1151. The EPA will retain responsibility under RCRA for underground storage tanks in Indian country. Therefore, this action has no effect in Indian country. See 40 CFR 281.12(a)(2).

Codification is the process of placing citations and references to a State's statutes and regulations that comprise a State's approved UST program into the CFR. The EPA codifies its approval of State programs in 40 CFR part 282 and incorporates by reference State statutes and regulations that the EPA can enforce, after the approval is final, under sections 9005 and 9006 of RCRA, and any other applicable statutory provisions. The incorporation by reference of EPA-approved State programs in the CFR should substantially enhance the public's ability to discern the status of the approved State UST programs and State requirements that can be federally enforced. This effort provides clear notice to the public of the scope of the approved program in each State.

In 2001, the EPA incorporated by reference and codified North Carolina's approved UST Program at 40 CFR 282.83 (66 FR 32566, June 15, 2001). Through this action, the EPA is amending 40 CFR 282.83 to incorporate by reference and codify North Carolina's revised UST Program.

In this rule, the EPA is finalizing regulatory text that incorporates by reference the federally approved North Carolina UST Program, including the revisions made to the UST Program based on the 2015 Federal Revisions. In accordance with the requirements of 1 CFR 51.5, the EPA is incorporating by reference North Carolina's statutes and regulations as described in the amendments to 40 CFR part 282 set forth below. These documents are available through https://www.regulations.gov. This codification reflects the State UST Program that will be in effect at the time the EPA's approval of the revisions to the North Carolina UST Program addressed in this direct final rule becomes final. If, however, the EPA receives substantive comment on the proposed rule, the EPA will withdraw this direct final rule and this codification will not take effect. The EPA will consider all comments and will make a decision on program approval and codification in a future final rule. By codifying the approved North Carolina UST Program and by amending the CFR, the public will more easily be able to discern the status of the federally-approved requirements of the North Carolina UST Program.

Specifically, in 40 CFR 282.83(d)(1)(i), the EPA is incorporating by reference the EPA-approved North Carolina UST Program. Section 282.83(d)(1)(ii) identifies the State's statutes and regulations that are part of the approved North Carolina UST Program, although not incorporated by reference for enforcement purposes, unless they impose obligations on the regulated entity. Section 282.83(d)(1)(iii) identifies the State's statutory and regulatory provisions that are broader in scope or external to the State's approved UST Program and therefore not incorporated by reference. Sections 282.83(d)(2) through (5) reference the Attorney General's Statement, Demonstration of Adequate Enforcement Procedures, Program Description, and Memorandum of Agreement, which are part of the State Application and part of the North Carolina UST Program under subtitle I of RCRA.

The EPA retains the authority under sections 9003(h), 9005, and 9006 of subtitle I of RCRA, 42 U.S.C. 6991b(h), 6991d, and 6991e, and other applicable statutory and regulatory provisions, to undertake corrective action, inspections, and enforcement actions, and to issue orders in approved States. If the EPA determines it will take such actions in North Carolina, the EPA will rely on Federal sanctions, Federal inspection authorities, and other Federal procedures rather than the North Carolina analogs. Therefore, the EPA is not incorporating by reference North Carolina's procedural and enforcement authorities, although they are listed in 40 CFR 282.83(d)(1)(ii).

As discussed in section I.H. above, some provisions of North Carolina's UST Program are not part of the federally approved State UST Program because they are broader in scope than the Federal UST Program. Where an approved State program has provisions that are broader in scope than the Federal program, those provisions are not a part of the federally approved program. As a result, North Carolina provisions which are broader in scope than the Federal program are not incorporated by reference for purposes of enforcement in part 282. See 40 CFR 281.12(a)(3)(ii). In addition, provisions that are external to the State UST program approval requirements, but included in the North Carolina's State Application, are also being excluded from incorporation by reference in part 282. For reference and clarity, 40 CFR 282.83(d)(1)(iii) lists the North Carolina statutory and regulatory provisions which are broader in scope than the Federal program or external to State UST program approval requirements. These provisions are, therefore, not part of the approved UST Program that the EPA is codifying. Although these provisions cannot be enforced by the EPA, the State will continue to implement and enforce such provisions under State law.

The EPA's actions merely approve and codify North Carolina's revised UST Program requirements pursuant to RCRA section 9004, and do not impose additional requirements other than those imposed by State law. For that reason, these actions:

• Are not significant regulatory actions subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 14094 (88 FR 21879, April 11, 2023);

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

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

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

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

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

• Are not significant regulatory actions subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

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

• Do not provide the EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994) and Executive Order 14096 (88 FR 25251, April 26, 2023).

• Do not apply on any Indian reservation land or in any other area where the EPA or an Indian Tribe has demonstrated that a Tribe has jurisdiction. The rule does not have Tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on Tribal governments or preempt Tribal law.

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. The EPA will submit a report containing this document and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication in the Federal Register . A major rule cannot take effect until 60 days after it is published in the Federal Register . This action is not a “major rule” as defined by 5 U.S.C. 804(2). This final action will be effective December 2, 2024.

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

In FR Doc. 2024-16910 of August 6, 2024 (89 FR 64202), there were a number of technical and typographical errors that are identified and corrected in this correcting document. The provisions in this correction document are effective as if they had been included in the final rule that appeared in the August 6, 2024 Federal Register . Accordingly, the corrections are effective October 1, 2024.

On page 64207, we made a typographical error in the reported core-based statistical area (CBSA) name and wage index value for CBSA 25980, Hinesville, Georgia. We reported the CBSA name as Hinesville-Fort Stewart, Georgia instead of Hinesville, Georgia, and the FY 2025 hospice wage index value as 0.8872, instead of 0.8886.

On page 64210, in Table 3, titled “Urban Counties that Would Change to Rural Status”, we inadvertently omitted FIPS county 09015 Windham County from the list of counties that were previously urban but would gain rural status beginning in FY 2025. Table 3 contains the FIPS codes, county name, current CBSA number and name of the counties that will gain rural status in FY 2025. Windham County was previously designated in CBSA 49340 Worchester, MA-CT. However, beginning in FY 2025 this county is redesignated into rural Connecticut (rural area 99907). Accordingly, we are adding FIPS 09015 Windham County to the list of counties that will gain rural status beginning in FY 2025. We also reported a total of 53 counties and county equivalents that are currently considered urban that would be considered rural beginning in FY 2025. Therefore, with the addition of Windham County to the list, we are correcting that number to 54 counties and county equivalents.

Windham County is also experiencing a change to its county name beginning in FY 2025, as described in the FY 2025 hospice final rule (89 FR 64209) and will transition from FIPS county 09015 Windham County to 09150 Northeastern Connecticut planning region.

On page 64222, in Table 8, titled “Counties That Will Use a Wage Index Transition Code”, we inadvertently omitted FIPS county 09150 “Northeastern Connecticut Planning Region” from the list of counties that will use a transition code on hospice claims for FY 2025 instead of the CBSA number. Table 8 contains the FIPS codes, county name, current CBSA number and name, the redesignated FY 2025 CBSA number and name and the corresponding “500XX” transition code that must be submitted on hospice claims for FY 2025 to ensure that hospice providers who provide services in certain counties receive that county's appropriate wage index value. The omission of the Northeastern planning region from Table 8 and the subsequent unassigned transition code for that region resulted in two wage index values being assigned to statewide rural area 99907 in the FY 2025 hospice final wage index file located at: https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-wage-index. However, for hospice claims processing, each CBSA or statewide rural area can have only one wage index value assigned to that CBSA or statewide rural area. Therefore, hospices that serve beneficiaries in the Northeastern Connecticut planning region must use transition code 50030, instead of the rural statewide code 99907, on hospice claims beginning in FY 2025. Accordingly, we are adding FIPS county 09150 “Northeastern Connecticut Planning Region” to the list of counties in Table 8 that will use a transition code on hospice claims for FY 2025 instead of the CBSA number.

This correction does not represent a change in policy and is consistent with the finalized transition policy outlined in the FY 2025 Hospice final rule (89 FR 64220-64224), where beginning in FY 2025, certain counties must use a 500XX transition code on hospice claims instead of the statewide rural area or CBSA code in circumstances where a county was redesignated into a new CBSA or rural area and has a different wage index than the constituent counties that make up that CBSA or rural area due to the calculation of the 5-percent cap.

On page 64239, we made a typographical error. We inadvertently included the word “Proposed” in the title of Section III.D.2, which therefore incorrectly read: “Implementation of Two Process Quality Measures Based on Proposed HOPE Data Collection”. As HOPE is finalized as of the FY 2025 final rule, it should not be referred to as “proposed”. Therefore, the title of this Section III.D.2 is corrected to read: “Implementation of Two Process Quality Measures Based on HOPE Data Collection.”

On page 64240, we made a typographical error in the sentence “CMS maintains to avoid creating unnecessary burden for hospice providers.” The sentence is corrected to read: “CMS maintains its commitment to avoid creating unnecessary burden for hospice providers.”

On page 64242, we made a typographical error in the sentence “Theses (SFVs) may be performed by RNs or LPNs/LVNs.” The sentence is corrected to read: “These SFVs may be performed by RNs or LPNs/LVNs.”

On page 64244, under the undesignated heading “Public Availability of Data Submitted”, we made two typographical errors. We stated the following: “We are finalizing the decision that the data from the first quarter Q4 CY 2025, if HOPE data collection begins in October 2025, it will not be used for assessing validity and reliability of the quality measures.” This sentence is corrected to read: “We are finalizing the decision that the data from the first quarter—Q4 CY 2025, if HOPE data collection begins in October 2025—will not be used for assessing validity and reliability of the quality measures.”

We also inadvertently used the word “proposed” in our discussion of HOPE-based quality measures. HOPE-based quality measures are finalized as of the FY 2025 final rule; therefore, they should not be referred to as “proposed”. The sentence incorrectly read: “In light of all the steps required prior to data being publicly reported, we finalize the decision that public reporting of the proposed quality measures will be implemented no earlier than FY 2028, allowing ample time for data analysis, review of measures' appropriateness for use for public reporting, and allowing hospices the required time to review their own data prior to public reporting.”

As HOPE-based quality measures are finalized as of the FY 2025 final rule; they should not be referred to as “proposed”. Therefore, this sentence is corrected to read: “In light of all the steps required prior to data being publicly reported, we finalize the decision that public reporting of the HOPE-based quality measures will be implemented no earlier than FY 2028, allowing ample time for data analysis, review of measures' appropriateness for use for public reporting, and allowing hospices the required time to review their own data prior to public reporting.”

On page 64260, we made a typographical error inadvertently stating that under the Paperwork Reduction Act of 1995, we are required to provide “60-day notice” in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. Instead, we are required to provide a “30-day notice.”

In addition, on page 64260, the sentence that reads “The OMB control number will remain 0938-1153.” and the parenthetical phrase that reads “(set out in the PRA accompanying this Rule, as well as the HOPE Guidance Manual finalized in this Rule)” are removed.

On page 64261, we referred readers to the HOPE Beta testing report and the PRA package associated with the rule. The “PRA package” should have been referred to as the “information collection request”. In addition, we inadvertently omitted the expiration date for the information collection request. The sentence is corrected to read: “For additional information regarding the calculation of HOPE time and cost burdens, please refer to the HOPE Beta Testing Report found on the HOPE web page at https://www.cms.gov/medicare/quality/hospice/hope and the information collection request (OMB control number 0938-1153/Expiration date: 1/31/2026) associated with this rule found at https://www.cms.gov/medicare/regulations-guidance/legislation/paperwork-reduction-act-1995/pra-listing .”

On page 64262, we made a typographical error within Table 18. The cell “HUV Timepoint” is corrected to read: “HUV Timepoints.”

As discussed above, we inadvertently omitted FIPS county number 09150 Northeastern Connecticut planning region from the list of counties that must use a 500XX transition code beginning in FY 2025. That error was subsequently included in the FY 2025 Hospice wage index file exclusively on the CMS website at: https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-wage-index . In Tab 2 of the FY 2025 Hospice Wage Index file labeled “CT Counties”, we are correcting the erroneous assignment of the Northeastern Connecticut planning region to CBSA 99907 for FY 2025, to reflect the newly assigned wage index transition code 50030. We are also correcting the omission of the Northeastern Planning Region from Tab 3 of the file labeled “Transition Codes”, noting the addition of this region to the list of counties that must use a 500XX transition code instead of the statewide rural area code or CBSA number on the hospice claim beginning in FY 2025.

Given these errors, we are republishing the FY 2025 Hospice Wage Index file accordingly on the CMS website at: https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice/hospice-wage-index effective October 1, 2024.

Under 5 U.S.C. 553(b) of the Administrative Procedure Act (APA), the agency is required to publish a notice of the proposed rulemaking in the Federal Register before the provisions of a rule take effect. Similarly, section 1871(b)(1) of the Act requires the Secretary to provide for notice of the proposed rulemaking in the Federal Register and provide a period of not less than 60 days for public comment. In addition, section 553(d) of the APA, and section 1871(e)(1)(B)(i) of the Act mandate a 30-day delay in effective date after issuance or publication of a rule. Sections 553(b)(B) and 553(d)(3) of the APA provide for exceptions from the notice and comment and delay in effective date APA requirements; in cases in which these exceptions apply, sections 1871(b)(2)(C) and 1871(e)(1)(B)(ii) of the Act provide exceptions from the notice and 60-day comment period and delay in effective date requirements of the Act as well. Section 553(b)(B) of the APA and section 1871(b)(2)(C) of the Act authorize an agency to dispense with normal rulemaking requirements for good cause if the agency makes a finding that the notice and comment process is impracticable, unnecessary, or contrary to the public interest. In addition, both section 553(d)(3) of the APA and section 1871(e)(1)(B)(ii) of the Act allow the agency to avoid the 30-day delay in effective date where such delay is contrary to the public interest and an agency includes a statement of support. We believe that this correcting document does not constitute a rule that would be subject to the notice and comment or delayed effective date requirements. This correcting document corrects technical and typographical errors in the preamble, addenda, payment rates, and tables included or referenced in the FY 2025 Hospice final rule but does not make substantive changes to the policies or payment methodologies that were adopted in the FY 2025 Hospice final rule. As a result, this correcting document is intended to ensure that the information in the FY 2025 Hospice final rule accurately reflects the policies adopted in that document.

In addition, even if this were a rule to which the notice and comment procedures and delayed effective date requirements applied, we find that there is good cause to waive such requirements. Undertaking further notice and comment procedures to incorporate the corrections in this correcting document into the final rule or delaying the effective date would be contrary to the public interest because it is in the public's interest for providers to receive appropriate payments in as timely a manner as possible, and to ensure that the FY 2025 Hospice final rule reflects our policies. Furthermore, such procedures would be unnecessary, as we are not altering our payment methodologies or policies, but rather, we are simply correctly implementing the policies that we previously proposed, requested comment on, and subsequently finalized. This correcting document is intended solely to ensure that the FY 2025 Hospice final rule accurately reflects these payment methodologies and policies. For these reasons, we believe we have good cause to waive the notice and comment and delayed effective date requirements.

In FR Doc. 2024-16910 of August 6, 2024 (89 FR 64202) make the following corrections:

1. On page 64207, second column, second full paragraph:

a. In lines 17 and 18, “Hinesville-Fort Stewart, Georgia” is corrected to read “Hinesville, Georgia”.

b. In lines 19 and 20, “Hinesville-Fort Stewart, Georgia” is corrected to read “Hinesville, Georgia”.

c. In line 20, the figure “0.8872” is corrected to read: “0.8886”.

2. On page 64209, second column, paragraph below Table 2, “53 counties (and county equivalents)” is corrected to read “54 counties and county equivalents”.

3. On page 64210, Table 3 is corrected by adding an entry at the beginning of the table for FIPS County code “09015” to read as follows:

4. On page 64222, Table 8 is corrected by adding an entry at the beginning of the table for FIPS code “09150”code to read as follows:

5. On page 64239, in the first column, the header “2. Implementation of Two Process Quality Measures Based on Proposed HOPE Data Collection” is corrected to read

“2. Implementation of Two Process Quality Measures Based on HOPE Data Collection”.

6. On page 64240, third column, first full paragraph, in lines 4 through 6, the sentence “CMS maintains to avoid creating unnecessary burden for hospice providers.” is corrected to read “CMS maintains its commitment to avoid creating unnecessary burden for hospice providers.”

7. On page 64242, third column, last partial paragraph, in lines 11 and 12, the sentence “Theses (SFVs) may be performed by RNs or LPNs/LVNs.” is corrected to read “These SFVs may be performed by RNs or LPNs/LVNs.”

8. On page 64244, second column:

a. First partial paragraph, the final sentence, “We are finalizing the decision that the data from the first quarter Q4 CY 2025, if HOPE data collection begins in October 2025, it will not be used for assessing validity and reliability of the quality measures.”, is corrected to read “We are finalizing the decision that the data from the first quarter—Q4 CY 2025, if HOPE data collection begins in October 2025—will not be used for assessing validity and reliability of the quality measures.”

b. Second full paragraph, in lines 7 through 17, the sentence that reads “In light of all the steps required prior to data being publicly reported, we finalize the decision that public reporting of the proposed quality measures will be implemented no earlier than FY 2028, allowing ample time for data analysis, review of measures' appropriateness for use for public reporting, and allowing hospices the required time to review their own data prior to public reporting.” is corrected to read “In light of all the steps required prior to data being publicly reported, we finalize the decision that public reporting of the HOPE-based quality measures will be implemented no earlier than FY 2028, allowing ample time for data analysis, review of measures' appropriateness for use for public reporting, and allowing hospices the required time to review their own data prior to public reporting.”

9. On page 64260:

a. First column, first partial paragraph under the heading “IV. Collection of Information Requirements”, in lines 2 and 3, “60-day” is corrected to read “30-day”.

b. Third column, first partial paragraph:

i. In lines 3 and 4, the sentence that reads “The OMB control number will remain 0938-1153.” is removed.

ii. In lines 11 through 14, the parenthetical phrase “(set out in the PRA accompanying this Rule, as well as the HOPE Guidance Manual finalized in this Rule)” is removed.

10. On page 64261:

a. First column, first partial paragraph, in lines 1 through 11, the sentence that reads “For additional information regarding the calculation of HOPE time and cost burdens, please refer to the HOPE Beta Testing Report found on the HOPE web page at https://www.cms.gov/medicare/quality/hospice/hope and the PRA package associated with this rule found at https://www.cms.gov/medicare/regulations-guidance/legislation/paperwork-reduction-act-1995/pra-listing.” is corrected to read “For additional information regarding the calculation of HOPE time and cost burdens, please refer to the HOPE Beta Testing Report found on the HOPE web page at https://www.cms.gov/medicare/ quality/hospice/hope and the information collection request (OMB control number 0938-1153/Expiration date: 1/31/2026) associated with this rule found at https://www.cms.gov/medicare/regulations-guidance/legislation/paperwork-reduction-act-1995/pra-listing.”

b. Third column, lines 15 through 21, the sentence that reads “This increase in incremental burden is explained further in the Regulatory Impact Analysis (RIA) section of this Rule, and is also discussed in detail in the Information Collection Request and PRA accompanying this Rule.” is corrected to read “This increase in incremental burden is explained further in the Regulatory Impact Analysis (RIA) section of this rule, and is also discussed in detail in the information collection request accompanying this rule (OMB control number (0938-1153/Expiration date: 1/31/2026).”

11. On page 64262, in Table 18, titled “Summary of Changes in Burden”, the entry “HUV Timepoint” is corrected to read “HUV Timepoints”.

Pursuant to 49 U.S.C. 20103, FRA, as delegated by the Secretary of Transportation, 1 has authority to “prescribe regulations and issue orders for every area of railroad safety supplementing laws and regulations in effect on October 16, 1970.” As part of its mission to enforce and improve rail safety, FRA investigates rail transportation accidents/incidents which result in serious injury to an individual or to railroad property. See 49 U.S.C. 20902. In Section 22417 of the Infrastructure Investment and Jobs Act (IIJA), Congress mandated that the Secretary of Transportation (Secretary) create a standard process for investigators to use during accident and incident investigations conducted under this section. This process is to be used to determine when it is appropriate and the appropriate method for gathering information about an accident or incident under investigation from railroad carriers, contractors or employees of railroad carriers, or representatives of employees of railroad carriers, and others, as determined relevant by the Secretary. The process will also be used to determine when it is appropriate to consult with railroad carriers, contractors or employees of railroad carriers, or representatives of employees of railroad carriers, and others, as determined relevant by the Secretary, for technical expertise on the facts of the accident or incident under investigation. See Public Law 117-58, section 22417, Nov. 15, 2021, 135 Stat. 748.

In developing this standard process, the Secretary must also factor in ways to maintain the confidentiality of any entity if:

(1) The entity requests confidentiality;

(2) The entity was not involved in the accident or incident; and

(3) Maintaining the entity's confidentiality does not adversely affect FRA's investigation.

The IIJA specifies that any process developed under section 22417 applies only to FRA investigations and does not apply to any investigation carried out by the National Transportation Safety Board (NTSB).

In response to the IIJA mandate, FRA worked with stakeholders, including both labor and rail organizations, to develop a Policy for Gathering Information and Consulting with Stakeholders (Policy Document). The resulting Policy Document is available on FRA's website  2 and includes guidelines for:

• When FRA will provide the opportunity for stakeholders to participate in FRA accident/incident investigations;

• How FRA will notify stakeholders of an accident investigation in which they may participate;

• The expectations of stakeholders;

• How stakeholders can participate in FRA's accident investigation process;

• How stakeholders can submit information to FRA to assist with the investigation; and

• How confidentiality of individuals and requests for confidentiality by entities will be addressed and maintained.

This rule codifies the process contained in the Policy Document.

FRA is publishing this rule without a prior proposed rule because it views this as a noncontroversial action that generally codifies FRA's current process for accident investigations. As noted above, FRA has already worked with stakeholders (both labor and the rail organizations) to develop the Policy Document which is posted on FRA's website. Accordingly, FRA anticipates no adverse, substantive comment on any of the provisions of the rule. If FRA receives an adverse, substantive comment on any of the provisions, it will publish in the Federal Register a timely withdrawal, informing the public that the direct final rule will not take effect.

FRA is amending 49 CFR 225.31 by consolidating existing paragraphs (a) through (f) into numbered paragraphs (a)(1) through (6) and adding new paragraph (b) addressing stakeholder participation in certain FRA accident/incident investigations. FRA is also revising existing paragraph (a) (now paragraph (a)(1)) to clarify that FRA's policy is to investigate rail accidents/incidents which result in the serious injury or death of a railroad employee or passenger and other accidents/incidents where FRA determines investigation would substantially serve to promote railroad safety.

New paragraph (b) codifies the process contained in the Policy Document. Specifically, paragraph (b) codifies the procedures for FRA investigators to gather information from, and consult with, various stakeholders as part of certain accident/incident investigations. Consistent with the Policy Document, paragraph (b) includes guidelines for when FRA will provide stakeholders the opportunity to participate in investigations, how FRA will notify stakeholders of an accident investigation, how stakeholders will participate in the accident investigation process, and how stakeholders can submit information to FRA to assist with the investigation.

Paragraph (b) explains that, based on initial information, for accidents or incidents involving an on-duty employee fatality, an on-duty employee amputation, or an on-duty employee suffering a life-threatening injury), and other accidents or incidents FRA's Chief Safety Officer (or their delegate) determines appropriate, FRA will provide an opportunity for stakeholder involvement in the agency's accident investigation. Paragraph (b) further provides that those stakeholders may include railroads, contractors, employees, representatives of employees, industry associations, academia, the Volpe National Transportation Systems Center, and others, as FRA determines relevant.

Paragraphs (b)(1) through (6) set forth the procedures both FRA and involved stakeholders must follow when conducting or participating in accident/incident investigations under this section.

Paragraph (b)(1) addresses FRA's initial accident response and stakeholder notification. Specifically, when initiating an accident investigation under this section, paragraph (b)(1) requires FRA to identify stakeholders relevant to the accident/incident.

Paragraph (b)(1)(i) requires FRA to notify identified stakeholders when it is initiating an investigation of an accident or incident under paragraph (b), and (b)(1)(ii) requires stakeholders interested in participating in any such investigation to communicate their intent to participate to FRA's Chief Safety Officer (or their delegate) within 24 hours of being notified of the investigation.

As soon as practicable after receipt of a stakeholder's notice of its intent to participate in an FRA investigation, paragraph (b)(1)(iii) requires FRA to establish clear channels of communication with stakeholders, including, for example, email correspondence, teleconferences, and in-person meetings, to facilitate the efficient transfer of information, and consultation and coordination between FRA and the stakeholders.

Paragraph (b)(2) establishes guidelines for stakeholder access to an accident or incident site, and includes rules that FRA, the involved railroad(s), and other stakeholders must follow. Specifically, paragraph (b)(2)(i) provides that stakeholders may only gain access to an accident site through the incident command (if the accident site is off railroad property) or on-site railroad personnel (if the accident site is on-railroad property). This paragraph makes clear that when investigations occur on railroad property, although FRA encourages railroads to permit on-site access to all relevant stakeholders participating in FRA's investigation process and expects that railroads will grant such access, FRA cannot, at its own discretion, provide stakeholders access. If a railroad rule prohibits a stakeholder from accessing an accident site during FRA's on-site investigation, the railroad must promptly notify FRA in writing of any such rule and FRA will subsequently communicate the substance of that rule to all affected stakeholders. Paragraph (b)(2)(i) further provides that, in the event a railroad rule prohibits a stakeholder from accessing an accident site, FRA may consult with that stakeholder by other means ( e.g., real time participation in on-site meetings via video or conference call, off-site in-person meetings, virtual meetings, or phone calls).

Paragraph (b)(2)(ii) makes clear that any stakeholders participating in FRA's accident/incident investigation process under this paragraph are not actual or implied agents of FRA and, as such, FRA is not responsible for the safety of the stakeholders.

Paragraph (b)(2)(iii) provides that FRA will initiate its on-site investigation when FRA staff arrive at an accident site, and the FRA investigation team will depart the accident site upon completion of FRA's on-site investigation activities. FRA will not await the arrival of stakeholder representatives to begin its investigation, and, if a stakeholder timely notifies FRA's of its intent to participate but does not arrive at the accident/incident scene during the investigation, FRA may make a reasonable effort, at its discretion, to provide a verbal summary of the status of the investigation before FRA departs the scene.

Paragraph (b)(2)(iv) requires each stakeholder representative participating in FRA's on-site investigation to contact the FRA Inspector-in-Charge (IIC) upon arrival at the accident site and provide photo identification to the IIC. This paragraph further explains that, at the time of a stakeholder's initial contact with the IIC, the IIC or other FRA representative will provide the stakeholder with the name and contact information for the incident commander and other pertinent information related to the accident known to the IIC at the time.

Paragraph (b)(3) addresses stakeholder participation in FRA's off-site information gathering and investigative activities. Specifically, paragraph (b)(3)(i) provides that FRA will establish a means to receive and share documents and information electronically with stakeholders. As outlined in FRA's Policy for Gathering Information and Consulting with Stakeholders, FRA has developed a web-based document sharing site for stakeholders to provide relevant documents or information to FRA and for FRA to share relevant information with stakeholders. Consistent with the published policy statement, stakeholders submitting documents and information to FRA's investigation team must submit those materials electronically through the site. Protection of personal confidential information and requests for protection of confidential business information by entities that have been granted by FRA will apply to relevant documents provided pursuant to this paragraph.

Paragraph (b)(3)(ii) provides that stakeholders may request meetings with representatives of other non-FRA stakeholders and request that FRA participate in such meetings. Although FRA participation is not guaranteed, any information pertinent to the investigation made available through these meetings must be documented and submitted to FRA.

Paragraph (b)(3)(iii) provides that any stakeholder seeking to provide confidential information to FRA, must coordinate with the IIC prior to submittal of that information and submit the information to FRA in compliance with 49 CFR 209.11.

Paragraph (b)(4) addresses stakeholder participation in FRA's off-site analysis portion of an FRA accident investigation. This paragraph provides that, when FRA deems appropriate, the FRA investigation team will consult with stakeholders to review the facts gathered during the FRA's investigation, FRA's analysis of those facts, and FRA's input and outputs of root cause analyses. Stakeholders may offer input, raise concerns, and participate in discussions aimed at identifying root causes and potential recommendations to mitigate risk or prevent reoccurrence of the accident/incident. Stakeholders will not be included in any FRA deliberations or consideration of potential compliance or enforcement issues related to an accident/incident investigation.

Paragraph (b)(5) addresses the confidentiality of certain information related to accident or incident investigations.

Paragraph (b)(5)(i) specifies that, in accordance with all applicable laws and regulations, FRA will maintain as confidential any personally identifiable information or sensitive security information as defined in 49 CFR 1520.5, respectively. This paragraph further requires that any documents or information a stakeholder provides to FRA as part of that stakeholder's participation in an accident/incident under this section, and for which the stakeholder requests confidentiality, must be submitted in accordance with 49 CFR 209.11. Moreover, FRA, pursuant to 49 CFR part 209, will maintain the confidentiality of any stakeholder if: (1) such stakeholder requests confidentiality; (2) such stakeholder was not involved in the accident or incident; and (3) maintaining such stakeholder's confidentiality does not adversely affect an FRA investigation.

Additionally, until FRA publishes its report on an investigation, stakeholders participating in the investigation may not disseminate any information (whether that information is confidential or not), or comment on an investigation to non-stakeholders through any means, unless FRA's Chief Safety Officer determines that public safety necessitates allowing the release of certain information to non-stakeholders. FRA's Chief Safety Officer must make any such determination in writing. This limitation on sharing information is intended to limit participating stakeholders from publicly sharing information about the ongoing investigation, to ensure FRA's ability to conduct the investigation. The limitation does not limit participating stakeholders from sharing information with individuals within their organization.

Paragraph (b)(6) provides that nothing in this rule may be construed to reduce, in any way, the protections afforded to individuals who exercise the conduct protected by 49 CFR 225.33, Internal Control Plans, and 49 United States Code (U.S.C.) 20109, Federal Railroad Safety Act, Whistleblower Protections.

Paragraphs (d), (e), and (f) of this section are being redesignated as paragraphs (a)(2) through (6) although the text remains substantively unchanged.

This final rule is a non-significant regulatory action within the meaning of Executive Order (E.O.) 12866, as amended by E.O. 14094, “Modernizing Regulatory Review”  3 and DOT's Order, “Rulemaking and Guidance Procedures,” DOT 2100.6A (June 7, 2021). 4 FRA made this determination because the economic effects of this regulatory action will not exceed the $100 million annual threshold as defined by E.O. 12866.

FRA is amending its Accident/Incident Regulations, covering reporting, classification, and investigations, by codifying its policy for gathering information from and consulting with stakeholders during an accident/incident investigation. FRA has revised its accident investigation process to establish procedures for stakeholder participation in investigation, including notifying stakeholders of an accident investigation; permitting the assistance of stakeholders in investigations; and allowing stakeholders to submit information to FRA to assist with the investigation.

FRA anticipates the primary benefit of this rule will be the increased information made available for accident/incident investigations. Involving stakeholders may result in the accident investigation process receiving more diverse perspectives and more complete information, which will provide accident investigators with valuable information that could be essential towards making well-informed determinations. FRA also expects that providing a means to submit information to an accessible web-based document sharing site will increase transparency and efficiency in the accident investigation process since there will now be one central point for all documentation related to each accident investigation, and the information will be accessible to all necessary parties.

FRA estimates this direct final rule will incur a cost of approximately $0.8 million (Present Value (PV), 5 7-percent) over the next ten years. Table 1 displays the costs of this rule.

NMFS published a final rule in the Federal Register on June 21, 2024 (89 FR 52222) announcing the promulgation of regulations governing the incidental take of marine mammals incidental to Avangrid Renewables, LLC's (Avangrid), construction of the New England Wind Project in Federal and State waters offshore Massachusetts, specifically within the Bureau of Ocean Energy Management (BOEM) Commercial Lease of Submerged Lands for Renewable Energy Development on the Outer Continental Shelf (OCS) Lease Areas (OCS-A 0534 and OCS-A 0561) and the southwest (SW) portion of Lease Area OCS-A 0501 (collectively referred to as the Lease Area), and along an export cable routes to sea-to-shore transition points (collectively, the Project Area), valid for 5 years from the date of effectiveness.

The regulations, which allow for the issuance of a Letter of Authorization to Avangrid for the incidental take of marine mammals during the specified activities within the specified geographical region during the effective dates of the regulations, prescribe the permissible methods of taking and other means of effecting the least practicable adverse impact on marine mammal species or stocks and their habitat, as well as requirements pertaining to the monitoring and reporting of such taking. NMFS refers the reader to the final rule (89 FR 52222, June 21, 2024) for background information concerning the regulations.

The following corrections are being made:

• The regulations contained an inconsistency between the headings for 50 CFR 217.325 wherein the heading in the table of contents did not agree with the text of the section, necessitating relabeling.

• 50 CFR 217.324(c)(15)(xiv) was promulgated twice ( i.e., two different measures were both designated as 50 CFR 217.324(c)(15)(xiv), necessitating renumbering).

The Mid-Atlantic Fishery Management Council (Council) and the Atlantic States Marine Fisheries Commission (Commission) cooperatively manage the black sea bass fishery. Amendment 23 considered changes to the management of the commercial black sea bass fishery. Specifically, Amendment 23 considered:

The Council and the Commission's Black Sea Bass Board (Board) initially approved their respective amendment and addendum during a joint meeting on February 1, 2021. However, in response to a remand from the Commission's Policy Board, the two management bodies revisited their previous recommendations and voted to revise the commercial state quota allocations. A notice of availability (NOA) for the amendment was published in the Federal Register on May 4, 2023 (88 FR 28456), with a comment period ending on July 3, 2023. NMFS published a proposed rule in the Federal Register on May 15, 2023 (88 FR 30938), with a comment period ending on June 14, 2023.

When a Council approves and then transmits an FMP or amendment to NMFS, NMFS publishes an NOA in the Federal Register announcing a 60-day comment period. Within 30 days of the end of the comment period, NMFS must approve, disapprove, or partially approve the plan or amendment based on consistency with law. After considering public comment on the NOA and proposed rule, NMFS partially approved Amendment 23 on August 2, 2023. This final rule implements the approved management measure in Amendment 23 regarding the in-season closure trigger. The details of the development of the measures in Amendment 23 were described in the NOA and proposed rule, and are not repeated here.

Previously, the Federal FMP required a commercial coastwide in-season closure for all federally permitted vessels and dealers, regardless of state, once the coastwide quota was projected to be landed. This amendment changes the trigger so that the closure will occur once landings are projected to exceed the coastwide quota plus an additional buffer of up to 5 percent. The Council and Board will agree to the appropriate buffer and make a recommendation to NMFS for the upcoming year through the specifications process. The Council's Monitoring Committee and the Commission's Technical Committee would provide advice on the appropriate buffer based on considerations such as stock status, the quota level, and recent fishery trends.

This change is being implemented to help minimize the negative economic impacts of coastwide closures on states that have not fully harvested their allocations. It is not expected to create an incentive for quota overages because the Commission's Interstate FMP would still require states to close when their state-specific quotas are reached and to pay back quota overages.

Our review of Amendment 23 concluded that the record supporting the Council's recommendations did not support a decision to approve incorporating the state-by-state allocations into the Federal FMP and regulations. By virtue of their reliance on the state allocations, the proposed state payback provisions and the state allocation formula were also disapproved. Specifically, NMFS concluded that the disapproved provisions of Amendment 23 are not consistent with:

• National Standard 4, which requires fishery conservation and management measures to avoid discrimination between residents of different states and to allocate or assign fishing privileges among various United States fishermen in a manner that is fair and equitable to all such fishermen, reasonably calculated to promote conservation, and carried out in such manner that no particular individual, corporation, or other entity acquires an excessive share of such privileges;

• National Standard 5, which requires that fishery conservation and management measures, where practicable, consider efficiency in the utilization of fishery resources and not have economic allocations as their sole purpose;

• National Standard 6, which requires fishery conservation and management measures to take into account and allow for variations among, and contingencies in, fisheries, fishery resources, and catches; and

• National Standard 7, which requires fishery conservation and management measures, where practicable, to minimize costs and avoid unnecessary duplication.

Amendment 23 proposed adding the commercial fishery state-by-state quota allocations to the Federal FMP and regulations. This change would have increased the administrative burden and cost of monitoring state quotas and processing state quota transfers for NMFS and the states, without providing a conservation benefit. Adding the allocations to the Federal FMP would have also required a joint action of the Council and Commission to make changes to the state-by-state allocations in the future.

Under the Commission's Interstate FMP, overages of state-specific quotas are required to be paid back by a state when the coastwide quota has been exceeded. If the state allocations were included in the Federal FMP, the Council and Black Sea Bass Board's preferred alternative was to implement this payback provision in the Federal regulations. NMFS disapproved the incorporation of the state payback provision in the Federal FMP, as it is not necessary given our disapproval of incorporating the state allocations in the Federal FMP. However, the Commission's use of this payback process is not affected by our decision with regard to the Federal FMP.

This joint action considered changes to the allocation formula for the distribution of commercial black sea bass quota among the states. The Commission adopted and implemented a new allocation formula in its Interstate FMP, and the Council recommended that NMFS approve and implement the same allocation approach in the Federal FMP. Because NMFS disapproved the state-by-state allocations as a measure in the Federal FMP and regulations, it is not necessary to incorporate an allocation formula in the Federal FMP, so it was also disapproved.

NMFS received 14 comments in response to the NOA and the proposed rule. Seven individuals submitted comments that were not germane to the alternatives in the proposed rule; their comments focused on state management measures, individual state allocations, the effects of offshore wind farms, and quotas. One individual commercial fisherman generally opposed the proposed amendment as making things more complicated and worse for fishermen. The comments relevant to the proposed action focused on five general topics regarding the addition of the state commercial allocations to the Federal FMP: The burden on NMFS and the affected state fishery management agencies; the perceived benefits of the action; the National Standards of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act); encumbering the process to adjust allocations; and state representation issues, including addressing climate change.

Comment 1: Three commenters suggested that the administrative burden of adding the state allocations would be minor or would be mitigated by using processes developed for other fisheries. One commenter also suggested that this shift would reduce the burden on the Commission to manage state quotas.

Response: While NMFS does manage some species' commercial quotas ( e.g., summer flounder) at a state level, adding black sea bass state quota management would require additional resources (time and staff) to conduct all of the necessary tasks. Adding the state commercial allocations in the Federal FMP would require NMFS to monitor the landings of commercial quotas at a state-by-state level—as opposed to overall coastwide landings—throughout the season, implement state closures when triggered, and manage all quota transfers between states. The increased workload on NMFS staff would reduce agency capacity for other priorities.

This change would also reduce efficiency by requiring the states to request transfers from NMFS in addition to the Commission and wait for NMFS's approval before the transfers are effective. This is not merely a shift in administrative burden. Rather, it increases the administrative burden for both NMFS and the states without eliminating the administrative burden for the Commission. The Commission is unlikely to end its practice of monitoring transfers and posting them on its website, so states would continue to bear the burden of the Commission's state management processes, along with the added requirement to submit transfer requests to NMFS. Comments from the Massachusetts Division of Marine Fisheries (MADMF) and the Rhode Island Department of Environmental Management (RIDEM) also noted these concerns (see Comment 2 ).

Comment 2: Comments from RIDEM and MADMF stated that including the state commercial black sea bass allocation in the Federal FMP would increase the administrative burden for NMFS and create additional complications for the states. MADMF noted that state and Federal closures for species such as bluefish and summer flounder have not always aligned. MADMF states that “. . . Landings data and projections often differ between state and Federal monitoring, as does the time requirement for [MADMF] and NMFS to close a fishery. [MADMF's] frequent and direct outreach to dealers as quotas near full utilization generally allows for more accurate landings tallies and projections, which [MADMF] can respond to nimbly. [MADMF's] ability to close a fishery within 24 hours is not matched by NMFS.” These differences can result in different closure dates and different impacts to state and Federal permit holders.

Response: NMFS agrees with these comments and has disapproved the addition of the commercial state black sea bass allocations to the Federal FMP.

Comment 3: One commenter highlighted that the restrictions on late-season transfers due to the Federal rulemaking process would have minimal impacts and would not justify disapproving the addition of the state allocations to the Federal FMP.

Response: The Commission currently allows transfers at any time up to 45 days after the last day of the fishing season. If NMFS were to manage transfers under the same process currently used for summer flounder and bluefish, transfers in the last 2 weeks of the year would only be allowed for unforeseeable circumstances such as vessel failure or bad weather. Post-season transfers would not be allowed. NMFS does not disagree that the impact of this particular restriction would be relatively small. However, the magnitude of this potential impact does not change our determination that adding the state allocations to the Federal FMP is inconsistent with the National Standards (see Disapproved Measures). This decision was based on a holistic review of the amendment and its consistency with the Magnuson-Stevens Act. It did not hinge on the impact of post-season transfer limitations.

Comment 4: Four commenters disagreed with our statement that there is no clear benefit from adding the state allocations to the Federal FMP, arguing that this change provides a greater level of Federal oversight, protection, and accountability. They stated that any changes to the allocations would be made through the Council process, which is thorough, transparent, and bound by the Magnuson-Stevens Act, National Environmental Policy Act (NEPA), and other applicable laws. According to these comments, the Commission process does not always provide the same safeguards.

Response: The Council and Commission have successfully co-managed black sea bass quotas through a two-tiered system since 2003, with the state quotas managed through the Commission's Interstate FMP and the overall coastwide quota managed by the Council and NMFS. While the Interstate FMP is not bound by the Magnuson-Stevens Act and the Federal rulemaking process, the Commission process is not without its own legal requirements and safeguards. The Atlantic Coastal Fisheries Cooperative Management Act (Atlantic Coastal Act) requires the Commission to manage fisheries throughout their range based on the best available science and with adequate opportunity for public participation and to establish adequate standards and procedures to do so. In compliance with the Atlantic Coastal Act, the Commission process is bound by the “Atlantic States Marine Fisheries Commission Compact and Rules and Regulations” and “Interstate Fishery Management Program Charter.” Under the Charter, the Commission's management must meet conservation and equity requirements. When states believe a Commission decision has not met these requirements, the Commission provides a formal appeals process.

Further, the Council manages the Federal black sea bass fishery with all of the safeguards and requirements of the Magnuson-Stevens Act, NEPA, and other applicable laws. This includes oversight of the various catch limits designed to prevent overfishing, which are established through a joint process with the Commission. The coastwide commercial quota addresses the conservation requirements of the Magnuson-Stevens Act, and when state quota overages could result in a coastwide overage, NMFS has the authority to close the entire fishery to prevent overfishing. Duplication of the state commercial allocations in the Federal FMP will not further any conservation benefit because the allocations are already in place and successfully managed through the Interstate FMP and the Federal regulations and specifications process are sufficient to address coastwide overages.

Comment 5: One commenter argued, “If this management plan remained within the [Commission], there would be no ability for any New York commercial fisherman to contest any portion of it by judicial review, because it is not considered an agency of the Federal government.” The commenter believed including the state commercial allocations in the Federal FMP would allow better redress.

Response: While the Commission is not a Federal agency, it provides a venue for deciding issues of interstate fishery management with equal representation of all interested states. As noted in response to Comment 4, the Commission is guided by the “Atlantic States Marine Fisheries Commission Compact and Rules and Regulations” and “Interstate Fishery Management Program Charter.” States can appeal Commission decisions through a formal appeals process when the decision is inconsistent with the rules and regulations, the Charter, the Commission's other guiding documents, or the goals and objectives of the Interstate FMP; is based on insufficient technical information; or results in unforeseen impacts. The appeals process may result in corrective action, providing a process for redress for Commission decisions. The efficacy of this appeals process is demonstrated by New York's successful appeal of the Commission's changes to the black sea bass state allocations, which resulted in an increase to New York's proportion of the black sea bass commercial quota. In addition, interested parties still have the option to contest Federal management measures developed through the joint management process described in response to Comment 4 pursuant to the Magnuson-Stevens Act's judicial review provisions.

Comment 6: One commenter stated that adding the state commercial allocations to the Federal FMP would provide the benefit of bringing the allocations in line with “most other aspects of the management program.”

Response: The Council and the Commission have successfully co-managed the black sea bass fishery for decades, as described in response to Comment 4.

Most aspects of the management program have implications for the coastwide fishery and are addressed in the Federal FMP. However, subdividing the coastwide commercial quota into state-specific allocations directly affects fishing opportunities at the state level and is an issue of interstate fishery management. The Commission provides a venue for interstate management decision-making with representation from all of the Atlantic states. States may join the management boards for any species in which they have an interest. Conversely, the Magnuson-Stevens Act determines state representation on the Council. As a result, the limited representation on the Council poses a challenge when making allocation decisions that directly affect the states. Continued changes in the stock distribution toward states that are not represented on the Council would exacerbate these challenges. Adding the allocations to the Federal FMP to make them consistent with other co-managed elements of the FMP would fail to recognize the unique, state-oriented nature of allocation decisions and the Commission's lead role in interstate fisheries management and would not further any conservation objective.

Comment 7: Two commenters contended that the NOA speculates “about future actions involving `potentially inadequate consideration of northern states' fisheries' ” without evidence in the administrative record to support such speculation, particularly “without providing any examples of actual present-day outcomes harming any particular state.” These commenters go on to note that future allocations would need to meet the requirements of the Magnuson-Stevens Act, including the requirement under National Standards 4 and 6 (described under Disapproved Measures) and National Standard 8—that measures provide for the sustained participation of all fishing communities. The second of these commenters argued that the current commercial state allocations were agreed on by the Council and Board and reflect recent biomass proportions. The commenter did not understand how the same decision-making process could potentially result in unfair outcomes in the future because the Council and Board work together to achieve consensus on joint actions and differing decisions between the two bodies are rare.

Response: The commenters are correct that NMFS cannot approve any changes to the Federal FMP that do not meet the requirements of the National Standards. While NMFS has concerns that adding the state allocations to the Federal FMP would result in an inequitable allocation process because not all interested states are represented on the Council, NMFS did not disapprove the changes based on future decisions being inconsistent with the National Standards. NMFS disapproved the addition of the state allocations in the Federal FMP because that action lacked conservation benefits, reduced management efficiency, lacked adaptability to variations and contingencies, increased costs, and unnecessarily duplicated management measures, which is inconsistent with National Standards 4, 5, 6, and 7.

Comment 8: MADMF agreed with NMFS that equity of representation is vitally important to the particular issue of state-by-state allocations. Its comment provided additional context and an example of how the vote to add the state allocations to the Federal FMP resulted in unequal representation among the states. After an initial motion was made and seconded by participants of both the Council and Board, a substitute motion not to add the state allocations to the Federal FMP was made and seconded by northern-state and NMFS representatives. The Council voted first, and the majority of Council members voted against the substitute motion. Without the Commission membership from New Hampshire through North Carolina being able to affirm their position, the substitute motion failed. The main motion received a passing vote from the Commission on a slim margin after the substitute motion failed in the Council vote and another option was not available. The Council and Commission voted along a geographical divide, with the northern states voting against the allocations in the Federal FMP. This illustrates that the limited representation on the Council by all states with an interest in the fishery poses a challenge when making state allocation decisions.

The Commission includes representation from all Atlantic states and provides an equitable process when making changes to commercial state allocations. MADMF asserted that the Commission, where every coastal state with an interest in a species is represented, is the more appropriate venue for determining state allocations.

Response: NMFS agrees that limited representation by all states in the Council poses a challenge in state allocation decisions and that the Commission, which includes representations from all Atlantic states, provides a more equitable process in commercial state allocations.

Comment 9: Two commenters asserted that the joint decision-making process is fair and equitable and that the states on the Council do not have a disproportionate role in the decision-making process. The commenters disagreed with the assertion that the lack of voting representation from the New England states on the Council creates “inequity in representation” in the joint decision-making process. These commenters believed that the special voting procedures and the broader representation on the Board make up for the lack of northern states' representation on the Council.

Response: A different comment letter from MADMF disputed these comments, as summarized in Comment 8. As one of the states in question and with authority on the matter, MADMF argued that the special voting procedures are not equivalent to full representation and that adding the state allocations to the Federal FMP would not result in an equitable allocation process. NMFS agrees with MADMF.

Comment 10: One commenter argued against concerns that the northern states' lack of representation on the Council has implications regarding the National Standard requirements and equity, stating that the Mid-Atlantic states lack representation on the New England Fishery Management Council and are regulated on groundfish, whiting, and scallops without representation. The commenter asserted that joint decision-making between the Council and the Commission, which represents all coastal states, has worked for other fisheries.

Response: NMFS agrees that co-management works here—the Council and the Commission successfully co-manage the black sea bass fishery. As previously described, the Council and Commission specifications processes establish annual coastwide catch limits and the Commission manages the commercial state allocations through the Interstate FMP because the state allocations have a direct impact on fishing opportunities at the state level. This co-management process provides equitable representation and greater flexibility because it does not require Council action in addition to Commission action to change the state allocations. This is particularly relevant in the black sea bass fishery, as it is foreseeable that black sea bass could become a commercially viable species as far north as Maine due to the ongoing and expected changes in the distribution of the black sea bass stock from the effects of climate change. The successful management of other species using different processes does not negate these facts nor the history of successful co-management of the black sea bass fishery. Furthermore, the fisheries referenced in the comment—groundfish, whiting, and scallops—are not managed with state-by-state quota allocations, but with a coastwide quota. This is consistent with the Federal management of the black sea bass fishery.

Comment 11: Three commenters argued that the Council should have a more substantive role in the allocation-setting process because the majority of commercial black sea bass landings come from Federal waters.

Response: The Council plays a significant role in black sea bass management, with coastwide management measures set in the Federal FMP through the Council process, as previously described. State quota allocations have a direct impact on fishing opportunities at the state level. Given the lack of northern state representation on the Council, the commercial quota state allocations are appropriately managed through the Commission's Interstate FMP. While adding the state allocations to the Federal FMP would not eliminate the Commission's role in the process, a comment letter from MADMF provides evidence that the special voting procedures used during joint decision-making do not necessarily result in equal representation of all states with commercial quota allocations, as described in Comment 8.

In addition, adding the state commercial quota allocations to the Federal FMP would then require NMFS to manage the state allocations, which would increase costs, reduce efficiency, and add complexity, as described throughout the comments and responses. The Commission's equal representation of all impacted states and the increased efficiency, timeliness, and reduced administrative burden for in-season monitoring activities support maintaining the Commission's primary role in this aspect of black sea bass management, with the Council maintaining the lead role in coastwide management.

Comment 12: One commenter contended that climate concerns are not unique to the black sea bass fishery and the Council manages other fisheries with changing distributions and geographic ranges beyond its member states. It noted that the Council is required to manage stocks as a unit throughout their range to the extent practicable under National Standard 3. The commenter was not aware of any provision under the Magnuson-Stevens Act or other applicable laws that would preclude the incorporation of state allocations in the Council FMP.

Response: While climate impacts are a concern for a number of fisheries, this action considers the management of black sea bass. Under the requirements of National Standard 3, the Council is required to manage the black sea bass stock as a unit throughout its range and does so when it sets coastwide management measures under the Federal FMP. These coastwide limits, including the commercial quota, satisfy the requirements of National Standard 3. However, inconsistencies with the requirements under National Standards 4, 5, 6, and 7 do preclude the addition of the state allocations to the Federal FMP. These inconsistencies are described under Disapproved Measures and throughout the comments and responses in this document.

Comment 13: One commenter claimed that formalizing the Council's role in the state commercial allocation-setting process would increase the Council's adaptive capacity and ability to respond to changes in the black sea bass fishery efficiently, thus supporting the goal of building resilient, climate-ready fisheries.

Response: Amendment 23 does not identify how duplicating the state commercial allocations in the Federal FMP and regulations and requiring the Council and Federal rulemaking processes to change the state commercial allocations would increase adaptive capacity, efficiency, or responsiveness in black sea bass management. According to the National Standard Guidelines at § 600.335(d), unpredictable events, such as unexpected climatic conditions or resource surges or failures, are best handled by establishing a flexible management regime that contains a range of management options through which it is possible to act quickly without amending the FMP or even its regulations. The current system of managing state commercial allocations through the Commission's Interstate FMP provides an efficient, responsive, and equitable process that does not require amending the FMP or regulations.

Continued changes in the stock distribution would exacerbate the already challenging allocation deliberations of the Council if the state allocations were added to the Federal FMP. Rapid changes and increased uncertainties in stock distribution, particularly in response to the effects of climate change, highlight the need for a flexible and responsive management system. Because the proposed measure to incorporate state-by-state quota allocations into the Federal FMP and regulations would create a less flexible and less responsive management system than the status quo, NMFS finds this aspect of Amendment 23 to be inconsistent with National Standard 6.

Comment 14: Three commenters agreed with NMFS that climate change and the shifting distribution of the stock exacerbate concerns regarding unequal representation. MADMF stated that every state with an interest in a species is represented on the Commission and moving the state commercial allocation to the Council FMP would uproot “the northern states' equal footing inherent” in the Commission process. It went on to say, “The mid-Atlantic states feel no similar repercussions from maintaining the allocations solely in the interstate plan; they are well represented by their delegates to the [Commission]. As the Council letter points out, this is the first time the allocations have been revised in the [Commission] plan since their original implementation in 2003, demonstrating that the [Commission] member states do not take the matter lightly. While distinct, the [Commission] processes are equally transparent, robust, and deliberative as the Council's.”

MADMF also noted that regional climate change scenario planning efforts, supported by the Council, have included consideration of more joint management and greater flexibility as stocks shift. Another commenter echoed MADMF's concerns regarding equity and adaptability in the face of shifting stocks and suggested that the allocations should be managed solely by the Commission or jointly by the Mid-Atlantic and New England Councils.

Response: NMFS agrees that the Commission should retain management of the state commercial allocations to ensure an equitable process and have disapproved the addition of the commercial state black sea bass allocations into the Federal FMP.

Comment 15: MADMF fully supported NMFS' rationale, as provided in 88 FR 28456 (May 4, 2023), for disapproving the addition of the commercial black sea bass state allocations into the Federal FMP.

Response: NMFS agrees and has disapproved the addition of the commercial state black sea bass allocations into the Federal FMP.

Comment 16: One commenter stated that NMFS' proposal will complicate things for fishermen and black sea bass issues should have been addressed two decades ago.

Response: NMFS agrees that duplicating the state allocations in the Federal FMP would create a more complicated process for black sea bass fishermen and have disapproved this measure.

The proposed rule included all of the Council's recommended changes to the FMP and proposed implementing regulations deemed necessary by the Council. As described above, NMFS has determined that the adjustment to the process for setting the state allocations and the addition of the state allocations and payback provisions to the Council's (Federal) FMP were inconsistent with the National Standards and disapproved those measures. The final rule only implements the proposed change to the commercial in-season closure trigger, and removes the disapproved measures that were in the proposed rule's regulatory text.

Pursuant to section 304(b)(3) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this final rule is consistent with the Summer Flounder, Scup, and Black Sea Bass FMP, other provisions of the Magnuson-Stevens Act, and other applicable law.

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

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

This final rule contains no information collection requirements under the Paperwork Reduction Act of 1995.

For the reasons set out in the preamble, NMFS amends 50 CFR part 648 as follows:

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

The 2024 ITAC of BS “other rockfish was established as 748 metric tons (mt), the 2024 ITAC of BS Pacific ocean perch was established as 9,891 metric tons mt, the 2024 ITAC of BSAI Kamchatka flounder was established as 6,373 mt, and the 2023 ITAC of BSAI skates was established as 25,941 mt, by the final 2024 and 2025 harvest specifications for groundfish of the BSAI (89 FR 17287, March 11, 2024). In accordance with § 679.20(a)(3) the Regional Administrator, Alaska Region, NMFS, has reviewed the most current available data and finds that the ITACs for BS “other rockfish,” BS Pacific ocean perch, BSAI Kamchatka flounder, and BSAI skates need to be supplemented from the non-specified reserve to promote efficiency in the utilization of fishery resources in the BSAI and allow fishing operations to continue.

Therefore, in accordance with § 679.20(b)(3), NMFS apportions from the non-specified reserve of groundfish to ITACs in the BSAI management area as follows: 132 mt to BS “other rockfish,” 1,745 mt to BS Pacific ocean perch, 1,125 mt to BSAI Kamchatka flounder, and 4,578 mt to BSAI skates. These apportionments are consistent with § 679.20(b)(1)(i) and do not result in overfishing of any target species because the revised ITACs and total allowable catches (TACs) are equal to or less than the specifications of the acceptable biological catch in the final 2024 and 2025 harvest specifications for groundfish in the BSAI (89 FR 17287, March 11, 2024).

The harvest specification for the 2024 ITACs and TACs included in the harvest specifications for groundfish in the BSAI are revised as follows 880 mt for BS “other rockfish,” 11,636 mt for BS Pacific ocean perch, 7,498 mt for BSAI Kamchatka flounder, and 30,519 mt for BSAI skates.

NMFS issues this action pursuant to section 305(d) of the Magnuson-Stevens Act. This action is required by 50 CFR part 679, which was issued pursuant to section 304(b), and is exempt from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(B), there is good cause to waive prior notice and an opportunity for public comment on this action, as notice and comment would be impracticable and contrary to the public interest, as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the apportionment of the non-specified reserves of groundfish to BS “other rockfish,” BS Pacific ocean perch, BSAI Kamchatka flounder, and BSAI skates NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 13, 2024.

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

Under § 679.20(b)(3)(iii), interested persons are invited to submit written comments on this action (see ADDRESSES section) until October 15, 2024.