I. Background A. Revised Capital Framework

On July 2, 2013, the Board approved the revised capital framework, which implemented the Basel III regulatory capital reforms and certain changes required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). 1 The revised capital framework introduces a new common equity tier 1 capital ratio and supplementary leverage ratio, raises the minimum tier 1 ratio and, for certain banking organizations, leverage ratio, implements strict eligibility criteria for regulatory capital instruments, and introduces a standardized methodology for calculating risk-weighted assets. The new minimum regulatory capital ratios and the eligibility criteria for regulatory capital instruments began to take effect as of January 1, 2014, subject to transition provisions, for banking organizations that meet the criteria for the advanced approaches rule (advanced approaches banking organizations). 2 All other banking organizations must begin to comply with the revised capital framework beginning on January 1, 2015.

As the revised regulatory capital framework comes into effect and as explained more fully below, banking organizations will be required to reflect the requirements of the revised capital framework in their capital plans submitted pursuant to the Board's capital plan rule and in their stress tests conducted under the Board's rules implementing the stress test requirements of the Dodd-Frank Act.

Pursuant to the Board's capital plan rule and its related supervisory process, the Comprehensive Capital Analysis and Review (CCAR), the Board assesses the internal capital planning process of a bank holding company with total consolidated assets of $50 billion or more (large bank holding company) and its ability to maintain sufficient capital to continue its operations under expected and stressful conditions. 3 Under the capital plan rule, a large bank holding company is required to submit an annual capital plan to the Board that contains estimates of its minimum regulatory capital ratios and its tier 1 common ratio under expected conditions and a range of stressed scenarios over a nine-quarter planning horizon (planning horizon). 4 A capital plan also must include a discussion of how a large bank holding company will maintain a pro forma tier 1 common ratio above 5 percent under expected conditions and stressed scenarios. 5

The preamble to the capital plan rule noted that the Basel III framework proposed by the Basel Committee on Bank Supervision includes a different definition of tier 1 common capital and that the Board and the other federal banking agencies continued to work to implement Basel III in the United States. 6 The capital plan rule's definition of “tier 1 common ratio” states that the definition will remain in effect until the Board adopts an alternative tier 1 common ratio definition as a minimum regulatory capital ratio. 7

The Board's stress test rules for large bank holding companies and nonbank financial companies supervised by the Board (together, covered companies) establish a framework for the Board to conduct annual supervisory stress tests to evaluate whether these companies have the capital necessary to absorb losses as a result of adverse economic conditions and require that these companies conduct semi-annual company-run stress tests. 8 For the supervisory stress tests, the Board uses data as of September 30 of each year to assess a covered company's capital levels, regulatory capital ratios, and tier 1 common ratio over the nine-quarter planning horizon of a given stress test cycle. 9 Similarly, the semi-annual stress tests conducted by a covered company require it to report, among other elements, its regulatory capital ratios and tier 1 common ratio for each quarter of a nine-quarter planning horizon. 10 The stress test rule for covered companies defines the tier 1 common ratio by cross-reference to the capital plan rule, which, as previously described, provides that the tier 1 common ratio is to remain in effect until the Board adopts an alternative tier 1 common ratio definition. 11

On September 30, 2013, the Board published in the Federal Register two interim final rules that amended the Board's capital plan rule and stress test rules. 12 The first interim final rule (capital planning and stress testing IFR) amended the Board's capital plan rule  13 and stress test rules  14 to require a bank holding company with total consolidated assets of $50 billion or more to estimate its tier 1 common ratio using the methodology in the Board's Basel I-based capital rules (under 12 CFR part 225, Appendix A). 15 This interim final rule also clarified when a banking organization would estimate its minimum regulatory capital ratios using the advanced approaches rule for a given capital plan and stress test cycle and made minor, technical changes to the capital plan rule. 16 Under the interim final rule, a banking organization is required to use the advanced approaches rule in its stress testing and capital planning only if the Board notifies the banking organization on or before September 30 that it has been approved to exit from parallel run under the advanced approaches rule. A satisfactory “parallel run” under the advanced approaches rule is a period of no less than four consecutive calendar quarters during which the banking organization complies with the qualification requirements of the rule. 17

The second interim final rule (IFR for $10-$50 billion companies) provided a one-year transition period during which bank holding companies and most state member banks with more than $10 billion but less than $50 billion in total consolidated assets are not required to reflect the Board's revised capital framework in their stress tests for the stress test cycle that began on October 1, 2013. Instead, for this stress test cycle, these companies are required to estimate their pro forma capital levels and ratios over the full nine-quarter planning horizon using the Board's Basel I-based capital rules. 18 Like the capital planning and stress testing IFR, the IFR for $10-$50 billion companies also clarified that a banking organization is required to use the advanced approaches rule in its company-run stress testing only if the Board notifies the banking organization on or before September 30 that it has been approved to exit from parallel run under the advanced approaches rule.

In this final rule, the Board is adopting both the capital planning and stress testing IFR and the IFR for $10-$50 billion companies in final form. The final rule is identical to the interim final rules except that the final rule provides an additional year, until October 1, 2015, for companies that have exited from parallel run to incorporate the advanced approaches rule into their capital planning and company-run stress tests, and for the Board to incorporate the advanced approaches rule in its supervisory stress tests.

The Board received two comments on the capital planning and stress testing IFR. The comments were both from individuals and encouraged the Board to implement the Dodd-Frank Act in a stringent manner. Neither commenter provided any specific comments regarding the capital planning and stress testing IFR.

The Board did not receive any comments on the IFR for $10-$50 billion companies.

The capital planning and stress testing IFR clarified that large bank holding companies should continue to calculate their tier 1 common ratio using the methodology in the Board's Basel I-based capital rules. The final rule maintains this requirement.

Under the final rule, a large bank holding company must project its regulatory capital ratios and meet the minimum capital requirements for each quarter of the planning horizon in accordance with the minimum capital requirements that are in effect for that company during that quarter. Accordingly, under the final rule, in the capital planning and stress test cycle that begins on October 1, 2014, a large bank holding company that is an advanced approaches banking organization is required to calculate its common equity tier 1 capital ratio using the revised capital framework in every quarter of the nine-quarter planning horizon, meet a 4.0 percent minimum in common equity tier 1 capital ratio in 2014, and a 4.5 percent minimum common equity tier 1 capital ratio in 2015 and 2016. A large bank holding company that is not an advanced approaches banking organization is required to calculate its common equity tier 1 capital ratio in the capital planning and stress test cycle that begins on October 1, 2014, using the Basel I-based capital rules in the first quarter of the planning horizon and the revised capital framework in the second through ninth quarters of the planning horizon, and meet a 4.5 percent minimum common equity tier 1 capital ratio in 2015 and 2016. A state member bank that is a subsidiary of a bank holding company with total consolidated assets of $50 billion or more will reflect the revised capital framework in the same manner as its bank holding company parent in projecting its capital for the upcoming stress test cycle. Table 1 summarizes these requirements.

Current T1C ratio: the ratio of a bank holding company's tier 1 common capital calculated using the definitions under the Board's Basel I-based capital rules ( i.e., tier 1 capital as defined under Appendix A of 12 CFR part 225, less the non-common elements of tier 1 capital, over total risk-weighted assets as defined under Appendices A and E of 12 CFR part 225).

CET1 ratio: a bank holding company's common equity tier 1 capital ratio as calculated under 12 CFR part 217, including the transition provisions of 12 CFR part § 217.300, as applicable within each quarter of the capital plan and stress test cycles that begin October 1, 2014.

Under the final rule, as under the capital planning and stress testing IFR, both large bank holding companies that are subject to the advanced approaches rule and large bank holding companies that are not subject to the advanced approaches rule must meet a minimum 5.0 percent tier 1 common ratio over every quarter of the planning horizon, calculate the tier 1 common ratio using the definitions of tier 1 capital and total risk-weighted assets under the Board's Basel I-based capital rules, and not incorporate the new definitions in the revised capital framework as part of this calculation. This approach maintains consistency with previous capital plan cycles during the multi-year phase-in of the new common equity tier 1 capital minimum requirement. Once the new minimum common equity tier 1 capital ratio reaches its permanent level of 4.5 percent and the deductions from common equity tier 1 capital are fully phased-in, the Board expects that the common equity tier 1 ratio will be generally more stringent than the tier 1 common ratio of 5.0 percent for the largest bank holding companies.

Under the IFR for $10-$50 billion companies, the Board provided bank holding companies and state member banks with total consolidated assets of more than $10 but less than $50 billion (other than state member banks that are subsidiaries of bank holding companies with total consolidated assets of $50 billion or more) with a one-year transition period to incorporate the revised capital framework into their company-run stress tests. During this transition period, these companies are not required to reflect the revised capital framework in any quarter of the nine-quarter planning horizon. The final rule maintains this transition period with respect to the current stress test cycle that began on October 1, 2013.

These companies will estimate their pro forma capital levels and ratios over the planning horizon using the capital rules under 12 CFR part 208, Appendix A (for state member banks) and 12 CFR part 225, Appendix A (for bank holding companies) and will not reflect the impact of the revised capital framework (12 CFR part 217) in their company-run stress tests. In particular, for this stress test cycle, these companies will not calculate common equity tier 1 capital as defined in the revised capital framework or incorporate the effects of any changes to the definition of capital or any changes to the calculation of risk-weighted assets. Beginning with the stress test cycle that starts on October 1, 2014, these companies will be required to reflect the revised capital framework in their company-run stress tests, including the common equity tier 1 capital requirement. Accordingly, for purposes of the stress test cycle that begins on October 1, 2014, each of these companies that is subject to the advanced approaches will be required to calculate its capital requirements, including the common equity tier 1 capital ratio, using the revised capital framework in every quarter of the nine-quarter planning horizon, and each of these companies that is not subject to the advanced approaches will be required to calculate its capital requirements using the Basel I-based capital rules in the first quarter of the planning horizon and the revised capital framework, including the common equity tier 1 capital ratio, in the second through ninth quarters of the planning horizon.

The final rule, like the IFR for $10-$50 billion companies, excludes from the one-year transition period state member banks that are subsidiaries of bank holding companies with total consolidated assets of $50 billion or more. Consistent with the stress test rules applicable to their bank holding company parents, these state member banks must project their regulatory capital ratios for each quarter of the planning horizon in accordance with the minimum capital requirements that will be in effect during that quarter.

The Office of the Comptroller of the Currency and Federal Deposit Insurance Company both implemented the Dodd-Frank Act stress testing requirements for the stress test cycle that began on October 1, 2013, in a similar manner for banks and savings associations under their supervision with between $10 and $50 billion in total consolidated assets.

In light of the issuance of the revised capital framework, both interim final rules were intended to provide clarity on when a banking organization would be required to estimate its minimum regulatory capital ratios over the planning horizon using the advanced approaches for a given capital planning and stress testing cycle. Without regard to the capital planning and stress test rules, an advanced approaches banking organization is required to use the advanced approaches to calculate its minimum regulatory capital ratios if it has conducted a satisfactory parallel run. 19 The interim final rules provided that for purposes of capital planning and stress testing, a banking organization must be notified that it has completed a successful parallel run by September 30 of a given calendar year in order to be required to estimate its capital ratios using the advanced approaches for the capital plan or stress test cycle that begins on October 1 of that calendar year. The final rule maintains this approach. Thus, the final rule provides that a company must be notified that it has completed its parallel run by September 30 of a given year in order to be required to estimate its capital ratios using the advanced approaches for the capital plan or stress test cycle that begins on October 1 of that year.

On February 14, 2014, the Board announced that certain advanced approaches banking organizations had completed a successful parallel run. 20 Beginning April 15, 2014, these companies will be required to use the advanced approaches rule to calculate their risk-based capital requirements consistent with the requirements of the advanced approaches rule. However, these companies will not be required to calculate capital according to the advanced approaches rule for purposes of capital planning and stress testing rules until the October 1, 2015, cycle.

As described above, the revised capital framework introduces more stringent capital requirements, including the 4.5 percent minimum common equity tier 1 capital ratio and the increasing deductions that will become effective on January 1, 2015. For the largest bank holding companies, this common equity tier 1 capital requirement, when fully phased in, is generally expected to result in a more stringent capital requirement than the capital plan rule's 5.0 percent tier 1 common ratio, in part because it incorporates significantly higher deductions from capital. The minimum capital requirements will continue to increase in stringency until the capital deductions are fully phased in in 2018. Large bank holding companies began to reflect these more stringent capital requirements in the current capital planning and stress test cycle, and all banking organizations subject to capital planning and stress testing will be required to reflect the more stringent capital requirements in the next capital planning and stress test cycle.

Given the operational complexity associated with incorporating the advanced approaches rule in the capital planning and stress testing processes, the final rule clarifies that the advanced approaches rule's incorporation into the capital plan and stress testing rules will be deferred for one year, until October 1, 2015, with respect to any banking organization that is notified on or before September 30, 2014, that the banking organization may exit from parallel run. The transition period will provide the Federal Reserve with sufficient time to integrate the advanced approaches into its stress testing processes and to provide guidance to advanced approaches banking organizations regarding supervisory expectations for integrating the advanced approaches into their stress testing and capital planning processes.

The interim final rule made minor technical changes to the capital plan rule. It clarified that a covered company that has not filed the FR Y-9C report for the four most recent consecutive quarters will calculate its total consolidated assets as reported on the company's available FR Y-9C reports for the most recent quarter or consecutive quarters. It also clarified that the Board (or the Reserve Bank, with concurrence of the Board) may extend the resubmission period for a capital plan beyond an initial 60-day extension if the Board or Reserve Bank determines that such longer period is appropriate.

The interim final rule modified the capital plan rule to reflect the Board's current practice of publicly disclosing its decision to object or not object to a bank holding company's capital plan along with a summary of the Board's analyses of that company. The rule provides that any disclosure will occur by March 31 of each calendar year, unless the Board determines that another date is appropriate. With regard to the Board's review of bank holding companies' capital plans, the Board expects the summary results largely will be similar to the results disclosed in previous CCAR exercises, unless the Board determines that different or additional disclosures would be appropriate.

The final rule maintains these minor and technical modifications without change. The final rule also deletes references to 12 CFR part 225, Appendix G, from the capital plan rule and stress test rules, because this appendix was removed from the Code of Federal Regulations effective January 1, 2014.

The Board has considered the potential impact of the final rule on small companies in accordance with the Regulatory Flexibility Act (5 U.S.C. 603(b)). Based on its analysis and for the reasons stated below, the Board believes that the final rule will not have a significant economic impact on a substantial number of small entities. Nevertheless, the Board is publishing a final regulatory flexibility analysis.

Under regulations issued by the Small Business Administration (“SBA”), a small entity includes a depository institution, bank holding company, or savings and loan holding company with total assets of $500 million or less (a small banking organization). The final rule would apply to bank holding companies, savings and loan holding companies, and state member banks with total consolidated asset of $10 billion or more and nonbank financial companies supervised by the Board. Companies that would be subject to the interim finale rule therefore substantially exceed the $500 million total asset threshold at which a company is considered a small company under SBA regulations.

The Board did not receive any comments on the interim final rules regarding their impact on small entities. In light of the foregoing, the Board does not believe that the final rule would have a significant economic impact on a substantial number of small entities.

Section 722 of the Gramm-Leach-Bliley Act required the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The Board invited comment on how to make the interim final rules easier to understand. The Board did not receive any comments on plain language and believes that the final rule is clearly written.

This final rule references currently approved collections of information under the Paperwork Reduction Act (44 U.S.C. 3501-3520) provided for in the capital plan rules. This final rule does not introduce any new collections of information nor does it substantively modify the collections of information that Office of Management and Budget (OMB) has approved. Therefore, no Paperwork Reduction Act submissions to OMB are required.

For the reasons stated in the Supplementary Information, the Board of Governors of the Federal Reserve System amends 12 CFR chapter II as follows:

Authority for This Rulemaking

The FAA's authority to issue regulations on aviation safety is found in Title 49 of the United States Code. Subtitle I, Section 106 describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the agency's authority.

This final rule is promulgated under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, the FAA is charged with promoting safe flight of civil aircraft in air commerce by prescribing minimum standards required in the interest of safety for the design and performance of aircraft; regulations and minimum standards in the interest of safety for inspecting, servicing, and overhauling aircraft; and regulations for other practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it revises the safety standards for design and operation of transport category airplanes.

This final rule adopts new standards for chemical oxygen generators (COG) installed in transport category airplanes. These new standards, based on the recommendations of the Lavatory Oxygen Aviation Rulemaking Committee (LOARC), pertain to future applications for type certificates, address potential security vulnerabilities with COG installations, and provide performance-based options for acceptable methods of compliance.

The FAA became aware of security vulnerabilities with certain types of oxygen systems installed inside the lavatories of most transport category airplanes. To address the underlying security issues, the FAA chartered an aviation rulemaking committee (ARC) to make recommendations regarding new standards for oxygen system installations, as well as how to implement those standards. Specifically, the LOARC was tasked to:

• Establish criteria for in-service, new production and new type design airplanes, preferably in the form of performance standards, for safe and secure installation of lavatory oxygen systems;

• Determine whether the same criteria should apply to the existing fleet and to new production and type designs;

• Establish what type of safety assessment approach should be used, for example, in accordance with Society of Automotive Engineers (SAE) International Document ARP5577  1 or Title 14, Code of Federal Regulations (14 CFR) 25.1309, as well as define content and procedures of the safety assessment;

• Determine whether tamper resistance, active tamper evidence, or different system design characteristics are equivalent options;

• Develop guidance as necessary to satisfy the recommended criteria for each system design characteristic as appropriate; and

• Consider the advantages and disadvantages of different implementation options and recommend a schedule(s) for implementation.

The LOARC identified five key subjects to focus on to develop its recommendations and fulfill its charter. Those subjects were:

• Design considerations—identifying and characterizing the design constraints and key factors affecting an installation.

• Security standards—identifying the necessary components of a secure installation, in terms of both new designs and for retrofit.

• System performance—identifying the factors that affect system performance in general and how modifications to enhance security might affect system performance.

• Implementation considerations—identifying the major factors to implement the new requirements into the fleet as expeditiously as practicable, as well as assessing how long certain actions will take.

• Other affected areas—characterizing the parameters that resulted in the determination of a security vulnerability for lavatory COG installations and establishing criteria for evaluating other installations against those characteristics.

The ARC submitted its recommendations to the FAA. Those recommendations are the basis for these new standards. On January 9, 2013, the FAA published a notice of proposed rulemaking (NPRM), Notice No. 13-01, entitled Requirements for Chemical Oxygen Generators Installed on Transport Category Airplanes in the Federal Register (78 FR 1765). The comment period for the NPRM closed on March 11, 2013. Additional background and historical information is contained in the NPRM. (See the docket for this rulemaking at www.regulations.gov .)

The FAA received comments from four commenters regarding the NPRM for this final rule. Those commenters were the Association of Flight Attendants, The Boeing Company (hereafter referred to as “Boeing”), Bombardier, and an individual commenter.

The Association of Flight Attendants and Bombardier concurred with the proposal without further comment.

Boeing commented that the proposed rule should be limited to lavatory installations and indicated that this would be consistent with the LOARC's recommendation. We disagree. The LOARC generalized its recommendations to apply to any COG installation. The effect of these new regulations on any given COG installation will vary. For most interior arrangements, lavatories are the only installation where design changes will be necessary. We did not change this final rule based on this comment.

Boeing proposed that we modify the applicability of the proposed rule to correspond with Airworthiness Directive (AD) 2011-04-09, Amendment 39-16630 (76 FR 12556, March 8, 2011), such that all-cargo airplanes and airplanes operating under Code of Federal Regulations (CFR) parts other than part 121 operations would not be affected. We disagree. While the final rule is intended to address the security of COGs on primarily passenger-carrying airplanes operating under part 121, all types of operations will benefit to some degree. Once installations are defined for an airplane type, the airplane could be operated under any operating regulation and would not require changes. This approach also accommodates future changes in operating requirements by making the COG standards a basic design requirement. Also, § 25.1450 contains a provision that excludes compliance with the new standards for airplanes approved using Special Federal Aviation Regulation (SFAR) 109. We did not change this final rule based on this comment.

An individual commented that the in-service fleet should be modified for any COG installation and not just lavatories. We disagree. The proposed rule did not address in-service airplanes, so adding retrofit requirements would be beyond the scope of the proposal. However, the FAA has taken action to revise COG installations that have a known unsafe condition by issuing AD 2011-04-09, Amendment 39-16630 (76 FR 12556, March 8, 2011) and AD 2012-11-09, Amendment 39-17072 (77 FR 38000, June 26, 2012). If we identify additional unsafe conditions on in-service airplanes, we will issue additional ADs. We did not change this final rule based on this comment.

The same individual also proposed that the requirements apply to newly-produced airplanes, in addition to new type certificates. We disagree. As discussed above, the FAA has already taken action on installations identified as being potentially unsafe. The referenced ADs apply to newly produced airplanes, as well as existing airplanes. This final rule raises the level of safety for future type certificates, but it is not meant to affect current airplanes in production. We did not change this final rule based on this comment.

Boeing commented that if the proposed rule applies to all COG installations, the economic analysis was not accurate, since it assumes there will be little cost impact. We disagree. As previously noted, all COG installations are affected by this final rule, but the vast majority of installations will not require any design changes because they are located where it would be immediately obvious if anyone attempted to access them. In those cases, the installation complies with the rule because of its location and would not require any physical changes to the generator or method of installation. In addition, because this rule applies to new applications for type certification, any design changes to existing approaches that might be needed can readily be accommodated during the design process. Therefore, the economic assessment is valid. We did not change this final rule based on this comment.

Boeing also commented that if the requirements of this rule were imposed as a result of § 21.101, the cost ramifications would be more significant and that this was not accounted for in the economic evaluation. We disagree. It is true that these requirements could be imposed on significant product-level design changes. However, as noted in the “Benefits” discussion of the Type Certification Procedures for Changed Products (65 FR 36244, June 7, 2000) final rule, compliance is required with all later regulations where such compliance will materially contribute to the level of safety.

The provisions of § 21.101 do not require compliance with later requirements under specified circumstances. In particular, where the costs involved would not be commensurate with the safety benefit achieved. Therefore, the incremental costs for changed products have already been justified by the benefits and are not attributable to this final rule. Accordingly, no change was made to this final rule as a result of this comment.

An individual commented on the detailed technical merits any such system should have, as well as the processes necessary to ensure such systems can be maintained and produced. We agree that most of the comments are worthwhile design considerations, but they are beyond the scope of this rulemaking effort, which defines a minimum performance standard for COG installations. The commenter also addressed the economics of product development and marketing, which is also beyond the scope of the notice. We did not change this final rule based on the individual's comments.

Boeing suggested that the current paragraph numbering be maintained in the CFR, such that § 25.795(d) is retained as “exceptions.” Boeing suggested this would assist future applicants administratively, since the amendment level would not affect which paragraph contained a requirement. We partially agree. While we understand the reason for the comment, an applicant must always specify the certification basis when applying for a design change, so the paragraph numbering should not be an issue. Furthermore, for consistency with existing regulations, a paragraph covering exceptions should come after the substantive requirements of the section. We did not change this final rule based on this comment.

Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 and Executive Order 13563 direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this final rule.

Department of Transportation Order DOT 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect and the basis for it to be included in the preamble if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this final rule. The reasoning for this determination follows:

This final rule adopts new standards for future type certificate applications pertaining to COGs installed on transport category airplanes. The new standards are intended to eliminate potential security vulnerabilities. Consequently, the primary benefit of this rule is that air carriers may continue to provide supplemental oxygen to individuals in lavatories during emergencies while ensuring that individuals in lavatories cannot tamper with the supplemental oxygen system.

The rule will affect future certifications, but as the newest certificated airplanes are in compliance with this final rule, these costs are expected to be minimal. The Boeing Model 787 and the Airbus A350 established an acceptable design, or received type certification between 3 and 5 years ago (hence predating this rule). The FAA expects that these systems can be incorporated into future type certificated airplanes at a minimal cost.

Secondly, the “newer” oxygen systems (such as those on the Boeing Model 787 and the Airbus A350) are cost efficient in comparison to the more traditional COGs. 2 The “newer” systems weigh less and deliver oxygen more effectively than the traditional COGs. The lesser weight of the materials used to construct the newer systems, combined with a reduction in the amount of oxygen required per passenger, translates into fuel cost savings over an airplane's lifespan.

The design standards for secure oxygen systems apply to future transport category airplane type certificates only. Airplanes currently in production, or already in the existing fleet, are excluded from this rule. Thus, there are no costs to the existing fleet or airplanes in production.

For these reasons this final rule is expected to have a minimal impact with positive net benefits, and a regulatory evaluation was not prepared. The FAA has therefore determined that this final rule is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, and is not “significant” as defined in DOT's Regulatory Policies and Procedures.

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation.” To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions.

Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.

However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

The Small Business Administration (SBA) small-entity size standard for aircraft manufacturers is 1,500 employees or less. No U.S. manufacturers of transport category airplanes are small entities; thus, this final rule will not affect small entities, and a regulatory flexibility analysis was not prepared.

If an agency determines that a rulemaking will not result in a significant economic impact on a substantial number of small entities, the head of the agency may so certify under section 605(b) of the RFA. Therefore, as provided in section 605(b), the head of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities.

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this final rule and determined that it would improve a safety objective and therefore is not considered an unnecessary obstacle to international trade.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (in 1995 dollars) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $143.1 million in lieu of $100 million. This final rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not apply.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. The FAA has determined that there is no new requirement for information collection associated with this final rule.

In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to conform to International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has reviewed the corresponding ICAO Standards and Recommended Practices and has identified no differences with these regulations.

Executive Order 13609, Promoting International Regulatory Cooperation, promotes international regulatory cooperation to meet shared challenges involving health, safety, labor, security, environmental, and other issues and to reduce, eliminate, or prevent unnecessary differences in regulatory requirements. The FAA has analyzed this action under the policies and agency responsibilities of Executive Order 13609, and has determined that this action would have no effect on international regulatory cooperation.

FAA Order 1050.1E identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. The FAA has determined this rulemaking action qualifies for the categorical exclusion identified in paragraph 312f and involves no extraordinary circumstances.

The FAA has analyzed this final rule under the principles and criteria of Executive Order 13132, Federalism. The agency determined that this action will not have a substantial direct effect on the states, or the relationship between the federal government and the states, or on the distribution of power and responsibilities among the various levels of government, and, therefore, does not have Federalism implications.

The FAA analyzed this final rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). The agency has determined that it is not a “significant energy action” under the executive order and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

An electronic copy of a rulemaking document may be obtained by using the Internet—

1. Search the Federal eRulemaking Portal ( http://www.regulations.gov );

2. Visit the FAA's Regulations and Policies Web page at http://www.faa.gov/regulations_policies/ or

3. Access the Government Printing Office's Web page at http://www.gpo.gov/fdsys/ .

Copies may also be obtained by sending a request (identified by amendment or docket number of this rulemaking) to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue SW., Washington, DC 20591, or by calling (202) 267-9680.

Comments received may be viewed by going to http://www.regulations.gov and following the online instructions to search the docket number for this action. Anyone is able to search the electronic form of all comments received into any of the FAA's dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.).

The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires FAA to comply with small entity requests for information or advice about compliance with statutes and regulations within its jurisdiction. A small entity with questions regarding this document, may contact its local FAA official, or the person listed under the FOR FURTHER INFORMATION CONTACT heading at the beginning of the preamble. To find out more about SBREFA on the Internet, visit http://www.faa.gov/regulations_policies/rulemaking/sbre_act/ .

In consideration of the foregoing, the Federal Aviation Administration amends chapter I of Title 14, Code of Federal Regulations as follows:

On October 24, 2013, at 78 FR 63429, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to Eurocopter France (now Airbus Helicopters) Model AS332C, AS332L, AS332L1, AS332L2, EC225LP, and SA330J helicopters with a turnbuckle, part number (P/N) 330A27-5031-20, installed. The NPRM proposed to require inspecting the turnbuckles for corrosion or a crack, and depending on the results, either replacing the turnbuckle or treating the turnbuckle for corrosion. The proposed requirements were intended to detect corrosion or a crack on a turnbuckle and prevent the failure of a turnbuckle, loss of control of the tail rotor and subsequent loss of control of the helicopter.

The NPRM was prompted by AD No. 2013-0081, dated March 26, 2013, issued by EASA, which is the Technical Agent for the Member States of the European Union. EASA published AD No. 2013-0081 to correct an unsafe condition for Eurocopter Model SA330J, AS332C, AS332C1, AS332L, AS332L1, AS332L2, EC225LP helicopters equipped with tail rotor control turnbuckles, part number 330A27-5031-20. EASA advises that one of the two turnbuckles installed on the tail rotor's yaw flight control cables failed on a helicopter because of corrosion. The subsequent investigation revealed a lack of Mastinox sealant coating between both sides of the turnbuckle's internal tappings and the interface screws of the end-fitting components of the yaw flight control cables. To address this condition, EASA issued AD No. 2013-0081, which requires repetitive inspections of each turnbuckle and, depending on the results, either replacing the turnbuckle or treating the turnbuckle for corrosion. EASA revised its AD and issued AD No. 2013-0081R1, dated June 20, 2013, to clarify some of the requirements.

Since we issued the NPRM, Eurocopter France changed its name to Airbus Helicopters. This AD reflects that change and updates the contact information to obtain service documentation.

We gave the public the opportunity to participate in developing this AD, but we received no comments on the NPRM (78 FR 63429, October 24, 2013).

These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other helicopters of the same type designs and that air safety and the public interest require adopting the AD requirements as proposed except for the minor change previously described. This change is consistent with the intent of the proposals in the NPRM (78 FR 63429, October 24, 2013) and will not increase the economic burden on any operator nor increase the scope of the AD.

The EASA AD applies to Eurocopter Model AS332C1 helicopters. This AD does not because Model AS332C1 helicopters are not type certificated in the United States.

On March 14, 2013, Eurocopter issued Alert Service Bulletin (ASB) No. EC225-05A031 for Model No. EC225LP helicopters; ASB No. AS332-05.00.95 for Model AS332C, AS332C1, AS332L, AS332L1 and AS332L2 and for military Model AS332B, AS332B1, AS332F1, AS332M and AS332M1 helicopters; and ASB No. SA330-05.98 for Model SA330J and military Model SA330Ba, SA330Ca, SA330Ea, SA330H, SA330L, SA330Jm, SA330S1 and SA330Sm helicopters. Eurocopter reports that a tail rotor control turnbuckle ruptured because of corrosion. The damage was discovered during a flight-control check after the main gearbox was replaced. An investigation revealed that Mastinox sealant was missing between the turnbuckle tappings and end-fittings and led to the formation of galvanic corrosion. To prevent a turnbuckle from splitting, Eurocopter called for checking all tail rotor control turnbuckles for cracks and corrosion every 12 months. On June 5, 2013, Eurocopter revised all of the ASBs with Revision 1 to clarify a requirement.

We estimate that this AD affects 46 helicopters of U.S. Registry and that labor costs average $85 a work-hour. Based on these estimates, we expect the following costs:

• Inspecting the tail rotor control turnbuckles for corrosion or a crack requires 4 work-hours for a labor cost of $340. Parts cost $148 for a total cost of $488 per helicopter, $22,448 for the U.S. fleet.

• Treating the turnbuckle to prevent corrosion require 1 work-hour for a labor cost of $85. The cost of parts is minimal for a total cost of $85 per helicopter.

• Replacing the turnbuckle requires no additional labor costs because it can be done as part of the inspection. Parts cost $173 for a total cost of $173 per helicopter.

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

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

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

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

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

Discussion

On September 26, 2013, at 78 FR 59306, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to Eurocopter France (Eurocopter) Model AS332C, AS332L, AS332 L1, and AS332 L2 helicopters with a hoist beam, Part Number (P/N) 330A87-2345-00, -01, -02, -03, -04, -05, or -06, installed with a single or double hoist plate; and Eurocopter Model SA330J helicopters with a hoist beam, P/N 330A87-2345-00, -01, -02, -03, -04, -05, or -06, installed with a single hoist plate. The NPRM proposed to prohibit use of the hydraulic hoist in helicopters equipped with certain parts and configurations until a hoist beam lower fitting protector was installed. The proposed requirements were intended to prevent the hoist cable from jamming and subsequent cable failure, which could result in injury and damage to the helicopter.

The NPRM was prompted by AD 2009-0271R1, dated July 8, 2011, issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Eurocopter Model AS332C, AS332C1, AS332L1, AS332L2 and SA330J helicopters with certain hoist beams installed. EASA advises that during a hoisting operation, a hydraulic hoist cable jammed against the base of the supporting strut of a dual hoist tray installation. According to EASA, the load was transferred to the back-up electrical hoist and safely brought on board. However, the jamming of the hydraulic hoist cable against the strut damaged the back-up electrical hoist power supply harness, which is routed through the area, resulting in a short circuit that fused and ruptured the cable. EASA reports that this condition, if not corrected, could lead to further incidents of hoist cable jamming and subsequent cable failure, which could result in personal injuries and damage to the helicopter.

Since we issued the NPRM, Eurocopter France has changed its name to Airbus Helicopters. This AD reflects that change and updates the contact information to obtain service documentation. We also corrected an error in the date of issue for Eurocopter Alert Service Bulletin No. 25.39 in the Required Actions paragraph and Differences section of this AD to reflect the correct date of July 6, 2011. We have corrected a math error in the total cost per helicopter for installation of the hoist beam lower fitting protector and short footstep with lower side protector for certain AS332 helicopters in the Cost section. Finally, we have corrected our Joint Aircraft Service Component Code in the Subject paragraph of this AD to 2500, Cabin Equipment/Furnishings.

We gave the public the opportunity to participate in developing this AD, but we received no comments on the NPRM (78 FR 59306, September 26, 2013).

These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed except for the minor changes previously described. These changes are consistent with the intent of the proposals in the NPRM (78 FR 59306, September 26, 2013) and will not increase the economic burden on any operator nor increase the scope of the AD.

Our AD differs from the EASA AD as follows:

The EASA AD requires certain actions before the next flight, while we require the same actions before the next hoisting operation.

The EASA AD sets calendar dates for compliance that have since passed, while we set compliance based on hours time-in-service.

The EASA AD misidentifies the Eurocopter SA330J service bulletin number and paragraph number in its required actions for Model SA330J helicopters. This AD requires compliance with paragraph 2.B.4 of Eurocopter Emergency Alert Service Bulletin No. 25.39, Revision 3, dated July 6, 2011.

Eurocopter issued one Emergency Alert Service Bulletin (EASB), Revision 3, dated July 6, 2011, with three different numbers. EASB No. 25.02.08 is for civil and military Model AS332-series helicopters; EASB No. 25.01.29 is for military Model AS532-series helicopters; and EASB No. 25.39 is for civil and military Model SA330-series helicopters. The EASB originally provided instructions to prevent the main hydraulic hoist cable from becoming jammed and damaged in the fixed fitting of the hoist beam lower fitting. The revisions add further instructions and expand the effectivity to more helicopters and helicopter equipment configurations. The revisions also extend some compliance deadlines, and revise some instructions to account for improved installation procedures. After further investigation, the most recent revisions remove some helicopter models from the list of applicable helicopters.

We estimate that this AD affects 20 helicopters of U.S. Registry and that work hours average $85 an hour. Based on these estimates, we expect the following costs:

• The cost for installing and removing placards is minimal.

• Disabling the hoist pyrotechnic shear function requires 1 work-hour. No parts are needed for a cost of $85 per helicopter, $1,700 for the U.S. fleet.

• Installation of the hoist beam lower fitting protector for Model AS332 helicopters without a right hand (RH) sliding door and without a short footstep requires 6 work-hours for a labor cost of $510 per helicopter. Parts cost $4,760 for a total cost of $5,270 per helicopter.

• Installation of the hoist beam lower fitting protector and short footstep with lower side protector for Model AS332 helicopters without a RH sliding door and with a short footstep requires 12 work-hours for a labor cost of $1020 per helicopter. Parts cost $26,891 for a total cost of $27,911 per helicopter.

• Installation of the hoist beam protector for Model AS332 helicopters with a RH sliding door requires 3 work-hours for a labor cost of $255 per helicopter. Parts cost $20,858 for a total cost of $21,113 per helicopter.

• Installation of the hoist beam protector for Model SA330J helicopters requires 3 work-hours for a labor cost of $255 per helicopter. Parts cost $4,774 for a total cost of $5,029 per helicopter.

• Enabling the hoist pyrotechnic shear function requires 1 work-hour. No parts are needed for a cost of $85 per helicopter.

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

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

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

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

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

On July 3, 2013 at 78 FR 40072, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to certain serial-numbered Eurocopter (now Airbus Helicopters) Model AS332C1 and AS332L1 helicopters. The NPRM proposed to require replacing the non-conforming 3.2 mm rivets, part-number (P/N) 212 15DC 3200J, on the longitudinal beams Y350 with airworthy 4.8 mm rivets, P/N 212 15DC 4800J. The proposed requirements were intended to prevent failure of the longitudinal beams Y350 and subsequent loss of control of the helicopter.

The NPRM was prompted by AD No. 2012-0046-E, dated March 21, 2012 (EAD 2012-0046-E), issued by the European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Model AS332C1 and AS332L1 helicopters. EASA advises that an AS332 helicopter was found on the production line with non-conforming rivets installed on the RH and LH longitudinal beams Y350 of the bottom structure of the fuselage, between sections X4780 and X5295. According to EASA, the investigation revealed that a limited number of helicopters were documented as receiving a production modification requiring the replacement of certain 3.2 mm rivets with 4.8 mm rivets, but the actual replacement of the rivets had not been performed. EASA states that this condition leads to significant reduction in the safety margins during sling operations and may cause failure of the web/flange assembly connections of the longitudinal beams Y350, possibly resulting in loss of control of the helicopter. For these reasons, EASA issued EAD 2012-0046-E, which, pending inspection of the helicopter beams Y350 and replacement of the affected rivets, prohibits sling operations or limits the 3-ton sling to external loads of 2.28 tons or less.

Since the NPRM was published, we have determined that the applicability requirements of the proposed AD should not apply to Model AS332C1 helicopters, because that model is not type certificated in the United States. We have removed that model and its corresponding serial numbers from this AD. Also, Eurocopter France has changed its name to Airbus Helicopters. This AD reflects that change and updates to contact information to obtain service information.

We gave the public the opportunity to participate in developing this AD, but we did not receive any comments on the NPRM (78 FR 40072, July 3, 2013).

These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed, except that we have removed Eurocopter Model AS332C1 helicopters from the Applicability paragraph and changed Eurocopter France to Airbus Helicopters. These changes are consistent with the intent of the proposals in the NPRM (78 FR 40072, July 3, 2013) and will not increase the economic burden on any operator nor increase the scope of the AD.

The EASA AD requires limiting the use of the 3-ton sling, inspecting the longitudinal beams Y350 for loose or missing rivets, black marks around the rivets, and cracks, and, depending on the accumulated sling operation cycles, replacing the rivets within a period of up to 24 months. This AD does not require the inspections as it would require replacing the rivets within 10 hours time-in-service, regardless of accumulated sling operation cycles. The EASA AD applies to Model AS332C1 helicopters, and this AD does not because that model is not type certificated in the United States.

We reviewed Eurocopter Emergency Alert Service Bulletin No. 01.00.81 Revision 0, dated March 19, 2012 (EASB 01.00.81) for Model AS332 helicopters. The EASB describes procedures for temporarily prohibiting sling operations or limiting the use of the 3-ton sling to 2.28 tons until the 3.2 mm diameter rivets are replaced with 4.8 mm diameter rivets.

We have subsequently reviewed Eurocopter EASB 01.00.81 Revision 1, dated July 6, 2012 (EASB 01.00.81 Revision 1). EASB 01.00.81 Revision 1 deletes from the applicability of the EASB helicopters with Modification (MOD) 07 26082 installed. MOD 07 26082 provides for installation of the correct 4.8 mm diameter rivets on Eurocopter's production line.

We estimate that this AD will affect 1 helicopter of U.S. Registry. We estimate that operators will incur the following costs in order to comply with this AD. Modifying the longitudinal beams Y350 with 4.8 mm rivets requires about 24 work-hours at an average labor rate of $85 per hour and required parts cost about $110, for a total cost per helicopter of $2,150. Thus, the total cost to U.S. operators to comply with this AD is about $2,150.

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

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

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

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

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2010-11-51, Amendment 39-16396 (75 FR 50874, August 18, 2010). AD 2010-11-51 applied to Eurocopter Model AS350B, BA, B1, B2, C, D, and D1 helicopters and Model AS355E, F, F1, F2, and N helicopters with certain part-numbered tail gearbox (TGB) control levers installed. The NPRM published in the Federal Register on June 17, 2013 (78 FR 36129). The NPRM proposed to retain the requirements in AD 2010-11-51 to perform repetitive visual inspections in a certain area on each TGB control lever not marked with an “X” and to replace a cracked part. Also, the NPRM proposed to require inspecting another area of each TGB control lever at additional intervals. The NPRM also proposed replacing each TGB control lever with a reworked TGB control lever marked with an “X” near the P/N or with a TGB control lever with a P/N not listed in the applicability of the AD. The proposed requirements were intended to prevent failure of the TGB control lever, loss of tail rotor control, and subsequent loss of control of the helicopter.

The NPRM was prompted by Emergency AD No. 2011-0038-E, dated March 4, 2011 (AD No. 2011-0038-E), issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for the Eurocopter Model AS350B, BA, BB, B1, B2, and D, and AS355E, F, F1, F2, and N helicopters. Emergency AD No. 2011-0038-E superseded EASA Emergency AD No. 2010-0082-E, dated April 27, 2010 (AD No. 2010-0082-E). EASA advises that since issuing its Emergency AD No. 2010-0082-E, Eurocopter found additional cracks opposite the required inspection area on the affected control levers. EASA Emergency AD No. 2011-0038-E retains the requirements of EASA Emergency AD No. 2010-082-E and adds repetitive inspections for the area opposite the control levers.

Since we issued the NPRM, Eurocopter France changed its name to Airbus Helicopters. This AD reflects that change and updates the contact information to obtain service documentation.

We gave the public the opportunity to participate in developing this AD, but we did not receive any comments on the NPRM (78 FR 36129, June 17, 2013).

These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed except for the name change previously described and correcting the date referenced for Revision 2 of the Eurocopter Emergency Alert Service Bulletin (EASB). These changes are consistent with the intent of the proposals in the NPRM (78 FR 36129, June 17, 2013) and will not increase the economic burden on any operator nor increase the scope of the AD.

This AD differs from EASA Emergency AD No. 2011-0038-E as follows:

• We include the Model AS350C and AS350D1 helicopters that may contain the affected TGB control lever. We do not include the Model AS350BB helicopter because it is not type-certificated in the United States.

• We do not require an “after last flight”of the day inspection.

• We do not allow a pilot to inspect for a crack.

• We do not require reworking noninstalled control levers.

• We do not include a calendar compliance time for reworking the TGB control lever if there is not a crack.

• We do not require you to contact Eurocopter (now Airbus Helicopters) if a crack is found during any inspection.

Eurocopter issued one EASB, Revision 2, dated March 1, 2011, with four different numbers. EASB No. 05.00.62 is for Model AS350 helicopters; EASB No. 05.00.57 is for Model AS355 helicopters; EASB No. 05.00.38 is for military Model AS550 helicopters; and EASB No. 05.00.35 is for military Model AS555 helicopters. The military models are not type-certificated in the United States. The EASB specifies visually inspecting the TGB control lever for a crack at the last flight of each day, without exceeding 10 flying hours between inspections. The EASB also specifies a rework procedure for affected TGB control levers, to be done within 660 flying hours and no later than June 30, 2011, indicated by marking the control lever with a letter “X.” EASA classified this EASB as mandatory and issued AD No. 2011-0038-E to ensure the continued airworthiness of these helicopters.

We estimate that this AD will affect 791 helicopters of U.S. registry. We estimate that operators may incur the following costs in order to comply with this AD. The inspections for a crack in the TGB control lever will take a minimal amount of time. Replacing a control lever will take about 3 work hours at an average labor rate of $85 per work hour. Required parts will cost about $2,103 per helicopter. Based on these figures, we estimate the total cost of the AD on U.S. operators to be $2,358 per helicopter to replace the control lever.

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

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

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

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

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

(3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

We prepared an economic evaluation of the estimated costs to comply with this AD and placed it in the AD docket.

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Bombardier, Inc. Model BD-100-1A10 (Challenger 300) airplanes. The NPRM published in the Federal Register on September 25, 2013 (78 FR 58965). The NPRM was prompted by multiple reports of erratic electrical status indications on the push button annunciators and the engine instrument and crew alerting system. Certain of those reported incidents resulted in the airplane experiencing a momentary loss of electrical power and loss of flight displays. The NPRM proposed to require modification of the direct current power centers. We are issuing this AD to prevent loss of electrical power, which could result in the loss of flight displays and reduced controllability of the airplane.

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2013-05, dated February 22, 2013 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov/#!documentDetail;D=FAA-2013-0798-0001.

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM (78 FR 58965, September 25, 2013) or on the determination of the cost to the public.

We reviewed the relevant data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM (78 FR 58965, September 25, 2013) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (78 FR 58965, September 25, 2013).

We estimate that this AD affects 92 airplanes of U.S. registry.

We also estimate that it will take about 7 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts will cost about $1,568 per product. Based on these figures, we estimate the cost of this AD on U.S. operators to be $198,996, or $2,163 per product.

According to the manufacturer, some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate.

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

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

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

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

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);

3. Will not affect intrastate aviation in Alaska; and

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

You may examine the AD docket on the Internet at http://www.regulations.gov/#!docketDetail;D=FAA-2013-0798; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647-5527) is in the ADDRESSES section.

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all The Boeing Company Model 717-200 airplanes. The NPRM published in the Federal Register on December 4, 2013 (78 FR 72836). The NPRM was prompted by multiple reports of cracking in the overwing frames. The NPRM proposed to require repetitive inspections for cracking in the overwing frames, and corrective actions if necessary. We are issuing this AD to detect and correct such cracking, which could result in a severed frame and might increase the loading of adjacent frames, resulting in damage to the adjacent structure and consequent loss of structural integrity of the airplane.

We gave the public the opportunity to participate in developing this AD. We have considered the comment received. Boeing stated that it supports the NPRM (78 FR 72836, December 4, 2013).

We revised paragraph (g)(2)(i) of this final rule to clarify that an operator that has already accomplished the inspections specified in Boeing Multi Operator Message (MOM) MOM-MOM-13-0375-01B, dated May 9, 2013, has a compliance time of within 9,300 flight cycles after those inspections were accomplished to do the actions required by paragraph (g) of this final rule.

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

• Are consistent with the intent that was proposed in the NPRM (78 FR 72836, December 4, 2013) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (78 FR 72836, December 4, 2013).

We estimate that this AD affects 129 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary replacements that would be required based on the results of any inspection. We have no way of determining the number of aircraft that might need this replacement:

In addition, for the on-condition repairs specified in this AD, we have received no definitive data that would enable us to provide cost estimates.

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

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

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

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

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

(2) Is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

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

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

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

This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or revoking SIAPS, Takeoff Minimums and/or ODPS. The complete regulators 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 FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

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

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as contained in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts. The circumstances which 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 procedures before adopting these SIAPS, Takeoff Minimums and ODPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making some SIAPs effective in less than 30 days.

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

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or revoking Standard Instrument Approach Procedures and/or Takeoff Minimums and/or Obstacle Departure Procedures effective at 0902 UTC on the dates specified, as follows:

This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (FDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference in the amendment under 5 U.S.C. 552(a), 1 CFR part 51, and § 97.20 of Title 14 of the Code of Federal Regulations.

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

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

The SIAPs, as modified by FDC P-NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs, 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 which created the need for all these SIAP amendments requires making them effective in less than 30 days.

Because of the close and immediate relationship between these SIAPs and safety in air commerce, I find that notice and public procedure before adopting these SIAPs are impracticable and contrary to the public interest and, where applicable, that good cause exists for making these SIAPs effective in less than 30 days.

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

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

Commission Rule 1.98 sets forth civil penalty amounts for violations of certain laws enforced by the Commission. 1 The Commission is increasing many of these amounts to account for inflation, as required by the Federal Civil Penalties Inflation Adjustment Act of 1990 (“FCPIAA”), 2 as amended by the Debt Collection Improvement Act of 1996. 3 The following adjusted amounts will take effect on April 10, 2014:

• Section 11(l) of the Clayton Act, 15 U.S.C. 21( l ) (violations of cease and desist orders issued under Clayton Act section 11(b))—$8,500;

• Section 10 of the FTC Act, 15 U.S.C. 50 (failure to file reports required by FTC Act)—$210;

• Section 5 of the Webb-Pomerene (Export Trade) Act, 15 U.S.C. 65 (failure to file required business information with the Commission)—$210;

• Section 6(b) of the Wool Products Labeling Act, 15 U.SC. 68d(b) (failure to maintain proper records of fiber content)—$210;

• Section 3(e) of the Fur Products Labeling Act, 15 U.S.C. 69a(e) (failure to maintain records)—$210;

• Section 8(d)(2) of the Fur Products Labeling Act, 15 U.S.C. 69f(d)(2) (failure to maintain records)—$210;

• Section 333(a) of the Energy Policy and Conservation Act, 42 U.S.C. 6303(a) (FTC enforcement of knowing violations)—$210;

• Section 525(a) of the Energy Policy and Conservation Act, 42 U.S.C. 6395(a) (recycled oil labeling violations)—$8,500;

• Section 1115(a) of the Medicare Prescription Drug Improvement and Modernization Act of 2003, Public Law 108-173, 21 U.S.C. 355 note (failure to comply with filing requirements)—$12,100; and

• Section 814(a) of the Energy Independence and Security Act of 2007, 42 U.S.C. 17304 (violations of prohibitions on market manipulation and provision of false information to federal agencies)—$1,100,000

The FCPIAA's rounding rules do not permit adjustment of the other civil penalties listed in Rule 1.98 at this time. 4

The FCPIAA directs federal agencies to adjust civil monetary penalties under their jurisdiction for inflation at least once every four years pursuant to a statutory “cost-of-living adjustment.”  5 The cost of living adjustment is defined as the percentage by which the U.S. Department of Labor's Consumer Price Index for all-urban consumers (“CPI-U”) for the month of June for the year preceding the adjustment exceeds the CPI-U for the month of June for the year in which the amount of the penalty was last set or adjusted pursuant to law. 6 Agencies do not have discretion over whether to adjust a maximum civil penalty at least once every four years, or the method used to determine the adjustment.

The Commission previously adjusted its civil penalty amounts in 1996, 2004, and 2009. 7 No adjustments were warranted in 2000 due to the FCPIAA's rounding rules. 8

In 2009, the Commission adjusted civil penalties under Clayton Act sections 7A(g)(1) and 11(l), FTC Act sections 5(l) and 5(m)(1)(A)-(B), sections 525(a) and (b) of the Energy Policy and Conservation Act (“EPCA”), and section 621(a)(2) of the Fair Credit Reporting Act (“FCRA”). See 74 FR 857 (Jan. 9, 2009). For these civil penalties, the relevant inflation period is between June 2009 and June 2013. Within that timeframe, the CPI-U has increased from 215.693 to 233.504, or 8.3%. This increase triggers a statutory adjustment from $7,500 to $8,500 for civil penalties under Clayton Act section 11( l ) and EPCA section 525(a).

At this time, the statute's rounding rules do not authorize the FTC to increase the amounts of the other civil penalties previously adjusted in 2009. The FCPIAA contains specific rules for rounding each increase based on the size of the penalty. 9 Increases in civil penalties of greater than $10,000 and less than or equal to $100,000 must be in $5,000 increments, and the increase in the CPI between June 2009 and June 2013 was not high enough to round up any adjustment to $5,000. Thus, the statute does not permit adjustments for civil penalties under Clayton Act sections 7A(g)(1), FTC Act sections 5( l ) and 5(m)(1)(A)-(B), and EPCA section 525(b). Likewise, increases in civil penalties of greater than $1,000 and less than or equal to $10,000 must be in increments of $1,000, and the increase in the CPI was not high enough to warrant an adjustment for civil penalties under FCRA section 621(a)(2).

The other civil penalties in Rule 1.98 did not qualify for adjustment in 2009. 10 These additional penalties were last adjusted in 1996. 11 Thus, the relevant inflation period is between June 1996 and June 2013. Within that time frame, the CPI-U has increased from 156.7 to 233.504 for a total percentage increase of 49.0%. Applying this percentage increase results in an adjustment from $110 to $210 for civil penalties under the following statutory provisions: FTC Act section 10, Webb-Pomerene (Export Trade) Act section 5, Wool Products Labeling Act section 6(b), Fur Products Labeling Act sections 3(e) and 8(d)(2), and EPCA section 333(a).

The FTC is increasing the civil penalty amount under section 1115(a) of the Medicare Prescription Drug Improvement and Modernization Act of 2003 (“MMA”) for the first time. 12 From June 2003 to June 2013, the CPI-U has increased from 183.7 to 233.504, a 27.1% increase. Because the FCPIAA imposes a ten percent cap on initial civil penalty adjustments, the Commission is adjusting this penalty from $11,000 to $12,100. 13

In addition, the FTC is adjusting civil penalties under section 814(a) of the Energy Independence and Security Act of 2007 (“EISA”)  14 The CPI-U has increased from 208.352 in June 2007 to 233.504 in June 2013, or 12.1%. Applying this percentage increase and the FCPIAA's ten percent cap on initial adjustments, this penalty will increase from $1,000,000 to $1,100,000.

To reflect these adjustments, the FTC is amending Commission Rule 1.98 by modifying paragraphs (b) and (f)-(l), adding new paragraphs (n)-(o), and redesignating current paragraph (n) as paragraph (p). These changes take effect on April 10, 2014.

Under the Administrative Procedure Act (“APA”), a final rule may be issued without public notice and comment if an agency finds good cause that notice and comment are impractical, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(3)(B). Because the Commission must adjust its civil penalties according to a statutory formula, the Commission finds that good cause exists to forego public notice and comment under the APA. Id. Because these adjustments are mandated by statute and do not involve the exercise of Commission discretion or any policy judgments, public notice and comment is unnecessary. For this reason, the requirements of the Regulatory Flexibility Act (“RFA”) also do not apply. 15 Finally, this rule does not contain any collection of information requirements as defined by the Paperwork Reduction Act of 1995 as amended. 44 U.S.C. 3501 et seq.

For the reasons set forth in the preamble, the Federal Trade Commission amends Title 16, chapter I, subchapter A, of the Code of Federal Regulations, as follows:

In the Federal Register of December 17, 2009 (74 FR 66979), FDA published a notice announcing the filing of a food additive petition (FAP 9A4779) submitted by Lallemand, Inc., c/o Dennis T. Gordon, 117 N. Welcome Slough Rd., Puget Island, Cathlamet, WA 98612. The petition proposed to amend the food additive regulations in part 172, Food Additives Permitted for Direct Addition to Food for Human Consumption (21 CFR part 172), to provide for the safe use of vitamin D 2 bakers yeast as a dual purpose nutrient supplement and leavening agent or dough relaxer in yeast-containing baked products at levels not to exceed 400 IU of vitamin D 2 per 100 g in the finished food. The specific foods identified in the petition were yeast-leavened baked goods and baking mixes, and yeast-leavened baked snack foods. After the notice was published, Lallemand amended the petition to exclude the proposed use of the additive as a dough relaxer.

In response to FAP 9A4779, we issued a final rule in the Federal Register on August 29, 2012 (77 FR 52228), authorizing the safe use of vitamin D 2 bakers yeast as a source of vitamin D 2 and as a leavening agent in yeast-leavened baked products at levels not to exceed 400 IU of vitamin D 2 per 100 g in the finished food. This regulation is codified at § 172.381. We based our decision on data contained in the petition and in our files. The preamble to the final rule (77 FR 52228 at 52231) stated that objections to the final rule and requests for a hearing were due within 30 days of the publication date (i.e., by September 28, 2012).

Section 409(f)(1) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 348(f)(1)) provides that, within 30 days after publication of an order relating to a food additive regulation, any person adversely affected by such order may file objections, “specifying with particularity the provisions of the order deemed objectionable, stating reasonable grounds therefor, and requesting a public hearing upon such objections.”

Under § 171.110 (21 CFR 171.110), objections and requests for a hearing are governed by part 12 (21 CFR part 12) of FDA's regulations. Under § 12.22(a), each objection must meet the following conditions: (1) Must be submitted on or before the 30th day after the date of publication of the final rule; (2) must be separately numbered; (3) must specify with particularity the provision of the regulation or proposed order objected to; (4) must specifically state each objection on which a hearing is requested; failure to request a hearing on an objection constitutes a waiver of the right to a hearing on that objection; and (5) must include a detailed description and analysis of the factual information to be presented in support of the objection if a hearing is requested; failure to include a description and analysis for an objection constitutes a waiver of the right to a hearing on that objection.

Following publication of the final rule authorizing the use of vitamin D 2 bakers yeast as a source of vitamin D 2 and as a leavening agent in yeast-leavened baked products at levels not to exceed 400 IU of vitamin D 2 per 100 g in the finished food, we received a letter from AB Mauri North America (AB Mauri) (letter to Docket No. FDA-2009-F-0570, September 26, 2012) containing two objections. The letter from AB Mauri did not request a hearing on either objection. Therefore, AB Mauri has waived its right to a hearing on those objections (see § 12.22(a)(4)). The only remaining question under § 12.24(a) is whether AB Mauri's objections, and the information submitted in support of the objections, establish that the regulation authorizing the use of vitamin D 2 bakers yeast should be modified or revoked. As discussed in detail in section III, we have concluded that AB Mauri has not established a basis for modification or revocation of the regulation authorizing the use of vitamin D 2 bakers yeast.

The first objection raised by AB Mauri contends that the regulation authorizing the use of vitamin D 2 bakers yeast in food (§ 172.381) is based on the incorrect assumptions that: (1) vitamin D 2 bakers yeast can be produced in such a way that the vitamin D 2 levels in the yeast itself can be accurately controlled and declared; and (2) vitamin D 2 bakers yeast can be used by food manufacturers in a way that allows them to control the level of vitamin D 2 in the finished product and accurately declare its level on the labeling of the finished food product. AB Mauri asserts that these assumptions may result in vitamin D 2 levels in finished products that exceed the maximum level specified in the regulation and declaration of inaccurate vitamin D 2 levels on finished product nutrition labels.

In support of their claim, AB Mauri presents vitamin D 2 levels from a limited number of samples of Lallemand's commercially available vitamin D 2 bakers yeast that AB Mauri had analyzed by an independent laboratory. According to AB Mauri, the results of the independent analysis demonstrate that the actual amount of vitamin D 2 in bakers yeast varies, and does not necessarily reflect the level of vitamin D 2 that Lallemand claims on its Web site is “typical” for the product. AB Mauri also provides theoretical ranges of vitamin D 2 levels that could result in batches of the same size product, depending on the level and type of vitamin D 2 bakers yeast used. According to AB Mauri, using different levels and types of vitamin D 2 bakers yeast result in different levels of vitamin D 2 in batches of equal size.

However, AB Mauri did not provide the manufacturer's certificates of analysis so that the vitamin D 2 levels of the analyzed samples could be verified. Additionally, AB Mauri did not identify the analytical method used in the analyses of vitamin D 2 bakers yeast and did not provide information on the samples that were analyzed (e.g., lot numbers, number of samples and replicates analyzed, age of samples, sample storage conditions, or solid content of the yeast cream samples). Therefore, the information provided by AB Mauri is not sufficient to demonstrate that there was a difference in the analyzed vitamin D 2 levels and the vitamin D 2 levels which Lallemand claims is typical for the product.'

The information provided by AB Mauri also does not provide sufficient evidence showing levels of vitamin D 2 in finished baked products made with vitamin D 2 bakers yeast exceed the maximum permitted level since the levels of vitamin D 2 in the finished baked products are based on hypothetical percentages of yeast used. Therefore, this objection does not provide a basis for FDA to reconsider its decision to issue the final rule on vitamin D 2 bakers yeast.

Our review of the petition explicitly considered variability of vitamin D 2 in ultraviolet light-treated bakers yeast. The petitioner provided analytical data of vitamin D 2 levels from production lots of vitamin D 2 bakers yeast, including the certificates of analysis for the products analyzed. Results demonstrated that vitamin D 2 levels were at least equal to 80 percent of the value for vitamin D 2 declared on the label of the vitamin D 2 bakers yeast product (see 21 CFR 101.9(g)(4)(ii)). Additionally, certificates of analysis, which include vitamin D 2 levels in the product, are provided with each product sold, thus allowing bakers to calculate the amount of vitamin D 2 that each finished product will contain. Based on these data and other information provided in the petition, we concluded that there are adequate controls in place to ensure that vitamin D 2 bakers yeast may be used in conformance with the provisions in the regulation.

Section 409 of the FD&C Act requires that a regulation authorizing the use of a food additive must prescribe, with respect to the proposed uses of the additive, the conditions under which the additive may be safely used. Section 172.381, as established in the final rule, does not include a requirement to label finished food with the level of vitamin D 2 contained in the finished food. However, to ensure that the level of vitamin D 2 in the finished food does not exceed the maximum level specified in the regulation, § 172.381(d) states that the label or labeling of the food additive container must bear, in addition to the other information required by the FD&C Act, adequate directions for use to provide a final product that complies with the limitations prescribed in § 172.381(c) (under which the additive may be used in yeast-leavened baked goods and baking mixes and yeast- leavened baked snack foods at levels not to exceed 400 IU of vitamin D 2 per 100 g in the finished food). The labeling requirement in § 172.381(d) ensures that when vitamin D 2 bakers yeast is used to make products, the manufacturer will have the information necessary to use the additive in conformance with the provisions of the regulation.

The second objection from AB Mauri asserts that if FDA is going to approve vitamin D 2 supplementation in baked products at higher levels than are currently permitted by the regulations, it should do so in a way that permits better control of vitamin D levels in finished products by considering the use of vitamin D 3 instead. AB Mauri questions whether vitamin D 2 is as effective for humans as vitamin D 3 at similar levels, and cites two peer-reviewed journal articles to support this claim.

Our evaluation of the petition was based solely on the safety of the proposed use of vitamin D 2 bakers yeast in yeast-containing baked goods. Therefore, expanding the scope of the final rule to provide for the safe use of vitamin D 3 is beyond the scope of the petition submitted by Lallemand. If AB Mauri is interested in obtaining approval for the expanded use of vitamin D 3 in food, they may do so by petitioning FDA for this use in accordance with section 409(b) of the FD&C Act.

Section 409 of the FD&C Act requires that a food additive be shown to be safe prior to marketing. Under 21 CFR 170.3(i), a food additive is “safe” if there is a reasonable certainty in the minds of competent scientists that the substance is not harmful under the intended conditions of use. In the final rule authorizing the use of vitamin D 2 bakers yeast, we concluded that the data presented by the petitioner to establish safety of the additive demonstrate that vitamin D 2 bakers yeast is safe for its intended use in yeast-leavened baked products at levels not to exceed 400 IU of vitamin D 2 per 100 g in the finished food.

The petitioner has the burden to demonstrate the safety of the additive to gain FDA approval. Once we make a finding of safety, the burden shifts to an objector, who must come forward with evidence that calls into question our conclusion (see section 409(f)(1) of the FD&C Act). After evaluating the objections from AB Mauri, we have concluded that the objections do not provide any basis for us to reconsider our decision to issue the final rule authorizing the use of vitamin D 2 bakers yeast as a dual purpose nutrient supplement and leavening agent in yeast-containing baked products at levels not to exceed 400 IU of vitamin D 2 per 100 g in the finished food. Accordingly, we are not making any changes in response to the objections.

Pfizer, Inc., 235 E. 42d St., New York, NY 10017, and its wholly owned subsidiaries Alpharma, LLC; Fort Dodge Animal Health, Division of Wyeth; Fort Dodge Animal Health, Division of Wyeth Holdings Corp.; and its division, Pharmacia & Upjohn Co., have informed FDA that they have transferred ownership of, and all rights and interest in, the 110 approved NADAs and 14 approved ANADAs in Table 1 to Zoetis, Inc., 333 Portage St., Kalamazoo, MI 4900.

Accordingly, the Agency is amending the regulations in 21 CFR part 558 to reflect these transfers of ownership. In addition, the regulations are being amended to make minor corrections. This is being done to increase the accuracy and readability of the regulations.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs and redelegated to the Center for Veterinary Medicine, 21 CFR part 558 is amended as follows:

In the Older Workers Benefit Protection Act of 1990 (OWBPA), Congress established requirements for the knowing and voluntary release of claims under the Age Discrimination in Employment Act (ADEA). 1 The OWBPA set basic requirements for all waivers of ADEA rights, and it imposed extra requirements when employers sought such waivers in connection with an exit incentive or group termination program. To implement the OWBPA, the EEOC issued a final negotiated rule at 29 CFR 1625.22 in 1998. 2

The EEOC now corrects a cross-reference in 29 CFR 1625.22(g)(3), the provision that states the basic requirements for waiving ADEA rights when settling an ADEA charge or lawsuit. Where subsection (g)(3) should cross reference the rule's “knowing and voluntary” requirements applicable to all ADEA waivers, it instead references the rule's additional requirements for group termination programs. Therefore, the EEOC now replaces the incorrect language in 29 CFR 1625.22(g)(3) (“set out in paragraph (f) of this section”), with language referencing the rule's general waiver requirements (“set out in paragraphs (b), (c), and (d) of this section.”).

This rule also contains several changes to the existing authority citation for 29 CFR Part 1625. Some of these changes update existing citations to comply with Federal Register formatting conventions. Others streamline and consolidate several references to the Age Discrimination in Employment Act. The revisions also add Executive Order 12067 due to its discussion of the EEOC's leadership role in age discrimination in employment and the EEOC's responsibilities with respect to federal regulations concerning employment discrimination.

Although the EEOC's rulemaking on waivers of rights and claims under the ADEA is not currently a priority for regulatory review, the Commission is taking this action, consistent with the EEOC Plan for Retrospective Analysis of Existing Rules, 3 based on stakeholder input and efforts to enhance clarity in the EEOC's regulations. 4

The Commission finds that public notice-and-comment on this rule is unnecessary, because the revision makes no substantive change; it merely corrects an internal cross-referencing error. The rule is therefore exempt from the notice-and-comment requirements of 5 U.S.C. 553(b) under 5 U.S.C. 553(b)(B). This technical correction also is not “significant” for purposes of Executive Order 12866, as reaffirmed by E.O. 13563, and therefore is not subject to review by Office of Management and Budget.

Since this technical correction contains no substantive changes to the law, EEOC certifies that it contains no new information collection requirements subject to review by the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35), it requires no formal cost-benefit analysis pursuant to E.O. 12866, it creates no significant impact on small business entities subject to review under the Regulatory Flexibility Act, and it imposes no new economic burden requiring further analysis under the Unfunded Mandates Reform Act of 1995.

This correction is defined as a rule under the Congressional Review Act, but not as a major rule. As a result, it was provided to Congress and the General Accountability Office pursuant to the requirements of 5 U.S.C. 801 as interpreted by Office of Management and Budget Memorandum M-99-13.

For the reasons stated in the preamble, the Equal Employment Opportunity Commission amends 29 CFR Part 1625 as follows:

Executive Summary—Purpose of the Regulatory Action

This rulemaking is needed to make PBGC's premium rules more effective and less burdensome. The rule simplifies and streamlines due dates, coordinates the due date for terminating plans with the termination process, makes conforming changes to the variable-rate premium rules, clarifies the computation of the premium funding target, reduces the maximum penalty for delinquent filers that self-correct, and expands premium penalty relief.

PBGC's legal authority for this action comes from section 4002(b)(3) of the Employee Retirement Income Security Act of 1974 (ERISA), which authorizes PBGC to issue regulations to carry out the purposes of title IV of ERISA, and section 4007 of ERISA, which gives PBGC authority to set premium due dates and to assess late payment penalties.

In recent years, premium due dates have generally depended on plan size. Large plans have paid the flat-rate premium early in the premium payment year and the variable-rate premium later in the year. Mid-size plans have paid both the flat- and variable-rate premiums by that same later due date. Small plans have paid the flat- and variable-rate premiums in the following year. PBGC recently eliminated the early due date for large plans' flat-rate premiums. PBGC is now completing the process of simplifying the due-date rules by making small plans' premiums due at the same time as large and mid-size plans' premiums. However, because of a transition rule that gives small plans more time to adjust to the new provisions, the due dates will not be completely uniform until 2015. The following table shows how due dates differ under the previous and the new due date rules for calendar-year plans for 2014 (the transition year) and 2015 (the year full uniformity is achieved).

For the special case of a plan terminating in a standard termination, the final premium might come due months after the plan closed its books and thus be forgotten. Correcting such defaults has been inconvenient for both plans and PBGC. To forestall such problems, PBGC is setting the final premium due date no later than the date when the post-distribution certification is filed. PBGC is also making conforming changes to other special case due date rules.

Some small plans determine funding levels too late in the year to be able to use current-year figures for the variable-rate premium by the new uniform due date. To address this problem, PBGC is providing that small plans generally use prior-year figures for the variable-rate premium (with a provision for opting to use current-year figures).

To facilitate the due date changes, a plan will generally be exempt from the variable-rate premium for the year in which it completes a standard termination or (if it is small) for the first year of coverage.

In response to inquiries from pension practitioners, PBGC is clarifying the computation of the premium funding target for plans in “at-risk” status for funding purposes.

PBGC assesses late premium payment penalties at 1 percent per month for filers that self-correct and 5 percent per month for those that do not. The differential is to encourage and reward self-correction. But both penalty schedules have had the same cap—100 percent of the underpayment—and once the cap was reached, the differential disappeared. To preserve the self-correction incentive and reward for long-overdue premiums, PBGC is reducing the 1-percent penalty cap from 100 percent to 50 percent.

PBGC is also codifying in its regulations the penalty relief policy for payments made not more than seven days late that it established in a Federal Register notice in September 2011 and is giving itself more flexibility in exercising its authority to waive premium penalties.

PBGC is also amending its regulations to accord with the Moving Ahead for Progress in the 21st Century Act and the Bipartisan Budget Act of 2013 and to avoid retroactivity of PBGC's rule on plan liability for premiums in distress and involuntary terminations.

PBGC administers the pension plan termination insurance program under title IV of the Employee Retirement Income Security Act of 1974 (ERISA). Under ERISA sections 4006 and 4007, plans covered by the program must pay premiums to PBGC. PBGC's premium regulations—on Premium Rates (29 CFR part 4006) and on Payment of Premiums (29 CFR part 4007)—implement ERISA sections 4006 and 4007.

On January 18, 2011, the President issued Executive Order 13563, “Improving Regulation and Regulatory Review,” to ensure that Federal regulations seek more affordable, less intrusive means to achieve policy goals, and that agencies give careful consideration to the benefits and costs of those regulations. In response to and in support of the Executive Order, PBGC on August 23, 2011, promulgated its Plan for Regulatory Review, 1 noting several regulatory areas—including premiums—for immediate review.

PBGC reviewed its premium regulations and identified a number of ways to simplify and clarify the regulations, reduce burden, provide penalty relief, and generally make the regulations work better. On July 23, 2013 (at 78 FR 44056), PBGC published a proposed rule to replace the system of three premium due dates (based on plan size and premium type) with a single due date corresponding to the Form 5500 extended due date, to coordinate the due date for terminating plans with the termination process, to make conforming and clarifying changes to the variable-rate premium rules, to provide for relief from penalties, and to make other changes.

PBGC received comments on its proposed rule from six commenters—two employer associations, two associations of pension practitioners, an actuarial firm, and an individual actuary. All of the commenters approved of the proposal, and one specifically urged that it be made effective for 2014. The commenters also had suggestions for additional changes PBGC might make in its premium regulations or procedures. Those suggestions are discussed below with the topics they relate to. In response to the comments, PBGC has made changes both to the regulatory text and to its premium forms and instructions. Changes have also been made to reflect adoption of the Bipartisan Budget Act of 2013 and a minor due-date simplification that PBGC introduced on its own initiative (also discussed below).

Because the proposed change in the large-plan flat-rate due date was time-sensitive (and received only positive comments from the public), PBGC expedited a final rule limited to that change (and related changes in penalty provisions). That final rule was published January 3, 2014 (at 79 FR 347).

There are two kinds of annual premiums. 2 The flat-rate premium is based on the number of plan participants, determined as of the participant count date. The participant count date is generally the last day of the plan year preceding the premium payment year; in some cases, however (such as for plans that are new or are involved in certain mergers or spinoffs), the participant count date is the first day of the premium payment year. The variable-rate premium (which applies only to single-employer plans) is based on a plan's unfunded vested benefits (UVBs)—the excess of its premium funding target over its assets. The premium funding target and asset values are determined as of the plan's UVB valuation date, which is the same as the valuation date used for funding purposes. In general, the UVB valuation date is the beginning of the plan year, but some small plans (with fewer than 100 participants) may have UVB valuation dates as late as the end of the year.

Section 4007 of ERISA authorizes PBGC to set premium due dates and assess penalties for failure to pay premiums timely. Beginning in 1999, 3 PBGC set the variable-rate premium due date for plans of all sizes as 9 1/2 calendar months after the beginning of the premium payment year (October 15 for calendar-year plans). This was done so that the due date would correspond with the extended due date for the annual report for the prior year that is filed on Form 5500. Coordination of the premium and Form 5500 due dates promotes consistency and simplicity and avoids confusion and administrative burden. In 2008, however, to conform to changes made by the Pension Protection Act of 2006 (PPA 2006), small-plan due dates were extended to 16 months after the beginning of the premium payment year (April 30 of the following year for calendar-year plans).

Flat-rate premiums for large plans (those with 500 or more participants) were previously due two calendar months after the beginning of the premium payment year (the end of February for calendar-year plans). PBGC recently eliminated that early due date, and large plans' flat-rate premiums are now due at the same time as variable-rate premiums.

Under ERISA section 4007, premiums accrue until plan assets are distributed in a standard termination or a failing plan is taken over by a trustee. A plan undergoing a standard termination is exempt from the variable-rate premium for any plan year after the year in which the plan's termination date falls. 4

Late payment penalties accrue at the rate of 1 percent or 5 percent per month of the unpaid amount, depending on whether the underpayment is “self-corrected” or not. Self-correction refers to payment of the delinquent amount before PBGC gives written notice of a possible delinquency. Penalties are capped by statute at 100 percent of the unpaid amount.

The changes to the premium regulations affecting due dates, variable-rate premiums, and penalties are discussed below in that order.

PBGC is setting the premium due date for small plans as 9 1/2 months after the beginning of the premium payment year (subject to a one-year transition rule, discussed below). This date corresponds with the extended due date for the annual report for the prior year that is filed on Form 5500. (For calendar-year plans, the due date will be October 15.) Having recently made the same change for large plans' flat-rate premium due date, PBGC has now eliminated the system of three premium due dates tied to plan size and premium type and replaced it with a uniform due date system for both flat- and variable-rate premiums of plans of all sizes.

For small plans, the new unified due date raises a timing issue. Unlike large plans, which by statute must value benefits at the beginning of the year, small plans are permitted by statute to value benefits as late as the end of the year and thus might be unable to calculate variable-rate premiums by a due date within the year using current-year data. (For example, a small calendar-year plan that valued benefits as of December 31 could not determine the premium by the preceding October 15.) PBGC's solution to this timing problem is for small plans to determine the variable-rate premium using data, assumptions, and methodology for the year before the premium payment year. (This solution also accommodates situations where (although timely action might be possible) sponsors prefer to put off giving plan actuaries information for plan valuations until after other close-of-the-year matters are dealt with.) A more detailed discussion of this provision is set forth below under the heading “Look-Back” Rule for Small Plans, below.

These changes mean that plan consultants can do all premium and Form 5500 filing chores at one time, once a year. PBGC will receive all premium filings for each plan year at one time, specific to that year, and will be able to process a plan's entire annual premium in a single operation. Going from three due dates to one will be simpler for all concerned—even for mid-size plans, whose due date is not changing. Simpler rules mean shorter and simpler filing instructions—instructions that PBGC must update annually and that plan administrators of plans of all sizes must read, understand, and follow. Less complexity means less chance for mistakes and the time and expense of correcting them. Moving to one uniform due date will also simplify PBGC's premium processing systems and save PBGC money on future periodic changes to those systems (because it is less expensive to modify simpler systems).

In short, PBGC believes that this change will produce a significant reduction in administrative burden for both plans and PBGC. It will also shift the earnings on premium payments between plans and PBGC for the time between the old and new due dates, but overall, plans will gain. 5

However, shifting immediately from the old to the new due date schedule would result in two premium due dates for small plans in the transition year: using a calendar-year plan as an example, the 2013 premium would be due at the end of April 2014, and the 2014 premium would be due in mid-October 2014. 6 This “doubling up” of premiums for one year prompted one commenter to express concern about potential cash flow problems for some small plan sponsors and to recommend that PBGC permit payment of the transition-year premium in three annual installments. Another commenter requested transition rules generally.

Although PBGC is not persuaded that the due date change poses a significant cash flow problem for most small plan sponsors (in part because premiums can be paid from plan assets), the fact that a comment raised this issue indicates that it may exist in some cases. But PBGC believes that a regime of installment payments is more complex than is necessary to deal with the problem. Instead, PBGC is addressing this concern by extending the transition year due date by four months (from October 15, 2014, to February 15, 2015, for calendar-year plans) for small plans that would otherwise have two premium due dates in the transition year. With this one-time extension, a small plan's transition-year premium and its premiums for the preceding and following plan years can be spaced about equally over a 17 1/2 -month period (from April 30, 2014, to October 15, 2015, for calendar-year plans), with about eight or nine months between each two payments. 7

In addition, a 60-day penalty waiver is available in cases of financial hardship, 8 which could extend the 17 1/2 -month period to 19 1/2 months. And case-by-case relief from late-payment penalties is also available. In combination with the transition-year due date extension, PBGC believes these provisions adequate to relieve any cash-flow problems caused by transition-year due-date bunching.

The foregoing discussion focuses on the normal due dates for annual premiums. There are also special due date rules for new and newly covered plans and for plans that change plan year. But there has been no special due date provision for terminating plans—and yet such plans have posed a special problem, because their final premium due date might come months after all benefits were distributed and their books were closed. Although the standard termination rules require that provision be made for PBGC premiums, 9 PBGC's experience has been that once the sometimes-difficult process of distributing benefits was over—and with the premium due date often months in the future—plan administrators might simply forget about premiums and consider their work done. Months later, when PBGC contacted them after they failed to make the final premium filing, it was typically an inconvenience, and sometimes an annoyance, to go back to (or reconstruct) the records to calculate and pay premium—and interest and penalties, because the due date had been missed.

With a view to ensuring that final-year premiums are routinely paid for plans winding up standard terminations, PBGC is changing the due date for such plans to bring it within the standard termination timeline. 10 The final event in the standard termination timeline is the filing of the post-distribution certification under § 4041.29 of PBGC's regulation on Termination of Single-Employer Plans (29 CFR part 4041). The plan administrator of a terminating plan must file the certification (on PBGC Form 501) within 30 days after the last benefit distribution date, but no late filing penalty is assessed if the filing is no later than 90 days after the distribution deadline under § 4041.28(a) of the termination regulation (the “penalty-free zone”). The proposed rule provided that the premium due date for a terminating plan's final year would be the earliest of (1) the normal premium due date, (2) the end of the penalty-free zone, or (3) the date when the post-distribution certification is actually filed. In the interest of simplicity, the final rule eliminates the second of these three dates and sets the due date for such final filings as the earlier of (1) the normal premium due date and (2) the date when the post-distribution certification is actually filed.

Thus plans will in effect have at least 90 days after distributions are complete to make the final year premium filing. And since in addition the normal unified premium due date is nine-and-a-half months after the plan year begins, only plans closing out in the first six-and-a-half months of the final year will face an accelerated premium deadline. For plans closing out in the last five-and-a-half months of the final year, the normal premium due date will come before the end of the penalty-free zone.

The 90 days (or more) between the completion of final distributions and the accelerated premium deadline will also give a plan at least that much time to determine the flat-rate premium (which is based on the participant count at the end of the prior year). For a terminating plan, counting participants should be relatively easy. Because it is in the process of providing benefits for (or for the survivors of) each participant, a terminating plan must necessarily have a roster of all participants. By simply subtracting from the roster the participants who received distributions before the participant count date, the plan can determine the participant count.

Computing a variable-rate premium in three months might be more challenging, but under this final rule it will not be necessary. If the termination date for a standard termination is before the beginning of the final plan year, the regulation already provides an exemption from the variable-rate premium for the final year. PBGC is expanding this exemption to apply to a plan's final year, even if the termination date comes during that year. 11 Thus, the final-year premium will be flat-rate only. This change will provide relief for the significant number of plans that close out in the same year in which their termination dates fall (as indicated by PBGC data on the number of plans that pay variable-rate premiums for the final year).

Advancing the premium due date for some terminating plans will shift earnings on the premiums from those plans to PBGC. But some of those plans should enjoy reduced administrative expenses (and possibly save on late charges) because the advanced deadline will prompt them to prepare premium filings while files are open for paying benefits. And some plans will avoid paying a final-year variable-rate premium under PBGC's expansion of the exemption for plans doing standard terminations. 12 On balance, PBGC expects there to be no significant net cost to plans and significant administrative benefits for PBGC.

One commenter recommended that the new terminating plan due date be extended by 30 days so that the final-year premium filing would not have to be made at the same time as the post-distribution certification (Form 501), citing the time necessary to prepare Form 501. PBGC believes that the simplicity of making the final flat-rate-only premium filing, as discussed above, suggests that plan administrators will typically be able to avoid simultaneous filing of the premium and post-distribution certification forms by simply filing the premium form before the deadline. If circumstances make that difficult, the seven-day penalty waiver (see Codification of Seven-Day Penalty Waiver Rule, below) will provide relief from late payment penalties. If, in an unusual situation, preparation of the premium filing takes more than a week, case-by-case relief from late-payment penalties is also available. (See Expansion of Penalty Waiver Authority, below).

As noted above, the premium payment regulation already includes a special due date provision for new and newly covered plans. PBGC is making two technical modifications to this provision in support of the primary changes in this rulemaking.

The first modification is to restore—for newly covered plans—the alternative due date of 90 days after title IV coverage begins. This alternative was available before the PPA 2006 amendments to the premium regulations, but those amendments set newly covered plans' normal due date four months after the end of the premium payment year—and thus more than 90 days after the latest possible coverage date. This made the alternative due date superfluous, and it was removed. Now that PBGC is returning the normal due date to 2 1/2 months before the end of the plan year, it will again be possible for a plan's coverage date to be too late in the premium payment year to make filing by the normal due date feasible. Hence the restoration of this alternative due date.

The second modification is to provide a due date extension for a subset of plans that are excluded from the normal rule that small plans base the variable-rate premium on prior-year data. 13 This subset consists of new small plans resulting from non- de minimis consolidations and spinoffs. These plans will have to pay a variable-rate premium based on current-year data. 14 But being small, a plan in this subset might have a UVB valuation date too late in the premium payment year to enable the plan to meet the normal filing deadline. This second modification to the new-plan due date provision extends the due date for such plans until 90 days after the UVB valuation date, to give them time to calculate the variable-rate premium. 15

One commenter recommended that PBGC adopt a very different due date rule for new plans and some newly covered plans. The suggestion was basically to provide for filing by the following year's normal due date in situations where one of the 90-day extension rules would otherwise apply. The commenter indicated that the suggested change would not apply to newly covered plans that had previously gone in and out of coverage, but even without this complication, PBGC is not persuaded that the change would be an improvement. The commenter argued that the existing rule is likely to result in missed filings, but the 90-day extension has been in the regulation for years, and no significant problems with it have come to PBGC's attention. Thus PBGC's concern would be that changing this long-standing pattern of due date extensions would be more likely to cause than cure problems. Furthermore, the commenter's recommendation for the new and newly covered plan due date would put plans in the position of owing two years' premiums on the same day, a result that the same commenter was concerned with in connection with the transition to the new unified due date for small plans (see Uniform Due Dates for Plans of All Sizes, above). Accordingly, PBGC is not adopting this suggestion.

As noted in the discussion of the unified due date above, some small plans value benefits too late in the premium payment year to be able to compute variable-rate premiums by the new uniform due date, which is 2 1/2 months before the end of the premium payment year. (As also noted, some small-plan sponsors prefer to defer plan valuation matters until after year-end.) To solve this problem, small plans will determine UVBs, on which variable-rate premiums are based, by looking back to data for the prior year. 16 Because a new plan does not have a prior year to look back to, new small plans will generally be exempt from the variable-rate premium. This new variable-rate premium exemption is discussed in more detail under First-Year Variable-Rate Premium Exemption below.

The term “UVB valuation year” is used in the text of the regulation to mean the year that the plan administrator looks to for the UVBs used to calculate the variable-rate premium for the premium payment year. As a general rule, the UVB valuation year is the plan year preceding the premium payment year for small plans, and is the premium payment year for other plans. (Using the term “UVB valuation year” avoids the need to have the regulation describe two versions of all the UVB determination rules—one version for small plans and a second version for the others.)

This “look-back” rule applies only to the variable-rate premium, not to the flat-rate premium. The participant count on which the flat-rate premium is based is determined not as of the UVB valuation date but as of the participant count date. This date is still the same as it was before PPA 2006, when small plans' premium due date was the historical date that this final rule reinstates for them (October 15 for calendar-year plans). From the perspective of the flat-rate premium, the final rule returns small plans to their situation before PPA 2006, and no special accommodation is needed.

In general, the look-back rule applies to any plan with a participant count for the premium payment year of up to 100, or a funding valuation date that is not at the beginning of the premium payment year. Thus the “small plans” to which the look-back rule applies are a slightly different group, compared to the “small plans” whose premium due date under the PPA 2006 amendment is four months after the end of the plan year. The difference in approach reflects the difference in the implications of plan size under the old and new premium payment regulations. Heretofore, all plans had the same UVB valuation year, and plan size determined due date; under the amended regulation, all plans have the same due date, and plan size generally determines UVB valuation year ( i.e., whether the look-back rule applies).

Until now, the regulation based plan size on the participant count for the year before the premium payment year, so that plans could determine well in advance whether they were large and thus required to pay the flat-rate premium early in the year. New plans (which have no prior year) were treated as small, which meant that they paid their first-year premiums according to the small-plan payment schedule, regardless of size. Newly covered plans were grouped with new plans. If a new or newly covered plan in fact covered more than 100 participants, it enjoyed the luxury of the delayed small-plan due date for its first year, but the most PBGC could be said to have “lost” was 6 1/2 months' interest on the premium.

Under the new rules, in contrast, if a new plan covering more than 100 participants were treated as small, PBGC would lose not just interest but (because of the new variable-rate premium exemption for new small plans) the whole variable-rate premium. For some new plans—particularly those created by consolidation or spinoff—this could be a very substantial sum. To avoid this unintended consequence of the look-back rule, which is meant for plans that are genuinely small, the small-plan category is based on the participant count for the premium payment year rather than the preceding year. This change is possible because PBGC's elimination of the early flat-rate premium due date for large plans has eliminated the pressure to determine plan size early in the premium payment year. By the time a plan needs to know whether it is small (and thus subject to the look-back rule), it will have had plenty of time to determine its current-year participant count.

Changing from the prior year's to the current year's participant count brings PBGC's definition of “small plan” into closer alignment with the category of plans eligible by statute to use non-first-day-of-the-year valuation dates. 17 The somewhat complex statutory provision is based on participant-count data from the prior year, 18 and PBGC's participant count date for the current year is generally the last day of the prior year. To improve the correspondence with the statutory provision, PBGC is changing the small-plan numerical size range from fewer than 100 participants to 100 or fewer participants (the numerical size range of plans permitted by statute to use non-first-day-of-the-plan-year valuation dates).

As a general matter, PBGC wants every plan that in fact has a non-first-day-of-the-plan-year valuation date to be included in the definition of “small plan” that the look-back rule applies to. But because of the complexity of the statutory category of plans eligible to use non-first-of-the-year valuation dates, PBGC has not matched its “small plan” definition closely to every aspect of that statutory category. Instead, PBGC is combining a simple “small plan” concept with a “catch-all” clause. 19 The look-back rule thus applies to any plan that has a participant count of 100 or fewer for the premium payment year or that in fact has a funding valuation date for the premium payment year that is not the first day of the year. 20

One commenter argued that small plans with first-day-of-the-plan-year valuation dates should be allowed to opt out of the look-back rule. The commenter noted that such plans would have plenty of time to compute the variable-rate premium based on a UVB valuation date in the premium payment year. Because the same can be said of a plan whose valuation date is the second day of the plan year, or indeed any day up to shortly before the due date (depending on the plan actuary's diligence), equity would seem to suggest that the proposed scope of the option would be too narrow and that the proposal should be evaluated on the assumption that it would apply to a much larger category of plans.

The commenter supported the proposal to permit opt-outs by observing that year-old data would not include prior-year contributions made to improve plans' funded status. PBGC is aware that some small-plan sponsors make additional contributions to reduce the variable-rate premium and that under the look-back rule, reductions would come a year later than if the look-back rule did not apply. Other correspondence and comments made at meetings have noted the importance of this opportunity for some small-plan sponsors (especially in view of the recent increase in the variable-rate premium  21 ). While PBGC doesn't know how many such plan sponsors there are, evidence suggests that there may be enough to warrant the introduction of some flexibility in the application of the look-back rule.

Accordingly, to accommodate these concerns, the final rule contains a special exception allowing for a procedure to be provided in PBGC's premium instructions whereby a small plan may opt out of the look-back rule and instead base the variable-rate premium on current-year UVBs. Details will be incorporated in the premium instructions and may be modified over time in response to experience or suggestions from the public. 22

PBGC's look-back rule has the advantage that it permits use of a more convenient premium due date, and it avoids the use of complicated mathematical manipulations aimed at making the prior-year figures more reflective of current conditions. For small plans, the combination of the new due date and the look-back rule means not only that the premium due date aligns with the Form 5500 due date (as typically extended), but that the due dates that align correspond to the same valuation. The following table illustrates, for filings due October 15, 2016, 23 how the alignment of valuations and due dates for small plans differ from the alignment for other plans.

For small plans, the combination of the new due date and the look-back rule has basically the same result as if the old small-plan due date (four months after the end of the premium payment year) were extended for 5 1/2 months without a look-back. For example, consider the following table comparing the final rule with a 5 1/2 -month due date extension (without a look-back) for a calendar-year plan:

PBGC in fact considered the alternative of extending the due date 5 1/2 months for small plans. But premium filings contain, in addition to premium data, other data that PBGC uses to help determine the magnitude of its exposure in the event of plan termination, to help track the creation of new plans and transfer of participants and plan assets and liabilities among plans, and to keep PBGC's insured-plan inventory up to date. It is important that these data be as current as possible. Furthermore, PBGC decided it was administratively simpler to have all premium filings for a year be due in that year—avoiding (for example) the need to determine whether a filing made October 15, 2016, was for 2016 or 2015.

The comparison of the advanced and deferred due date approaches shows why it is not clear how to analyze the financial impact of the final rule. On the one hand, the change can be viewed as a simple acceleration of the premium due date, with small plans losing 6 1/2 months' interest on their annual premium payments. On the other hand, it can be viewed as a deferral of the due date (with small plans gaining 5 1/2 months' interest on their premiums each year) preceded by a one-time “extra” premium in the transition year. For purposes of the analyses in this preamble of the effects of the changes for small plans, PBGC views the due date as being accelerated rather than deferred.

Under the look-back rule, small plans pay variable-rate premiums based on year-old data. Plans may view this either positively or negatively, depending on whether UVBs are trending up or down; using year-old data to compute variable-rate premiums shifts by one year the effect of changes in those data, which are typically modest but may at times be dramatic. And for the first year to which the look-back rule applies, small plans' variable-rate premiums are based on the same UVBs as for the year before, which each small plan may consider either beneficial or detrimental depending on its circumstances.

The look-back rule faces the difficulty, noted above, that a new plan does not have a prior year to look back to. The typical new plan has no vested benefits, and so would owe no variable-rate premium with or without the look-back rule. But some new plans do have UVBs—for example, newly created plans that grant past-service credits. This circumstance creates a dilemma: a new small plan cannot look back to prior-year UVBs (because it has no prior year), but it may be unable to base its first year's premium on its first year's UVBs (because its valuation date may be too late in the year). To resolve this problem, PBGC is providing an exemption from the variable-rate premium for most small plans that are new or newly covered. 24 PBGC considers it reasonable to forgo variable-rate premiums from a few new small plans in the interest of greatly simplifying its premium due date structure. 25

However, PBGC considers plans created by consolidation or spinoff to be new plans. To avoid creating an incentive to sponsors of underfunded small plans to turn them (in effect) into new plans by spinoff or consolidation, simply to avoid paying variable-rate premiums, PBGC is excluding from this variable-rate premium exemption any new small plan that results from a non- de minimis consolidation or spinoff. These consolidated or spunoff plans are not subject to the look-back rule, but instead base their variable-rate premiums on current-year data, with an extended due date available (as discussed above) to provide time to calculate the premium where the UVB valuation date is late in the premium payment year.

Although the premium rates regulation exempts a plan in a standard termination from the variable-rate premium for any plan year beginning after the plan's termination date, 26 it is possible to carry out a standard termination so that the termination date and final distribution come within the same plan year. In that case, the plan is subject to the variable-rate premium—based on underfunding of vested benefits—for the very year in which it demonstrates, by closing out, that its assets are sufficient to satisfy not merely all vested benefits but all non-vested benefits as well.

As mentioned above, PBGC is expanding the exemption from the variable-rate premium to include the year in which a plan closes out, regardless of when the termination date is. Like the existing exemption, the new exemption is conditioned on completion of a standard termination. If the exemption is claimed in a premium filing made before (but in anticipation of) close-out, and close-out does not in fact occur by the end of the plan year, the exemption is lost, and the variable-rate premium is owed for that year (with applicable late charges).

As previously noted, variable-rate premium amounts not owed because of this change in the variable-rate premium exemption will significantly offset costs attributable to the revised final-year due date rule for plans in standard terminations, to which this change is related. 27

ERISA section 4006(a)(3)(E) makes the funding target in ERISA section 303(d) (with modifications) the basis for the premium funding target. The definition of “funding target” in section 303(d) in turn incorporates the provisions of ERISA section 303(i)(1), dealing with “at-risk” plans. (A plan is in “at-risk” status if it fails certain funding-status tests.) ERISA section 303(i)(5) provides for phasing in changes between normal and at-risk funding targets over five years and thus ameliorates the effects of section 303(i)(1). Although neither section 303(d) nor section 303(i)(1) refers explicitly to section 303(i)(5), PBGC believes that section 303(i)(5) clearly applies to the determination of the premium funding target. PBGC is adding a provision to the premium rates regulation clarifying this point.

ERISA section 303(i)(1)(A)(i) requires the use of special actuarial assumptions in calculating an at-risk plan's funding target, and section 303(i)(1)(A)(ii) requires that a “loading factor” be included in the funding target of an at-risk plan that has been at-risk for two of the past four plan years. The loading factor, described in section 303(i)(1)(C), is the sum of (i) an additional amount equal to $700 times the number of plan participants and (ii) an additional amount equal to 4 percent of the funding target determined as if the plan were not in at-risk status.

In response to inquiries from pension practitioners, PBGC is amending the premium rates regulation to clarify the application of the loading factor to the calculation of the premium funding target for plans in at-risk status.

The statutory variable-rate premium provision refers explicitly to the defined term “funding target,” which for at-risk plans clearly includes the section 303(i)(1) modifications. PBGC thus considers it clear that all of the at-risk modifications must be reflected in the premium funding target. And considering that the funding target and the premium funding target are so closely analogous, it seems natural that for premium purposes, the 4 percent increment referred to in section 303(i)(1)(C)(ii) should be taken to mean 4 percent of the premium funding target determined as if the plan were not in at-risk status.

But for premium purposes, the term “participant” in the loading factor provision is ambiguous. Because the premium funding target reflects only vested benefits, while the funding target reflects all accrued benefits, there is a suggestion that the term “participant” should in the premium context be understood to refer to vested participants. But many participants are partially vested (as in plans with graded vesting) or are vested in one benefit but not another (for example, vested in a lump-sum death benefit but not in a retirement annuity) and thus are not clearly either vested or non-vested. Furthermore (putting vesting aside), the premium regulations (§ 4006.6 of the premium rates regulation) and the Internal Revenue Service's regulation on special rules for plans in at-risk status (26 CFR 1.430(i)-1(c)(2)(ii)(A)) count participants differently.

PBGC is resolving the statutory ambiguity by providing that the participant count to use in calculating the loading factor to be reflected in the premium funding target is the same participant count used to compute the load for funding purposes. This solution has the advantage that it avoids introducing new participant-counting rules and does not impose on filers the burden of determining two different participant counts for two similar purposes.

One commenter argued that the loading factor should not be included in the premium funding target. The commenter noted that ERISA section 4006 could have referred to both ERISA sections 303(d) and 303(i), but refers only to section 303(d). However, as the commenter notes, section 303(d) refers to section 303(i). Thus section 4006, by referring to section 303(d), is referring to section 303(i) as well.

The commenter also supported the argument against incorporation of the loading factor by appealing to the difference in the purposes of sections 303 and 4006, the former dealing with plan funding and taking unvested benefits into account, the latter dealing with PBGC premiums and not taking unvested benefits into account. PBGC acknowledges these differences, but points out that the two sections are linked, in that section 4006 refers to section 303 for the methodology for calculating premiums. In fact, section 4006(a)(3)(E)(iii)(I) specifies how the premium methodology differs from the funding methodology. Two differences are noted: disregarding unvested benefits and using different interest assumptions. The load is not mentioned. PBGC thus believes that the statutory language adequately supports the applicability of the loading factor to the calculation of premiums.

Finally, the commenter claimed that participants in at-risk plans are better off if funds are devoted to benefits rather than premiums. But even if each dollar spent on pension insurance premiums is a dollar not spent on benefits, pension insurance is for the protection of those very benefits. PBGC insurance would appear to be even more valuable for participants in at-risk plans than in plans not in at-risk status.

Finding none of the commenter's reasoning persuasive, PBGC continues to hew to the position that the loading factor applies to the premium funding target.

The difference between the normal penalty rate of 5 percent per month and the self-correction rate of 1 percent per month provides an incentive to self-correct and reflects PBGC's judgment that those that come forward voluntarily to correct underpayments deserve more lenient treatment than those that PBGC ferrets out through its premium enforcement programs. But because of a penalty cap of 100 percent of the underpayment, regardless of the rate it accrues at, a plan that self-corrects after 100 months pays the same penalty as if it had been tracked down by PBGC. PBGC occasionally encounters situations in which—typically when there is a change in plan sponsor or plan actuary—a plan with a long history of underpaying or not paying premiums “comes in from the cold.” PBGC believes that in fairness to such filers (and to persuade others to emulate them), the maximum penalty for self-correctors should be substantially less than that for those that do not self-correct. 28

To preserve the self-correction penalty differential for long-overdue premiums, PBGC is capping the self-correction penalty at 50 percent of the unpaid amount. While this will reduce PBGC's penalty income in these cases, acceptance of the reduction is consistent with the view of penalties as a means to encourage compliance, rather than as a source of revenue.

The premium payment regulation and its appendix include many specific penalty waiver provisions that provide guidance to the public about the circumstances in which PBGC considers waivers appropriate—circumstances such as reasonable cause and mistake of law. To deal with unanticipated situations that nevertheless seem to warrant penalty relief, § 4007.8(d) refers to the policy guidelines in the appendix, and § 21(b)(5) of the appendix says that PBGC may waive all or part of a premium penalty if it determines that it is appropriate to do so, and that PBGC intends to exercise this waiver authority only in narrow circumstances.

In reviewing the circumstances where it has exercised its waiver authority, PBGC has concluded that the term “narrow” may not capture well the scope of that exercise and may thus be misleading. To avoid an implication that PBGC considers its waiver authority more narrowly circumscribed than in fact it does, the sentence about narrow circumstances is being removed from the appendix.

On September 15, 2011 (at 76 FR 57082), PBGC published a policy notice announcing (among other things) that for plan years beginning after 2010, it would waive premium payment penalties assessed solely because premium payments were late by not more than seven calendar days.

In applying this policy, PBGC assumes that each premium payment is made seven calendar days before it is actually made. All other rules are then applied as usual. If the result of this procedure is that no penalty would arise, then any penalty assessed on the basis of the actual payment dates is waived.

PBGC is codifying this policy in the premium payment regulation.

One commenter complained that by the time PBGC notifies a late filer that an expected filing has not been received, the seven-day grace period has expired, and the filer becomes liable for a five percent penalty. The commenter requested that tardy filers in such circumstances be given an additional 15 days to pay and incur a one-percent penalty or that PBGC notify plans immediately when expected filings are not received, to give them the full benefit of the seven-day grace period within which to file.

Plan administrators are expected to know the law and to be capable of setting up tickler files and computerized reminders for legal obligations they may otherwise forget to fulfill. Nonetheless, PBGC does offer a reminder service. Reminders are sent shortly after the beginning of each month to practitioners who have signed up for reminders for that month. Plan administrators may sign up for reminders at http://www.pbgc.gov/prac/pg/other/practitioner-filing-reminders.html .

PBGC believes no modification of its premium regulations is called for to accommodate this comment.

The premium payment regulation provides an option for paying an estimate of the variable-rate premium at the due date and “truing up” within 6 1/2 months without penalty. The availability of this option has been restricted to mid-size and large plans. With the elimination of different due dates based on plan size, the option is being made available to plans of any size. PBGC expects that very few small plans will take advantage of the option, since in virtually all cases, the variable-rate premium will be known by the uniform due date. But the only comment PBGC received on this issue was in favor of making the option available to small plans.

Before amendment to conform to statutory changes made by PPA 2006, PBGC's premium regulations used the same date for counting participants for purposes of the flat-rate premium and for determining UVBs for purposes of the variable-rate premium. This date was (generally) “the last day of the plan year preceding the premium payment year.”

When PBGC amended the premium regulations to conform to PPA 2006, the amendments provided that in general, UVBs were to be determined as of a different date from the date used to count participants. Thus references in the regulations to “the last day of the plan year preceding the premium payment year” in some cases were changed to refer to “the participant count date” and in other cases were changed to refer to “the UVB valuation date.”

The regulatory provision dealing with the variable-rate premium cap for plans of small employers includes two references to “the last day of the plan year preceding the premium payment year” that should have been amended to refer to “the participant count date” but were overlooked. PBGC is correcting the variable-rate premium cap provision to remedy this oversight.

When PBGC added to the premium regulations the exemption from the variable-rate premium for plans terminating in standard terminations, it stated that the exemption would apply to “a standard termination with a proposed termination date during a plan year preceding the premium payment year.”  29 This reflects the provision in Rev. Rul. 79-237 (1979-2 C.B. 190) that minimum funding standards apply only until the end of the plan year that includes the termination date. In the text of the regulation, this requirement was expressed by requiring that the proposed termination date be on or before “the last day of the plan year preceding the premium payment year” — the same words used to identify the date as of which participants were to be counted for purposes of the flat-rate premium and the date as of which UVBs were to be determined for purposes of the variable-rate premium.

When PBGC amended the premium regulations to conform to statutory changes made by PPA 2006, as described above, the phrase “the last day of the plan year preceding the premium payment year” in the standard termination exemption from the variable-rate premium should have been left unchanged. Instead, it was inadvertently amended to read “the UVB valuation date.” PBGC is correcting the exemption to require that the proposed termination date be “before the beginning of the premium payment year,” which also makes the provision clearer and simpler. 30

The premium payment regulation provides that a single-employer plan does not have an obligation to pay premiums if the plan is the subject of distress or involuntary termination proceedings, with a view to conserving plan assets in such situations. The premium payment obligation then falls solely on the plan sponsor's controlled group. Heretofore, the regulation focused on the plan year for which a premium is due; the plan's obligation was tolled with respect to premiums for the year in which the termination was initiated and future years.

PBGC has encountered cases in which plan administrators have used plan assets to pay premiums for which the plans had no obligation because termination proceedings began later in the plan year, after payment was made. To address this problem, PBGC is revising the regulation so that a plan's obligation to pay premiums ceases when termination proceedings begin—an event of which the plan administrator will have notice—at which time the premium payment obligation falls solely on the plan sponsor's controlled group.

This change does not affect the amount of premiums due. It simply reduces administrative burden by making it easier for a plan administrator to determine whether the plan has an obligation to make a premium payment.

The current definition of newly covered plan excludes new plans. In rare cases, a new plan might not initially be covered by title IV of ERISA and might then become covered later in its first year of existence. PBGC is revising the definition to remove the exclusion of new plans so that in the rare case described, the plan will be a newly covered plan (as well as a new plan) and thus entitled to prorate its premium based on its coverage date (as newly covered plans are permitted to do) rather than its effective date (as new plans are permitted to do).

On July 6, 2012, and December 26, 2013 (respectively), the President signed into law the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Pub. L. No. 112-141) and the Bipartisan Budget Act of 2013 (BBA 2013) (Pub. L. No. 113-67). MAP-21 and BBA 2013 included provisions about PBGC premiums that, without the need for implementing action by PBGC, have already become effective. 31 PBGC is amending the premium rates regulation in accordance with MAP-21 and BBA 2013.

Under sections 40221 and 40222 of MAP-21, effective for plan years beginning after 2012, each flat or variable premium rate has a different annual inflation adjustment formula, and the variable-rate premium is limited by a cap (the “MAP-21 cap”) with its own annual inflation adjustment. BBA 2013 added more adjustment provisions. Because of the multiplicity and complexity of the adjustment formulas, PBGC has concluded that it is not useful to repeat the statutory premium rate rules in the premium rates regulation. Instead, PBGC is replacing existing premium rate provisions with statutory references and will simply announce each year the new rates generated by the statutory rate formulas.

Effective for plan years beginning after 2011, section 40211 of MAP-21 establishes a “segment rate stabilization” corridor for certain interest assumptions used for funding purposes but provides (in section 40211(b)(3)(C)) for disregarding rate stabilization in determining PBGC variable-rate premiums. PBGC is revising the description of the alternative premium funding target to make clear that it is determined using discount rates unconstrained by the segment rate stabilization rules of MAP-21.

PBGC is revising the language that describes the “reconciliation” date—associated with the penalty waiver for underestimation of the variable-rate premium—to clarify that the waiver does not require a particular state of mind (of the plan administrator, sponsor, actuary, or other person) regarding the correctness or “finality” of the estimate. This clarification is not substantive but merely reflects the fact that (as noted in the 2008 preamble to the PPA 2006 amendment to the regulation) the waiver is provided “in recognition of the possibility that circumstances might make a final UVB determination by the due date difficult or impossible”. 32

PBGC is also making some other non-substantive editorial changes, including provision of an additional example, deletion of anachronistic text, and addition of a definitional cross-reference.

PBGC's regulation on Restoration of Terminating and Terminated Plans (29 CFR part 4047) has a cross-reference to § 4006.4(c) of the premium rates regulation, which used to describe the alternative calculation method for determining the variable-rate premium  33 but no longer does so. To avoid confusion, PBGC is removing the obsolete cross-reference.

PBGC is deleting from its regulation on Filing, Issuance, Computation of Time, and Record Retention (29 CFR part 4000) a provision that parallels anachronistic text that is being deleted from the premium rates regulation.

One commenter proposed a change to the “merger-spinoff rule.” That provision applies where there is a plan merger or spinoff at the very beginning of the premium payment year (the “stroke of midnight” between the prior year and the premium payment year). The provision shifts the participant count date from the day before the premium payment year begins to the first day of the premium payment year for certain plans involved in such mergers or spinoffs. The participant count date shifts for the transferee plan in a non- de minimis merger and for the transferor plan in a non- de minimis spinoff. Participants for whom the transferor plan in a merger will pay no premiums get picked up in the transferee plan's participant count, and participants for whom the transferee plan in a spinoff will pay premiums get dropped from the transferor plan's participant count. In general, a transaction is de minimis if the liabilities of one of the two plans involved in the transaction are less than three percent of the other plan's assets.

The commenter suggested that the exception for de minimis transactions be eliminated. PBGC believes consideration of this suggestion should be deferred. The suggestion deals with a feature of the premium rates regulation not directly focused on by the proposed rule. While the suggestion would tend to lower premiums for transferor plans in de minimis spinoffs, it would tend to raise premiums for transferee plans in de minimis mergers. For both types of transaction, it would mean counting participants on a different date, which might be inconvenient. And PBGC notes that de minimis transactions are also disregarded in determining whether a plan is a continuation plan for purposes of applying the due date and look-back rules. There is a question whether de minimis transactions should be taken account of for that purpose too or whether de minimis transactions should be treated in different ways for the two different purposes. Thus PBGC is taking no action on this suggestion now.

PBGC's premium filing instructions require that a plan making its final premium filing report the reason why the filing is the plan's final filing. But when the event that leads to the cessation of the filing requirement—such as a plan merger or consolidation—occurs after the premium filing is made, the instructions say no amended filing is required. To avoid the need for correspondence to clarify why a plan has stopped filing, the instructions recommend contacting PBGC in such cases unless a termination, merger, or consolidation is involved.

One commenter complained that PBGC requires amended filings in final-filing circumstances where its premium instructions say amended filings are not required. (PBGC assumes the comment reflects informal guidance provided by PBGC's premium information call center.)

PBGC's position on amended filings in such cases is as stated in its filing instructions. Amended filings are not required for post-filing events that lead to cessation of the premium filing requirement, although voluntary informal reporting is encouraged.

Where informal guidance from a PBGC source seems to conflict with other PBGC guidance (such as premium filing instructions), PBGC encourages filers to contact PBGC's Problem Resolution Officer (Practitioners) as described in item 7 of appendix 2 to PBGC's premium filing instructions, available on PBGC's Web site ( www.pbgc.gov ).

This issue appears not to implicate anything in PBGC's premium regulations.

Two comments requested that PBGC modify the premium forms and instructions to permit a plan to take advantage of the penalty waiver for underestimation of the variable-rate premium without the need to declare the initial filing an estimate by checking a box. Since the introduction of this waiver, the instructions have required that a plan that checks the box make a reconciliation filing even when the estimated variable-rate premium turns out to be correct, and plans that fail to make the required second filing have been contacted by PBGC to enforce the requirement. Eliminating the check box would obviate the burden of making a second filing when there is no change in the premium and would conserve PBGC resources by eliminating the need for correspondence with such plans.

Although PBGC is always interested in simplifying the premium filing process, it is not taking action on this suggestion at this time. PBGC is not convinced that it has an adequate basis for concluding that the burden of the checkbox procedure outweighs the utility of the checkbox. For example, for 2012, only about 70 plans checked the estimated-filing checkbox; about 40 filed timely reconciliations and 30 did not. About another 30 plans made amended filings by the reconciliation deadline and might have qualified for penalty relief if they had checked the box to indicate that their initial filings were estimated. One commenter's assertion that plans routinely check the estimated-filing checkbox to preserve the option to amend without penalty seems unsupported by these data. Nor do the data bear out the hypothesis that many plans fail to qualify for the penalty waiver simply because they neglect to check the box. In short, so few plans seem to be affected by the checkbox requirement that PBGC believes other options, such as providing more guidance or cautions in PBGC's electronic premium filing interface, could ameliorate the commenters' concerns. PBGC thinks it prudent to explore such other options and to gather and analyze further data before deciding whether to take the checkbox off the electronic premium filing form.

PBGC welcomes further public comment on this suggestion.

Except as indicated below, the amendments in this final rule are applicable for 2014 and later plan years.

The change in the due date and the exemption from the variable-rate premium for a plan closing out in a standard termination are applicable to plans that complete distribution of assets in satisfaction of all plan benefits under the single-employer termination regulation on or after the effective date of this final rule.

The change in the date when a plan ceases to be liable for premiums in a distress or involuntary termination is applicable to terminations with respect to which the plan administrator issues the first notice of intent to terminate, or the PBGC issues a notice of determination, on or after the effective date of this final rule.

MAP-21 became effective on July 6, 2012. BBA 2013 is effective for plan years beginning after 2013. The changes to premium rates in this final rule apply to plan years beginning after 2012 (to the extent attributable to MAP-21) or after 2013 (to the extent attributable to BBA 2013). The clarification to the definition of the alternative premium funding target after MAP-21 applies to plan years beginning after 2011.

PBGC has determined, in consultation with the Office of Management and Budget, that this rulemaking is not a “significant regulatory action” under Executive Order 12866.

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule is associated with retrospective review and analysis in PBGC's Plan for Regulatory Review issued in accordance with Executive Order 13563.

In accordance with OMB Circular A-4, PBGC has examined the economic and policy implications of this final rule and has concluded that the action's benefits justify its costs. That conclusion is based on the following analysis of the impact of the due date changes in this rule. (The other changes have essentially no cost-benefit impact.)

PBGC estimates that the reduction in administrative burden attributable to adoption of the new unified due date translates into average annual savings of 1.2 hours for each small plan. (PBGC arrived at this estimate on the basis of inquiries made to pension practitioners.) The dollar equivalent of this saving for the roughly 15,000 small plans is about $400 per plan. 34

Adoption of the uniform due date also shifts the earnings on premium payments between plans and PBGC for the time between the old and new due dates. Because earning rates differ between PBGC and plans, the losses and gains will not balance out exactly. But the earnings shift for small plans will be virtually negligible. The analysis is not straightforward because of the concomitant shift from current-year to prior-year data. See the discussion under the heading Combined Effects of Due Date and Look-Back Proposals, above. But based on 2011 data, and assuming aggregate small-plan premiums of about $36 million, a 6 1/2 -month advance in the small-plan due date, and a plan earnings rate of 6 percent, small plans in the aggregate will lose about $1.2 million a year—on average, about $85 per plan. A plan's lost interest earnings will be proportional to its premium; the premium may vary widely among plans, and thus the loss may do the same.

Accordingly, PBGC foresees an average net benefit (in dollar terms) from adoption of the new uniform due date of about $315 for each small plan—about $400 in administrative cost savings offset by about $85 in lost interest earnings.

PBGC's gain will be about one-third the amount lost by plans. PBGC estimates its rate of return, from investment in U.S. Government securities, at about 2 percent. PBGC estimates plans' rate of return at 6 percent. The following table shows the estimated average interest earnings calculated with four rates: Two percent (our best estimate for PBGC's rate of return), six percent (our best estimate for plans' rate of return), and three and seven percent (the discount rates recommended by OMB Circular A-4).

Advancing the premium due date for some terminating plans will also shift earnings on the premiums from plans to PBGC. Since plans that do standard terminations are almost all small, 35 the amounts involved are also small.

On average (over the period 2001-2010), about 1,300 plans terminate each year. About half of them will have their final-year due dates advanced by an average of about 100 days; for the other half, the due date will not be advanced. Thus on average, this rule requires payment of the premium about 50 days early. The average single-employer flat-rate premium is about $950 for small plans and about $176,000 for larger plans. 36 At a rate of 6 percent, 50 days' interest on an average small-plan flat-rate premium of $950 is about $8. For larger plans, the average figure using the same methodology is about $1,450. But so few larger plans do standard terminations that the weighted average earnings loss for plans of all sizes will be only about $110 per plan, or an aggregate estimated earnings loss of $143,000.

On the other hand, there should be some savings to plans arising from calculating and paying the final-year premium while plan books and records are still open and in use for paying benefits—as opposed to later, when they would have to be found and reopened. If one-tenth of final-year filers (130 plans) each save one hour of actuarial time at an average of $350 per hour, the total savings will be over $45,500 (or, if averaged over all terminating plans, about $35 per plan).

Further, historical data indicate that plans doing standard terminations could be expected to pay an aggregate of about $117,000 in variable-rate premiums in their final year. This represents an estimate of the savings to plans under the expansion of the standard termination variable-rate premium exemption. The savings will of course be realized only by the small minority of terminating plans that would owe variable-rate premium in their final year in the absence of this final rule. Averaged over all plans closing out in a year, however, the savings will be about $90 per plan.

Accordingly, PBGC foresees no significant economic impact from the due date change for terminating plans because the loss of earnings on flat-rate premiums paid earlier (about $110 per plan) will be offset by the gain from variable-rate premiums not paid (about $90 per plan) and cost reductions from improvement in administrative procedures (about $35 per plan).

The Regulatory Flexibility Act imposes certain requirements with respect to rules that are subject to the notice and comment requirements of section 553(b) of the Administrative Procedure Act. Unless an agency determines that a final rule is not likely to have a significant economic impact on a substantial number of small entities, section 604 of the Regulatory Flexibility Act requires that the agency present a final regulatory flexibility analysis at the time of the publication of the final rule describing the impact of the rule on small entities and steps taken to minimize the impact. Small entities include small businesses, organizations and governmental jurisdictions.

For purposes of the Regulatory Flexibility Act requirements with respect to this final rule, PBGC considers a small entity to be a plan with fewer than 100 participants. This is substantially the same criterion used to determine what plans would be subject to the look-back rule under the proposal, and is consistent with certain requirements in title I of ERISA  37 and the Internal Revenue Code, 38 as well as the definition of a small entity that the Department of Labor (DOL) has used for purposes of the Regulatory Flexibility Act. 39 Using this proposed definition, about 64 percent (16,700 of 26,100) of plans covered by title IV of ERISA in 2010 were small plans. 40

Further, while some large employers may have small plans, in general most small plans are maintained by small employers. Thus, PBGC believes that assessing the impact of the proposal on small plans is an appropriate substitute for evaluating the effect on small entities. The definition of small entity considered appropriate for this purpose differs, however, from a definition of small business based on size standards promulgated by the Small Business Administration (13 CFR 121.201) pursuant to the Small Business Act. In its proposed rule, therefore, PBGC requested comments on the appropriateness of the size standard used in evaluating the impact of the proposed rule on small entities. No comments were received.

On the basis of its definition of small entity, PBGC certifies under section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) that the amendments in this final rule will not have a significant economic impact on a substantial number of small entities. Accordingly, as provided in section 605 of the Regulatory Flexibility Act, sections 603 and 604 do not apply. This certification is based on PBGC's estimate (discussed above) that the change to uniform due dates will create an average annual net economic benefit for each small plan of about $315. This is not a significant impact.

PBGC is submitting the information requirements under this final rule for approval by the Office of Management and Budget under the Paperwork Reduction Act (OMB control number 1212-0009; expires February 29, 2016). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

PBGC is making only small changes in the data filers are required to submit. A plan's filing will be required to state whether the plan is a new small plan created by non- de minimis consolidation or spinoff (to which special rules apply) and to indicate if an exemption from the variable-rate premium is claimed under one of the new exemption rules. The participant count will have to be broken down into active, terminated, and retired categories. Changes to the filing instructions clarify how to calculate premiums, set forth the new due date rules, and deal with other routine matters such as updating examples and premium rates.

PBGC needs the information in a premium filing to identify the plan for which the premium is paid to PBGC, to verify the amount of the premium, to help PBGC determine the magnitude of its exposure in the event of plan termination, to help PBGC track the creation of new plans and the transfer of plan assets and liabilities among plans, and to keep PBGC's inventory of insured plans up to date. PBGC receives premium filings from about 25,700 respondents each year and estimates that the total annual burden of the collection of information will be about 8,000 hours and $53,255,000.

In comparison with the burden that OMB had approved for this information collection before PBGC's recent final rule eliminating the early due date for large plans' flat-rate premiums, this burden estimate reflects both a decrease in burden attributable to changes in the premium due dates (under both the large-plan final rule and this final rule) and an increase in burden attributable to a re-estimate of the existing premium filing burden. The increase in burden due to re-estimation is about 31,300 hours, and the decrease due to the due date changes is about 35,000 hours (about 17,000 hours for large plans and about 18,000 hours for small plans), a net decrease of about 3,700 hours from the burden approved before the large-plan final rule (about 163,600 hours). PBGC assumes that about 95 percent of the work is contracted out at $350 per hour, so the 35,000-hour decrease attributable to the two final rules is equivalent to about 1,750 hours of in-house labor and about $11,600,000 of contractor costs.

The burden for which PBGC sought OMB approval in connection with the recent final rule eliminating the early due date for large plans' flat-rate premiums was about 178,000 hours (about 8,900 in-house hours plus about $59,250,000 in contractor costs for the remaining 169,100 hours). This burden estimate reflected both the increase due to re-estimation and the decrease due to the large-plan flat-rate due date change.

In comparison with the 178,000-hour burden estimate, the new burden estimate reflects a decrease of about 18,000 hours, attributable to the due date change for small plans. Since PBGC assumes that about 95 percent of the work is contracted out at $350 per hour, this 18,000-hour decrease is equivalent to about 900 hours of in-house labor and about $6 million of contractor costs.

In consideration of the foregoing, PBGC amends 29 CFR parts 4000, 4006, 4007, and 4047 as follows:

The Metro North SAGA Bridge, across Saugatuck River, mile 1.1, at Saugatuck, Connecticut, has a vertical clearance of 13 feet at mean high water in the closed position. The existing drawbridge operating regulations are listed at 33 CFR 117.221(b).

The Saugatuck River is transited primarily by seasonal recreational vessels of various sizes.

The Connecticut Department of Transportation requested a temporary deviation to facilitate replacement of railroad ties at the bridge.

Under this temporary deviation the Metro North SAGA Bridge will require a two hour advance notice for bridge openings from March 17, 2014 through March 31, 2014, between 8:10 a.m. and 4 p.m., Monday through Friday and between 7 a.m. and 4 p.m., on Saturday and Sunday. Vessels that can pass under the closed draw may do so at all times.

In accordance with 33 CFR 117.35(e), the bridge must return to its regular operating schedule immediately at the end of the designated deviation period. This deviation from the operating regulations is authorized under 33 CFR 117.35.

Executive Summary

The purpose of this action is to amend the regulations to reflect changes in ownership and responsibilities of flood control management of Marshall Ford Dam (Mansfield Dam and Lake Travis) by the U.S. Army Corps of Engineers (USACE) and the Lower Colorado River Authority (LCRA) and to clarify that the published water control plan has been superseded. Specifically, 33 CFR part 208 is amended:

(A) A change in project ownership. The Corps is revising 33 CFR 208.11(e) List of Projects, and 33 CFR 208.19, to indicate that the LCRA, is the responsible party for operating Marshall Ford Dam in the interest of flood control above elevation 714.

(B) Revision of the Marshall Ford Dam (Mansfield Dam and Lake Travis) water control plan in 2012.

(C) USACE intention to henceforth forego publication of the Marshall Ford Dam (Mansfield Dam and Lake Travis) water control plan in the Federal Register .

(D) USACE and LCRA as sources for obtaining information regarding the most recently approved and therefore currently the effective water control plan.

Mansfield Dam was funded, planned, and built by the United States Bureau of Reclamation (USBR) from February 1937 through September 1940. The Lower Colorado River Authority (LCRA) acquired the land for the project and paid for the majority of the costs related to the hydroelectric power facilities. The USBR was the project owner while LCRA was repaying the federal government contribution to the project. LCRA completed repayment in May 1997, and the USBR relinquished all rights and obligations to the project. USBR has formally requested USACE revise the water control manual (of which the water control plan is an integral part) and any other regulatory documents accordingly.

As a result of Section 7 of the Flood Control Act of 1944, the U.S. Army Corps of Engineers (USACE) is responsible for prescribing a formal water control plan for regulation of the Lake Travis storage space allocated for flood control (elevation 681.0 to elevation 714.0). As per ER 1110-2-241, Use of Storage Allocated for Flood Control and Navigation at Non-Corps Projects (24 May 1990), paragraph 6.d.—Water Control Plan and Manual, the Corps of Engineers is responsible for developing the formal flood control regulation/water control plan, documenting the plan in a water control manual, and furnishing a copy of the manual to the project owner. A water control plan for Lake Travis was published in the Federal Register (33 CFR 208.19) in May of 1951. Subsequently, 33 CFR 208 was amended in April 1976, and again in April 1979, by revising Section 208.19 to reflect revision of the water control plan. Each of these three respective water control plans, and Section 208.11, identifies the U.S. Department of the Interior and/or the USBR as stakeholders in the project.

In 2012, based on results of a recent study, USACE—Fort Worth District and LCRA finalized a jointly supported revision of the water control plan for Lake Travis. There being no requirement for publication of the water control plan in the Federal Register , USACE plans to henceforth forego doing so. Also in 2012, USACE—Fort Worth District and LCRA agreed on a formal Letter of Understanding (LOU) and a Water Control Agreement (WCA) in accordance with ER 1110-2-241, Use of Storage Allocated for Flood Control and Navigation at Non-Corps Projects (24 May 1990). LCRA has agreed to sign the LOU and the WCA, and adopt the new water control plan, upon amendment of the CFR to indicate the last published water control plan (April 1979) has been superseded.

The Corps published the proposed rule in the Federal Register on 23 December 2013 (78 FR 77397). The Corps did not receive any comments in response to the proposed rule.

In compliance with the principles in the President's memorandum of June 1, 1998, (63 FR 31855) regarding plain language, this preamble is written using plain language. The use of “we” in this notice refers to the U.S. Army Corps of Engineers. We have also used the active voice, short sentences, and common everyday terms except for necessary technical terms.

This final rule does not impose any new information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. Therefore, this action is not subject to the Paperwork Reduction Act.

The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice-and-comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the final rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations and small governmental jurisdictions.

For purposes of assessing the impacts of this final rule on small entities, a small entity is defined as: (1) A small business based on Small Business Administration size standards; (2) a small governmental jurisdiction that is a government of a city, county, town, school district, or special district with a population of less than 50,000; or (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of this final rule on small entities, we believe that this action will not have a significant economic impact on a substantial number of small entities. The final rule is consistent with current agency practice, does not impose new substantive requirements, and therefore would not have a significant economic impact on a substantial number of small entities.

The Congressional Review Act, 5 U.S.C. 801 et seq., as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a final 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. We will submit a report containing this final rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States. This final rule is not a “major rule” as defined by 5 U.S.C. 804(2).

For the reasons set out in the preamble, the Corps amends 33 CFR part 208 as follows:

Throughout this document, “we,” “us” and “our” refer to EPA.

On December 10, 2013 (78 FR 74057), EPA proposed to disapprove the following section of the Clark County Air Quality Regulations (CCAQR) that was amended by the Clark County Board of Commissioners (CCBC) and submitted to EPA on behalf of the Clark County Department of Air Quality and Environmental Management (DAQEM) by the State of Nevada Division of Environmental Protection (NDEP) for incorporation into the Nevada SIP.

We proposed to disapprove this SIP submission because some of the rule provisions do not satisfy the requirements of section 110 and part D of title I of the Act. These provisions include the following:

1. Sections 25.1 and 25.3 are inconsistent with the requirements provided in CAA section 110(a) and conflict with the fundamental enforcement structure provided in CAA sections 113 and 304, because they create an affirmative defense to monetary penalties for violations due to excess emissions from sources during startup and shutdown events. EPA believes that providing an affirmative defense applicable to avoidable violations, such as those resulting from excess emissions during planned events such as startups and shutdowns that are within the source's control, is inconsistent with the requirements provided in CAA section 110(a) and the fundamental enforcement structure provided in CAA sections 113 and 304, which provide for potential civil penalties for violations of SIP requirements.

2. The criteria for qualifying for an affirmative defense to monetary penalties for violations due to excess emissions from sources during malfunction events in CCAQR Section 25.2 are not fully consistent with CAA requirements. EPA has guidance making recommendations for criteria appropriate for affirmative defense provisions applicable in the case of malfunction events that would be consistent with the CAA. EPA's 1999 SSM Policy  1 and the February 22, 2013 Proposed SSM SIP Call  2 lay out these criteria. These criteria are guidance and states do not need to track EPA's recommended wording verbatim, but states should have SIP provisions that are consistent with these recommendations in order to assure that an affirmative defense for monetary penalties applicable in the case of malfunction events satisfies EPA's interpretation of CAA requirements. EPA interprets the CAA to allow only narrowly drawn affirmative defense provisions. The affirmative defense criteria set forth in Section 25.2.1 are not sufficiently consistent with these recommended criteria for affirmative defense provisions in SIPs for malfunctions.

Our proposed action contains more information on the basis for this rulemaking and on our evaluation of the submission.

EPA's proposed action provided a 30-day public comment period. During this period, we received only one set of comments, from Laurie Williams, Sierra Club, letter dated January 9, 2014.

The comments and our responses are summarized below.

Comment #1: Sierra Club supports EPA's proposal because the affirmative defenses provided in Clark County Section 25 “conflict with the CAA and EPA policy.” In particular, the commenter stated that EPA should not approve the SIP revision at issue because the Agency is required to disapprove any SIP revision that does not meet all applicable CAA requirements or that would interfere with any applicable CAA requirement.

Response #1: EPA acknowledges the commenter's support, in part, for the proposed action. EPA agrees that any SIP revision must be measured against the applicable substantive requirements of the CAA and the requirements of section 110(l) in particular. In this action, EPA has determined that Sections 25.1, 25.2, and 25.3 are inconsistent with the requirements provided in the CAA for the reasons explained in the proposed action.

Comment #2: Sierra Club disagrees with EPA's statements in the proposal that affirmative defenses for monetary penalties in the case of violations due to excess emissions during malfunctions may be consistent with the CAA if appropriately drawn. The commenter asserts that such affirmative defenses contravene the CAA “because they limit courts' discretion to assess penalties for violations and prevent courts from considering statutory factors.” The commenter further argues that such affirmative defense provisions are inconsistent with the CAA requirement that SIP emission limits be “continuous” and that such provisions “critically disrupt the fundamental enforcement structure of the Act.” The commenter provides additional assertions to support this position and includes its comments on another EPA proposed rule related to affirmative defense provisions in Oklahoma.

Response #2: EPA is disapproving the SIP revision with respect to CCAQR Section 25 for the reasons set forth in the proposal and summarized above. The commenter argues that EPA should identify additional reasons for disapproval, including an argument that CAA section 113 unequivocally precludes such affirmative defenses. As explained in the proposal, EPA interprets the CAA to allow appropriately drawn affirmative defenses in SIP provisions in the case of violations due to excess emissions during malfunction events, if the affirmative defense is consistent with guidance recommendations for such provisions. However, EPA notes that it is not necessary to respond to the substance of this comment because our action would not change were we to include additional reasons for disapproval. EPA has concluded that the affirmative defense provisions both for malfunction events and for startup and shutdown events embodied in CCAQR Section 25 are not consistent with EPA's interpretation of the CAA for such provisions for the reasons articulated in the proposal, regardless of the additional theories advanced by the commenter in this comment.

In the event that DAQEM elects to respond to our disapproval action by revising and resubmitting CCAQR Section 25 to address the deficiencies we have identified in the current provisions, the commenter will then have an opportunity to pursue its argument that there are additional reasons for disapproval of the revised affirmative defense provisions. If that occurs in the future, EPA will evaluate the substance of the new SIP submission in light of the laws, policies, and other relevant circumstances in effect at that time.

No comments were submitted that change our assessment of CCAQR Section 25 as described in our proposed action. Therefore, as authorized in section 110(k)(3) of the Act, EPA is finalizing a disapproval of Section 25 as submitted. Affirmative defenses for excess emissions and other elements of Section 25 are not required by the Act, and the absence of affirmative defenses for excess emissions does not make a SIP deficient. Therefore, there are no sanction implications as described in CAA section 179 and 40 CFR 52.31, and no Federal Implementation Plan (FIP) implications as described in CAA section 110(c) as a result of this disapproval. Note that the submitted Section 25 has been adopted locally by the DAQEM, and EPA's final disapproval does not prevent sources from asserting an affirmative defense in state court. The state law affirmative defenses will not, however, be effective in the event of any action to enforce the requirements of the SIP pursuant to CAA section 304 or section 113.

The Office of Management and Budget (OMB) has exempted this regulatory action from Executive Order 12866, entitled “Regulatory Planning and Review.”

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

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions.

This rule will not have a significant impact on a substantial number of small entities because SIP disapprovals under section 110 and title I, part D of the Clean Air Act do not create any new requirements but simply disapprove requirements that the State is already imposing. Therefore, because EPA's disapproval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities.

Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of State action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

Under sections 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated costs to State, local, or tribal governments in the aggregate; or to the private sector, of $100 million or more. Under section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule. EPA has determined that the disapproval action promulgated does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action disapproves pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

Federalism (64 FR 43255, August 10, 1999) revokes and replaces Executive Orders 12612 (Federalism) and 12875 (Enhancing the Intergovernmental Partnership). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that 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.” Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. EPA also may not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation. This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132, because it merely disapproves a State rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This final rule does not have tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments, 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. Thus, Executive Order 13175 does not apply to this rule.

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This rule is not subject to Executive Order 13045, because it disapproves a State rule implementing a Federal standard.

This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866.

Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires Federal agencies to evaluate existing technical standards when developing a new regulation. To comply with NTTAA, EPA must consider and use “voluntary consensus standards” (VCS) if available and applicable when developing programs and policies unless doing so would be inconsistent with applicable law or otherwise impractical. The EPA believes that VCS are inapplicable to this action. Today's action does not require the public to perform activities conducive to the use of VCS.

Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy on environmental justice. Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.

EPA lacks the discretionary authority to address environmental justice in this rulemaking.

The Congressional Review Act, 5 U.S.C. section 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 rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register . 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. section 804(2). This rule will be effective April 10, 2014.

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by May 12, 2014. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements (see section 307(b)(2)).

Part 52, Chapter I, Title 40 of the Code of Federal Regulations is amended as follows:

On July 9, 2012 (77 FR 40302), the Department amended the DTAR to implement the “Internet Payment Platform.” The Department has discovered that it inadvertently left off the clause date in § 1052.232-7003. To eliminate any confusion this omission may cause, this technical amendment inserts the “August 2012” date in place of “DATE TBD” in the clause heading “ELECTRONIC SUBMISSION OF PAYMENT REQUESTS.”

Accordingly, 48 CFR part 1052 is corrected by making the following correcting amendment:

This final rule amends the DFARS as follows:

1. Update the link for DoDAAC queries at 204.7003(a)(1).

2. Remove erroneous text at 204.7403(c).

3. Correct typographical error at 252.204-7004.

Therefore, 48 CFR parts 204 and 252 are amended as follows:

Availability

An electronic copy of the application containing a list of the references used in this document may be obtained by writing to the address specified above, telephoning the contact listed below (see FOR FURTHER INFORMATION CONTACT ), or visiting the internet at: http://www.nmfs.noaa.gov/pr/permits/incidental.htm .

Documents cited in this notice may be viewed, by appointment, during regular business hours, at the aforementioned address.

Section 101(a)(5)(A) of the MMPA (16 U.S.C. 1361 et seq.) directs the Secretary of Commerce to allow, upon request, the incidental, but not intentional, taking of small numbers of marine mammals by U.S. citizens who engage in a specified activity (other than commercial fishing) within a specified geographical region if certain findings are made and regulations are issued. We are required to grant authorization for the incidental taking of marine mammals if we find that the total taking will have a negligible impact on the species or stock(s) and will not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant). We must also set forth the permissible methods of taking and requirements pertaining to the mitigation, monitoring, and reporting of such takings. NMFS has defined negligible impact in 50 CFR 216.103 as “an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.”

The National Defense Authorization Act of 2004 (NDAA) (Pub. L. 108-136) amended section 101(a)(5)(A) of the MMPA by removing the small numbers and specified geographical region provisions; and amended the definition of “harassment” as it applies to a “military readiness activity” to read as follows (section 3(18)(B) of the MMPA): “(i) Any act that injures or has the significant potential to injure a marine mammal or marine mammal stock in the wild [Level A Harassment]; or (ii) any act that disturbs or is likely to disturb a marine mammal or marine mammal stock in the wild by causing disruption of natural behavioral patterns, including, but not limited to, migration, surfacing, nursing, breeding, feeding, or sheltering, to a point where such behavioral patterns are abandoned or significantly altered [Level B Harassment].”

On December 30, 2011, NMFS received an application from the U.S. Air Force requesting an authorization for the take of marine mammals incidental to PSW and AS gunnery testing and training operations within the Eglin Gulf Test and Training Range (EGTTR). On June 28, 2012, pursuant to 50 CFR 216.104(b)(1)(ii), NMFS began the public review process by publishing its determination that the application was adequate and complete by publishing a Notice of Receipt in the Federal Register (77 FR 38595) followed by a proposed rule soliciting public comments on May 7, 2013 (78 FR 26586). The regulations establish a framework for authorizing incidental take in a future Letter of Authorization (LOA). The LOA authorizes the take, by Level A (physiological) and Level B (behavioral) harassment, of Atlantic bottlenose dolphin ( Tursiops truncatus ) and Atlantic spotted dolphin ( Stenella frontalis ) incidental to PSW testing and training activities. Takes of dwarf sperm whale ( Kogia simus ), pygmy sperm whale ( K. breviceps ), Atlantic bottlenose dolphins ( Tursiops truncatus ), Atlantic spotted dolphin ( Stenella frontalis ), pan tropical spotted dolphin ( S. attenuate ), and spinner dolphin ( S. longirostris ) by Level B harassment will also be authorized incidental to AS gunnery testing and training operations.

PSW missions would involve air-to-surface impacts of two weapons: (1) the Joint Air-to-Surface Stand-off Missile (JASSM) AGM-158 A and B; and (2) the small diameter bomb (SDB) (GBU-39/B), which result in underwater detonations of up to approximately 300 lbs (136 kg) and 96 lbs (43.5 kg, double SDB) of net explosive weight (NEW), respectively. AS gunnery missions would involve surface impacts of projectiles and small underwater detonations. Pursuant to the MMPA, NMFS issued regulations and annual LOAs for PSW activities from 2006 to 2011, and annual Incidental Harassment Authorizations for AS gunnery activities in 2006, 2007, 2008, 2009, 2010, and 2011.

NMFS is committed to the use of the best available science. NMFS uses an adaptive transparent process that allows for both timely scientific updates and public input into agency decisions regarding the use of acoustic research and thresholds. NMFS is currently in the process of re-evaluating acoustic thresholds based on the best available science, as well as how these thresholds are applied under the MMPA to all activity types. This re-evaluation could potentially result in changes to the acoustic thresholds or their application as they apply to future Eglin AFB activities. However, it is important to note that while changes in acoustic criteria may affect the enumeration of “takes,” they do not necessarily change the evaluation of population level effects or the outcome of the negligible impact analysis. In addition, while acoustic criteria may also inform mitigation and monitoring decisions, Eglin AFB has a robust adaptive management program that regularly addresses new information and allows for modification of mitigation and/or monitoring measures as appropriate.

The proposed rule (78 FR 26586, May 7, 2013) includes a complete description of Eglin AFB's specified activities that are being authorized in this final rule. Underwater detonations from PSW and AS gunnery testing and training missions are most likely to result in impacts on marine mammals that could rise to the level of harassment, thus necessitating the MMPA authorization. The PSW missions involve the two weapons identified above, the JASSM and SDB, and AS gunnery missions typically involve the use of 25-mm, 40-mm, and 105-mm gunnery rounds. These activities are described in more detail in the following paragraphs.

The JASSM is a precision cruise missile designed for launch from a variety of aircraft at altitudes greater than 25,000 ft (7.6 km). The JASSM has a range of more than 200 nautical miles (370.4 km) and carries a 1,000-pound warhead. The JASSM has approximately 300 lbs of TNT equivalent net explosive weight (NEW). After launch from the aircraft, the JASSM cruises at altitudes greater than 12,000 ft (3.7 km) for the majority of its flight until making the terminal maneuver towards the target. The testing exercises involving the JASSM would consist of a maximum of two live shots (single) and four inert shots (single) during the year (Table 1). One live shot will detonate in water and one will detonate in air. Detonation of the JASSM would occur under one of the following three scenarios: (1) detonation upon impact with the target (about 1.5 m above the water's surface); (2) detonation upon impact with a barge target at the surface of the water; or (3) detonation at 120 milliseconds after contact with the surface of the water.

The SDB is a GPS-guided bomb that can be carried and launched from most USAF aircraft, which makes it an important element of the USAF's Global Strike Task Force. The SDB has a range of up to 50 nautical miles and carries a 217-lb warhead. The SDB has approximately 48 lbs of TNT equivalent NEW. After being released from the aircraft at an altitude greater than 15,000 ft (4.6 km), the SDB deploys “Diamond Back” type wings that increase glide time and range as it descends towards the target. Exercises involving the SDB consist of a maximum of six live shots with two of the shots occurring simultaneously, and a maximum of 12 inert shots with up to two occurring simultaneously (Table 1).

Chase aircraft will accompany the launch of JASSM and SDB ordnance. Chase aircraft include F-15, F-16, and T-38 aircraft. These aircraft would follow the test items during captive carry and free flight, but would not follow either item below a predetermined altitude as directed by Flight Safety. Other airborne assets on site may include an E-9 turboprop aircraft or MH-60/53 helicopters circling around the target location. Tanker aircraft, including KC-10s and KC-135s, would also be used for aerial refueling of aircraft involved in training exercises. In addition, an unmanned barge may also be on location to hold instrumentation. If used, the barge would be up to 1,000 ft (304.8 m) away from the target location.

Based on availability, there are two possible target types to be used for the PSW mission tests. The first is a Container Express (CONEX) target (see figure 1-4 in Eglin AFB's application) that consists of five containers strapped, braced, and welded together to form a single structure. The dimensions of each container are approximately 8 ft by 8 ft by 40 ft (2.4 m by 2.4 m by 12.2 m). Each container would contain 200 55-gallon steel drums (filled with air and sealed) to provide buoyancy for the target. The second type of target is a hopper barge, which is a non-self propelled vessel typically used for transportation of bulk cargo (see figure 1-5 in Eglin AFB's application). A typical hopper barge is approximately 30 ft by 12 ft and 125 ft long (9.1 m by 3.7 m and 38.1 m long). The targets would be held in place by a 4-point anchoring system using cables.

PSW testing and training activities conducted by Eglin AFB would occur in the northern GOM in the EGTTR. Targets would be located in water less than 200 ft (61 m) deep and from 15 to 24 nm (27.8 to 44.5 km) offshore, south of Santa Rosa Island and south of Cape San Blas Site D3-A. PSW test missions may occur during any season of the year, but only during daytime hours.

AS gunnery missions involve the firing of 25-mm, 40-mm, and 105-mm gunnery rounds from a circling AC-130 gunship. Each round contains 30 g, 392 g, and 2.1 kg of explosive, respectively. Live rounds must be used to produce a visible surface splash that must be used to “score” the round (the impact of inert rounds on the sea surface would not be detected). The U.S. Air Force has developed a 105-mm training round (TR) that contains less than 10 percent of the amount of explosive material (0.16 kg) as compared to the “Full-Up” (FU) 105-mm round. The TR was developed as one method to mitigate effects on marine life during nighttime AS gunnery exercises when visibility at the water surface is poor. However, the TR cannot be used in the daytime because the amount of explosive material is insufficient to be detected from the aircraft. To establish the test target area, two Mk-25 flares are deployed or a target is towed into the center of a 9.3 km cleared area on the water's surface. A typical gunship mission lasts approximately 5 hrs without refueling and 6 hrs when air-to-air refueling is accomplished. The total anticipated number of missions and rounds for daytime and nighttime activities is shown in Table 2.

Water ranges within the EGTTR that are typically used for AS gunnery operations are located in the GOM offshore from the Florida Panhandle (areas W-151A, W151B, W-151C, and W-151D as shown in Figure 1-9 in the Eglin AFB application). Data indicate that W-151A (Figure 1-10 in the Eglin AFB application) is the most frequently used water range due to its proximity to Hurlburt Field, but activities may occur anywhere within the EGTTR. Eglin AFB proposes to conduct AS gunnery missions year round during both daytime and nighttime hours.

Additional information on the Eglin AFB training operations is contained in the application, which is available upon request (see ADDRESSES ).

On May 7, 2013 (78 FR 26586), NMFS published a proposed rule to authorize the taking of marine mammals incidental to Eglin AFB's PSW and AS gunnery activities. During the 30-day public comment period, comments were received from the Marine Mammal Commission (Commission), Whale and Dolphin Conservation (WDC), and two members of the public. Comments specific to section 101(a)(5)(A) of the MMPA and NMFS' analysis of impacts to marine mammals are summarized and addressed below and/or throughout the final rule.

Comment 1: The Commission requested that Eglin AFB provide a clear, step-by-step description of how it estimated the zones of exposure and associated number of takes for impulse, peak pressure, and sound exposure level thresholds, accounting for the multiple types and quantities of ordnance to be used for representative missions.

Response: The zones of influence or exposure zones are defined as the area of ocean in which marine mammals could potentially be exposed to various noise thresholds associated with exploding ordinance. Marine mammals may be affected by certain energy and pressure levels resulting from the detonations. The methodology and analytical approach for determining the exposure zones and number of marine mammal takes is fully explained in the LOA application, proposed rulemaking (78 FR 26586, May 7, 2013), as well as in the previous IHAs and LOAs and supporting documents issued for these activities. Readers should refer to those documents for additional information.

The method to estimate the number of marine mammals potentially taken by the specified activities is based on marine mammal density, the amount and type of ordnance proposed, and distances to our harassment threshold criteria.

Briefly, Eglin AFB estimated the zones of exposure based on impulse, peak pressure, and sound exposure level thresholds (based on our explosive harassment criteria). For example, during an AS gunnery exercise using large arms rounds, a person can fire munitions as individual rounds spaced in time, or rapid fire as a burst of individual rounds. Due to the tight spacing in time, Eglin AFB treats the individual rounds within a burst as a single detonation. For the energy-based metrics, Eglin AFB calculated the impact area of a burst using a source energy spectrum, which is the source spectrum for a single detonation scaled by the number of rounds in a burst. For the pressure-based metrics, the impact area for a burst was calculated as equal to the impact area of a single round. For all metrics, the cumulative impact area of an event consisting of (N) bursts was calculated as the product of the impact area of a single burst and the number of bursts, which would be the case if the bursts were sufficiently spaced in time or location to insure that each burst affects a different set of marine wildlife. Last, Eglin AFB modeled each explosive event for the potential impacts to a derived density of marine mammals within the influence area. Eglin AFB summed the results of all individual events over the year to obtain their take estimate.

Comment 2: The Commission recommended that NMFS require Eglin AFB to (1) model mission scenarios and implement the thresholds for various ordinance types consistently for both PSW and AS gunnery missions and (2) determine the zones of exposure and associated number of takes for the Level B harassment threshold of 177 dB re 1 µPa 2 -sec for all PSW and AS gunnery missions that involve more than one bomb, missile, or round.

Response: NMFS disagrees with the Commission's recommendations. Since 2002, we have worked closely with Eglin AFB over several Authorization cycles to develop the methodologies and analytical approaches for PSW and AS gunnery missions and, prior to submitting an application, NMFS and Eglin AFB discuss the methodologies used to ensure that they are still valid and applicable. NMFS agrees with them even though they appear to be different for each mission. These differences are explained and accounted for as follows.

Two separate methods were used to calculate the zones of exposure (the area of potential impact defined as a radius in the application) and to estimate the number of takes of each species for each threshold and criteria (total number of animals exposed to noise levels that may result in Level A or Level B harassment). With the exception of the gunnery rounds, the zones of exposure for all other munitions were based on the detonation/burst of one munition at a given depth; not the total number of munitions planned to be detonated for the duration of the test. On the other hand, Level A and Level B take estimates of each species were calculated by summing together all detonations proposed to occur annually for each munition at a given depth. The methodology and analytical approach for determining the exposure zones and estimating the number of marine mammal takes was fully explained in the application, the proposed rule (78 FR 26586, May 7, 2013), as well as in the previous MMPA authorizations issued to Eglin AFB, and supporting documents issued for these activity. Readers should refer to those documents for additional information.

Comment 3: The Commission recommended that NMFS require Eglin AFB to evaluate its mitigation and monitoring measures to assess their effectiveness in detecting marine mammals and minimizing takes.

Response: We have worked closely with Eglin AFB over the past several Authorization cycles to develop proper mitigation, monitoring, and reporting requirements designed to minimize and detect impacts from the specified activities. In order to ensure that we can make the findings necessary for issuance of an Authorization, we have worked with Eglin AFB to develop comprehensive and acceptable mitigation, monitoring, and reporting requirements. We have determined that the required mitigation, monitoring, and reporting measures within the Authorization are adequate to satisfy the requirements of the MMPA.

Comment 4: The Commission recommended that NMFS work with Eglin AFB to design and conduct the necessary performance verification testing for electronic detection devices under the relevant sea state conditions for AS gunnery missions before changing any sea state restrictions.

Response: NMFS does not believe that additional performance verification testing is necessary for electronic detection devices for AS gunnery mission before changing any sea state restrictions. A sea state of 3 or less, with a maximum wind speed of 10 knots (11.5 mph, 18.5 kmh), is considered a gentle breeze and is fairly common off the Gulf coast of Florida, especially during the summer months; however, although more common during the winter months, a large portion of time can be categorized as a sea state of 4 (11-16 knots (13-18 mph, 21-19 kmh), which is considered a moderate breeze. In 2008, Eglin AFB requested and NMFS authorized an increase in the sea state restriction from 3.5 to 4 for the IHA issued to Eglin AFB for AS gunnery missions. The increase was requested to enable Eglin AFB to conduct AS gunnery missions in the EGTTR during multiple seasons because limiting the availability of EGTTR for AS gunship use during anything equal to or less than a sea state 3 precluded activities in other months, especially during the winter. Since 2008, nothing has changed to warrant NMFS' reassessment of its previous concurrence with that request. At that time, NMFS explained that under sea state 4 conditions white caps area fairly frequent on the sea surface, but sea spray does not occur.

In general, sea spray, white caps, and large waves that occur when the sea state is at or above 4 can decrease the effectiveness of infrared (IR) detection; however, AS gunnery missions are not conducted if such conditions make observation of the gunnery target (the flare) problematic. Therefore, as long as weather conditions allow the target flare to be observed, NMFS and Eglin AFB believe that marine mammals can also be observed. Furthermore, based on in-the-field experience, USAF subject matter experts have determined that the airborne systems adequately function in a sea state of 4. Additional research conducted by Balacci et al. (2005) indicated that a sea state of 2 or 3 pushed the capabilities of the system; however, this study involved observations looking horizontally along the surface of the water, whereas Eglin AFB is looking straight down, which improves system capabilities in higher sea states.

To gather more information about monitoring during missions, Sensor Operators are continuously scanning the area for traffic, boats, marine mammals, etc. when transiting to and from the water exercise ranges. Eglin AFB will instruct Sensor Operators to begin gathering additional data, such as sea state and level of difficulty in detecting objects at the different sea states, during those transits for comparison purposes, as long as doing so does not interfere with mission training activities. The use of adaptive management allows NMFS to consider new information from different sources, including mitigation and monitoring, to determine (with input from Eglin AFB regarding practicability) if mitigation or monitoring measures should be modified. Measures could be modified if new data suggests that such modifications would have a reasonable likelihood of reducing adverse effects to marine mammal species and their habitat and if the measures are practicable.

Comment 5: Whale and Dolphin Conservation expressed concern regarding the alleged underestimation of marine mammal population densities and exclusion of sperm whales from the analysis. They suggest that more accurate population data should be obtained so that the actual take and harassment numbers can be fully understood and sperm whales be included in the request for takes incidental to PSW and AS gunnery activities.

Response: Density estimates for marine mammals (other than bottlenose dolphins) occurring in the EGTTR were derived from the Navy OPAREA Density Estimates (NODE) for the GOMEX OPAREA report (Navy, 2007), which were determined by either model-derived estimates or literature-derived estimates. In order to address negative bias in the underlying survey results, Eglin AFB adjusted density estimates by using a variety of submergence factors suggested by Moore and Clark (2008). Bottlenose dolphin density estimates were derived from Protected Species Habitat Modeling in the Eglin Gulf Test and Training Range report (Garrison, 2008). NMFS has reviewed the source relied upon to estimate marine mammal densities in the EGTTR and considers them to be the best scientific data available. In order to provide conservative impacts estimates, the greatest density between summer and winter seasons was selected. Sperm whales in the Gulf of Mexico are located in the waters of the continental slope, not in shallow continental shelf waters. For Eglin AFB, the PSW and AS gunnery mission would be located in water less than 200 ft (61 m) deep and 15 to 24 nm (27.8 to 44.5 km) offshore. As a result, sperm whales would not be affected by PSW and AS gunnery activities.

Comment 6: Whale and Dolphin Conservation state that the proposed authorization does not adequately prescribe other means that effect the least practicable adverse impact and recommend additional mitigation measures such as Forward Looking Infrared (FLIR) cameras, time-based aerial surveys over the target area's safety zone instead of a minimum number of orbits, and consideration of alternative target areas if marine mammals are present in the original target area.

Response: NMFS has worked with Eglin AFB over the years to develop the most effective mitigation protocols using the platforms and assets that are available. The required mitigation measures in this document represent the maximum level of effort that Eglin AFB can commit given the number of personnel involved and the number and type of assets and resources available. Eglin AFB has determined that it is impractical to include additional mitigation measures, such as FLIR and time-based aerial surveys. The only activities conducted by Eglin AFB that would require low-light monitoring are Air-to-Surface Gunnery missions, a portion of which will occur during nighttime. During nighttime missions, visual monitoring would be supplemented with infra-red (IR) and TV monitoring. Therefore, adding FLIR cameras, which also detect infra-red heat, would be redundant and impractical. Eglin's LOA application indicated that initial orbits at 6,000-ft AGL altitude would occur approximately over a 15-minute timeframe. Once the area has been confirmed clear of protected species at that altitude, then the aircraft would begin a spiral ascent up to operational altitude (up to 20,000 ft AGL), while continuing to scan for protected species. While there is no time limit for the ascent, Eglin will adopt a 30-minute pre-mission survey requirement (15-minutes for initial orbit and at least 15 minutes for ascent to operational altitude).

Finally, during AS Gunnery and PSW missions, if marine mammals are detected at any time, the mission would be immediately halted and relocated as necessary or suspended until marine mammals have left the area.

The National Defense Authorization Act of 2004 amended the MMPA as it relates to military readiness activities (which Eglin AFB's activities are) and the incidental take authorization process such that “least practicable adverse impact” shall include consideration of personnel safety, practicality of implementation, and impact on the effectiveness of the “military readiness activity.” Eglin AFB has a limited number of resources (e.g., personnel and other assets) and the mitigation requirements in this rulemaking represent the maximum level of effort that Eglin AFB can commit.

Comment 7: Whale and Dolphin Conservation expressed concern that the ecological effects of the 2010 Deepwater Horizon oil spill need to be adequately addressed before NMFS issues incidental take authorizations and that any analysis that has been done to date be incorporated into future analysis of the environmental impact associated with issuing the incidental take authorization.

Response: While the EA did not contain a quantitative analysis, Eglin AFB's EA had a qualitative analysis and comprehensive discussion of ongoing and reasonably foreseeable actions in the GOM that included: ongoing oil and gas exploration, development, and production; existing oil and gas infrastructure; commercial fishing; alternate energy development; military operations; marine vessel traffic; scientific research; recreation and tourism; and marine mining and disposal areas. NMFS also considered the findings presented in a recent study on bottlenose dolphins in Louisiana's Barataria Bay and Florida's Sarasota Bay, which examined the effects of the 2010 Deepwater Horizon oil spill on bottlenose dolphins (Schwacke et al., 2013); however, neither population would be affected by the proposed action due to their location relative to the EGTTR.

There are 29 species of marine mammals documented as occurring in Federal waters of the GOM. Cetaceans inhabiting the waters of the GOM may be grouped as odontocetes (toothed whales, including dolphins) or mysticetes (baleen whales), but most of the cetaceans occurring in the Gulf are odontocetes. Typically, very few baleen whales are found in the Gulf and none are expected to occur within the study area given the known distribution of these species. Within the bulk of the EGTTR, over the west Florida continental shelf, the most common species is the bottlenose dolphin (Garrison, 2008), and the Atlantic spotted dolphin also occurs commonly over the continental shelf (Fulling et al., 2003). One species of sirenian inhabits the GOM, the West Indian manatee ( Trichechus manatus ), is managed by the U.S. Fish and Wildlife Service and is not considered further in this rule.

Approximately 21 marine mammal species may be found in the vicinity of the proposed action area, the EGTTR. These species are the Bryde's whale ( Balaenoptera edeni ), sperm whale ( Physeter macrocephalus ), dwarf sperm whale ( Kogia sima ), pygmy sperm whale ( K. breviceps ), Atlantic bottlenose dolphin ( Tursiops truncatus ), Atlantic spotted dolphin ( Stenella frontalis ), pantropical spotted dolphin ( S. atenuarta ), Blainville's beaked whale ( Mesoplodon densirostris ), Cuvier's beaked whale ( Ziphius cavirostris ), Gervais' beaked whale ( M. europaeus ), Clymene dolphin ( S. clymene ), spinner dolphin ( S. longirostris ), striped dolphin ( S. coeruleoalba ), killer whale ( Orcinus orca ), false killer whale ( Pseudorca crassidens ), pygmy killer whale ( Feresa attenuata ), Risso's dolphin ( Grampus griseus ), Fraser's dolphin (Lagenodelphis hosei ), melon-headed whale ( Peponocephala electra ), rough-toothed dolphin ( Steno bredanensis ), and short-finned pilot whale ( Globicephala macrorhynchus ). Of these species, only the sperm whale is listed as endangered under the Endangered Species Act (ESA) and as depleted throughout its range under the MMPA. While some of the other species listed here have depleted status under the MMPA, none of the GOM stocks of those species are considered depleted. Eglin AFB's 2011 MMPA application contains a detailed discussion on the description, status, distribution, regional distribution, diving behavior, and acoustics and hearing for the marine mammals in the EGTTR. Additionally, more detailed information on these species can be found in Würsig et al. (2000), NMFS' 2008 EA (see ADDRESSES ), and in the NMFS U.S. Atlantic and GOM Stock Assessment Reports (SARs; Waring et al., 2010). This latter document is available at: http://www.nefsc.noaa.gov/publications/tm/tm210/.

The species most likely to occur in the area of Eglin AFB's proposed activities for which takes have been requested include: Atlantic bottlenose dolphin; Atlantic spotted dolphin; pantropical spotted dolphin; spinner dolphin; and dwarf and pygmy sperm whales. Bryde's whales, sperm whales, Blainville's beaked whales, Cuvier's beaked whales, Gervais' beaked whales, killer whales, false killer whales, pygmy killer whales, Risso's dolphins, Fraser's dolphins, striped dolphins, Clymene dolphins, rough-toothed dolphins, short-finned pilot whales, and melon-headed whales are rare in the project area and are not anticipated to be impacted by the PSW and AS gunnery mission activities. Therefore, these species are not considered further in this rule.

With one exception, marine mammal densities estimates for species which takes have been requested, as provided in the LOA application, are consistent with those included in a recent LOA request and LOA addendum for Navy actions conducted offshore of Navy Surface Warfare Center Panama City Division (75 FR 3395, January 21, 2010). The geographic area covered by that LOA overlaps the area associated with PSW and AS gunnery activities, and is considered applicable for the purpose of estimating marine mammal occurrence and densities. The one exception is bottlenose dolphin, for which density estimates were recently provided through a Department of Defense-funded study.

For all species other than the bottlenose dolphin, density estimates were derived from the Navy OPAREA Density Estimates (NODE) for the GOMEX OPAREA report (DON, 2007). Densities were determined using one of two methods: (1) model-derived estimates; or (2) SAR or other literature-derived estimates. For the model-based approach, density estimates were calculated for each species within areas containing survey effort. A relationship between these density estimates and associated environmental parameters such as depth, slope, distance from the shelf break, sea surface temperature, and chlorophyll- a concentration was formulated using generalized additive models. This relationship was then used to generate a two-dimensional density surface for the region by predicting densities in areas where no survey data exist. All analyses for cetaceans in the GOM were based on data collected through NMFS-derived vessel surveys conducted between 1996 and 2004. Species-specific density estimates derived through spatial modeling were compared with abundance estimates found in the most current SAR to ensure consistency.

Cetacean density estimates provided by various researchers often do not contain adjustments for perception or availability bias. Perception bias refers to the failure of observers to detect animals, although they are present in the survey area and available to be seen. Availability bias refers to animals that are in the survey area, but are not able to be seen because they are submerged when observers are present. Perception and availability bias result in the underestimation of abundance and density numbers (negative bias). The density estimates provided in the NODE report are not corrected for negative bias and, therefore, likely underestimate density. In order to address potential negative bias, density estimates were adjusted using submergence factors. Although submergence time versus surface time probably varies between and among species populations based on geographic location, season, and other factors, submergence times suggested by Moore and Clark (1998) were used for this rule.

Bottlenose dolphin density estimates were derived from Protected Species Habitat Modeling in the EGTTR (Garrison, 2008). NMFS developed habitat models using recent aerial survey line transect data collected during winter and summer. In combination with remotely sensed habitat parameters (sea surface temperature and chlorophyll), these data were used to develop spatial density models for cetaceans within the continental shelf and coastal waters of the eastern GOM. Encounter rates during the aerial surveys were corrected for sighting probabilities and the probability that animals were available on the surface to be seen. Given that the survey area completely overlaps the present study area and that these survey data are the most recent and best available, these models are considered to best reflect the occurrence of bottlenose dolphins within the study area. Density estimates were calculated for a number of subareas within the EGTTR, and also aggregated into four principal area categories: (1) North-Inshore; (2) South-Inshore; (3) North-Offshore; and (4) South-Offshore. The proposed action would occur within W-151A and W-151B, which are located in the northernmost portion of the EGTTR in water depths between 30 and 350 m; however, all missions would occur in water depths less than 200 m. Therefore, density in the North-Offshore area is considered to be the most applicable. In order to provide conservative impact estimates, the greatest density between summer and winter seasons was selected, resulting in an overall density estimate of 0.4426 bottlenose dolphins per square kilometer (km 2 ) to be used in this rule.

PSW and AS gunnery operations have the potential to impact marine mammals by exposing them to impulsive noise and pressure waves generated by ordnance detonation at or near the surface of the water (maximum range of 25 ft (7.6 m) height and 80 ft (24 m) depth). Exposure to energy or pressure resulting from these detonations could result in non-lethal injury (Level A harassment) and disturbance (Level B harassment). Takes in the form of serious injury and mortality are neither anticipated nor requested. For PSW missions, a maximum of six detonations annually were analyzed to assess potential impacts to marine mammals, including two live JASSM, two live single SDB, and two live double SDB missions. This averages one mission every two months, although the actual timing of missions over the 5-year period is unknown. Only one mission would occur in any 24-hour period. A maximum of 70 annual AS gunnery missions were analyzed, which averages one mission approximately every 5 days. Live fire lasts for approximately 30 minutes per mission, which would result in a maximum of one-half hour of noise producing activities every 5 days occurring at a discreet, variable location within the 2,500 nm 2 area of W-151A (although activities could occur within the larger, overall 10,000 nm 2 area of W-151). The potential effects of sound from the proposed PSW and AS gunnery missions may include one or more of the following: tolerance; masking of natural sounds; disturbance; stress response; and temporary or permanent hearing impairment (Richardson et al., 1995). As outlined in previous NMFS documents, the effects of sound on marine mammals are highly variable, and can be categorized as follows (based on Richardson et al., 1995):

• The sound may be too weak to be heard at the location of the animal (i.e., lower than the prevailing ambient sound level, the hearing threshold of the animal at relevant frequencies, or both);

• The sound may be audible but not strong enough to elicit any overt behavioral response;

• The sound may elicit reactions of varying degrees and variable relevance to the well-being of the marine mammal; these can range from temporary alert responses to active avoidance reactions such as vacating an area until the stimulus ceases, but potentially for longer periods of time;

• Upon repeated exposure, a marine mammal may exhibit diminishing responsiveness (habituation), or disturbance effects may persist; the latter is most likely with sounds that are highly variable in characteristics and unpredictable in occurrence, and associated with situations that a marine mammal perceives as a threat;

• Any anthropogenic sound that is strong enough to be heard has the potential to result in masking, or reduce the ability of a marine mammal to hear biological sounds at similar frequencies, including calls from conspecifics and underwater environmental sounds such as surf sound;

• If mammals remain in an area because it is important for feeding, breeding, or some other biologically important purpose even though there is chronic exposure to sound, it is possible that there could be sound-induced physiological stress; this might in turn have negative effects on the well-being or reproduction of the animals involved; and

• Very strong sounds have the potential to cause a temporary or permanent reduction in hearing sensitivity, also referred to as threshold shift. In terrestrial mammals, and presumably marine mammals, received sound levels must far exceed the animal's hearing threshold for there to be any temporary threshold shift (TTS). For transient sounds, the sound level necessary to cause TTS is inversely related to the duration of the sound. Received sound levels must be even higher for there to be risk of permanent hearing impairment (PTS). In addition, intense acoustic or explosive events may cause trauma to tissues associated with organs vital for hearing, sound production, respiration and other functions. This trauma may include minor to severe hemorrhage.

Numerous studies have shown that underwater sounds are often readily detectable by marine mammals in the water at distances of many kilometers. However, other studies have shown that marine mammals at distances more than a few kilometers away often show no apparent response to activities of various types (Miller et al., 2005). This is often true even in cases when the sounds must be readily audible to the animals based on measured received levels and the hearing sensitivity of that mammal group. Although various baleen whales, toothed whales, and (less frequently) pinnipeds have been shown to react behaviorally to underwater sound from sources such as airgun pulses or vessels under some conditions, at other times, mammals of all three types have shown no overt reactions (e.g., Malme et al., 1986; Richardson et al., 1995; Madsen and Mohl, 2000; Croll et al., 2001; Jacobs and Terhune, 2002; Madsen et al., 2002; Miller et al., 2005).

Marine mammals use acoustic signals for a variety of purposes, which differ among species, but include communication between individuals, navigation, foraging, reproduction, and learning about their environment (Erbe and Farmer, 2000; Tyack, 2000). Masking, or auditory interference, generally occurs when sounds in the environment are louder than, and of a similar frequency as, auditory signals an animal is trying to receive. Masking is a phenomenon that affects animals that are trying to receive acoustic information about their environment, including sounds from other members of their species, predators, prey, and sounds that allow them to orient in their environment. Masking these acoustic signals can disturb the behavior of individual animals, groups of animals, or entire populations.

The extent of the masking interference depends on the spectral, temporal, and spatial relationships between the signals an animal is trying to receive and the masking noise, in addition to other factors. In humans, significant masking of tonal signals occurs as a result of exposure to noise in a narrow band of similar frequencies. As the sound level increases, the detection of frequencies above those of the masking stimulus decreases. This principle is expected to apply to marine mammals as well because of common biomechanical cochlear properties across taxa.

Richardson et al. (1995) argued that the maximum radius of influence of an industrial noise (including broadband low-frequency sound transmission) on a marine mammal is the distance from the source to the point at which the noise can barely be heard. This range is determined by either the hearing sensitivity of the animal or the background noise level present. Industrial masking is most likely to affect some species' ability to detect communication calls and natural sounds (i.e., surf noise, prey noise, etc.) (Richardson et al., 1995).

The echolocation calls of toothed whales are subject to masking by high-frequency sound. Human data indicate that low-frequency sounds can mask high-frequency sounds (i.e., upward masking). Studies on captive odontocetes by Au et al. (1974, 1985, 1993) indicate that some species may use various processes to reduce masking effects (e.g., adjustments in echolocation call intensity or frequency as a function of background noise conditions). There is also evidence that the directional hearing abilities of odontocetes are useful in reducing masking at the higher frequencies these cetaceans use to echolocate, but not at the low-to-moderate frequencies they use to communicate (Zaitseva et al., 1980). A study by Nachtigall and Supin (2008) showed that false killer whales adjust their hearing to compensate for ambient sounds and the intensity of returning echolocation signals. Holt et al. (2009) measured killer whale call source levels and background noise levels in the one to 40 kHz band and reported that the whales increased their call source levels by one dB SPL for every one dB SPL increase in background noise level. Similarly, another study on St. Lawrence River belugas reported a similar rate of increase in vocalization activity in response to passing vessels (Scheifele et al., 2005).

Although masking is a phenomenon which may occur naturally, the introduction of loud anthropogenic sounds into the marine environment at frequencies important to marine mammals increases the severity and frequency of occurrence of masking. For example, if a baleen whale is exposed to continuous low-frequency sound from an industrial source, this would reduce the size of the area around that whale within which it can hear the calls of another whale. The components of background noise that are similar in frequency to the signal in question primarily determine the degree of masking of that signal. In general, little is known about the degree to which marine mammals rely upon detection of sounds from conspecifics, predators, prey, or other natural sources. In the absence of specific information about the importance of detecting these natural sounds, it is not possible to predict the impact of masking on marine mammals (Richardson et al., 1995). In general, masking effects are expected to be less severe when sounds are transient than when they are continuous. Masking is typically of greater concern for those marine mammals that utilize low frequency communications, such as baleen whales and, as such, is not likely to occur for marine mammals in the EGTTR.

Behavioral responses to sound are highly variable and context-specific. Many different variables can influence an animal's perception of and response to (in both nature and magnitude) an acoustic event. An animal's prior experience with a sound or sound source affects whether it is less likely (habituation) or more likely (sensitization) to respond to certain sounds in the future (animals can also be innately pre-disposed to respond to certain sounds in certain ways) (Southall et al., 2007). Related to the sound itself, the perceived nearness of the sound, bearing of the sound (approaching vs. retreating), similarity of the sound to biologically relevant sounds in the animal's environment (i.e., calls of predators, prey, or conspecifics), and familiarity of the sound may affect the way an animal responds to the sound (Southall et al., 2007). Individuals (of different age, gender, reproductive status, etc.) among most populations will have variable hearing capabilities, and differing behavioral sensitivities to sounds that will be affected by prior conditioning, experience, and current activities of those individuals. Often, specific acoustic features of the sound and contextual variables (i.e., proximity, duration, or recurrence of the sound or the current behavior that the marine mammal is engaged in or its prior experience), as well as entirely separate factors such as the physical presence of a nearby vessel, may be more relevant to the animal's response than the received level alone.

Because the few available studies show wide variation in response to underwater sound, it is difficult to quantify exactly how sound from PSW and AS gunnery missions would affect marine mammals. Exposure of marine mammals to sound sources can result in, but is not limited to, no response or any of the following observable responses: Increased alertness; orientation or attraction to a sound source; vocal modifications; cessation of feeding; cessation of social interaction; alteration of movement or diving behavior; avoidance; habitat abandonment (temporary or permanent); and, in severe cases, panic, flight, stampede, or stranding, potentially resulting in death (Southall et al., 2007). A review of marine mammal responses to anthropogenic sound was first conducted by Richardson (1995). A more recent review (Nowacek et al., 2007) addresses studies conducted since 1995 and focuses on observations where the received sound level of the exposed marine mammal(s) was known or could be estimated. The following sub-sections provide examples of behavioral responses that provide an idea of the variability in behavioral responses that would be expected given the differential sensitivities of marine mammal species to sound and the wide range of potential acoustic sources to which a marine mammal may be exposed. Estimates of the types of behavioral responses that could occur for a given sound exposure should be determined from the literature that is available for each species, or extrapolated from closely related species when no information exists.

Flight Response —A flight response is a dramatic change in normal movement to a directed and rapid movement away from the perceived location of a sound source. Relatively little information on flight responses of marine mammals to anthropogenic signals exist, although observations of flight responses to the presence of predators have occurred (Connor and Heithaus, 1996). Flight responses have been speculated as being a component of marine mammal strandings associated with sonar activities (Evans and England, 2001).

Response to Predator —Evidence suggests that at least some marine mammals have the ability to acoustically identify potential predators. For example, harbor seals that reside in the coastal waters off British Columbia are frequently targeted by certain groups of killer whales, but not others. The seals discriminate between the calls of threatening and non-threatening killer whales (Deecke et al., 2002), a capability that should increase survivorship while reducing the energy required for attending to and responding to all killer whale calls. The occurrence of masking or hearing impairment provides a means by which marine mammals may be prevented from responding to the acoustic cues produced by their predators. Whether or not this is a possibility depends on the duration of the masking/hearing impairment and the likelihood of encountering a predator during the time that predator cues are impeded.

Diving —Changes in dive behavior can vary widely. They may consist of increased or decreased dive times and surface intervals as well as changes in the rates of ascent and descent during a dive. Variations in dive behavior may reflect interruptions in biologically significant activities (e.g., foraging) or they may be of little biological significance. Variations in dive behavior may also expose an animal to potentially harmful conditions (e.g., increasing the chance of ship-strike) or may serve as an avoidance response that enhances survivorship. The impact of a variation in diving resulting from an acoustic exposure depends on what the animal is doing at the time of the exposure and the type and magnitude of the response.

Nowacek et al. (2004) reported disruptions of dive behaviors in foraging North Atlantic right whales when exposed to an alerting stimulus, an action, they noted, that could lead to an increased likelihood of ship strike. However, the whales did not respond to playbacks of either right whale social sounds or vessel noise, highlighting the importance of the sound characteristics in producing a behavioral reaction. Conversely, Indo-Pacific humpback dolphins have been observed to dive for longer periods of time in areas where vessels were present and/or approaching (Ng and Leung, 2003). In both of these studies, the influence of the sound exposure cannot be decoupled from the physical presence of a surface vessel, thus complicating intepretations of the relative contribution of each stimulus to the response. Indeed, the presence of surface vessels, their approach and speed of approach, seemed to be significant factors in the response of the Indo-Pacific humpback dolphins (Ng and Leung, 2003). Low frequency signals of the Acoustic Thermometry of Ocean Climate (ATOC) sound source were not found to affect dive times of humpback whales in Hawaiian waters (Frankel and Clark, 2000) or to overtly affect elephant seal dives (Costa et al., 2003). They did, however, produce subtle effects that varied in direction and degree among the individual seals, illustrating the equivocal nature of behavioral effects and consequent difficulty in defining and predicting them.

Due to past incidents of beaked whale strandings associated with sonar operations, feedback paths are provided between avoidance and diving and indirect tissue effects. This feedback accounts for the hypothesis that variations in diving behavior and/or avoidance responses can possibly result in nitrogen tissue supersaturation and nitrogen off-gassing, possibly to the point of deleterious vascular bubble formation (Jepson et al., 2003). Although hypothetical, the potential process is currently popular and controversial.

Foraging —Disruption of feeding behavior can be difficult to correlate with anthropogenic sound exposure, so it is usually inferred by observed displacement from known foraging areas, the appearance of secondary indicators (e.g., bubble nets or sediment plumes), or changes in dive behavior. Noise from seismic surveys was not found to impact the feeding behavior in western grey whales off the coast of Russia (Yazvenko et al., 2007) and sperm whales engaged in foraging dives did not abandon dives when exposed to distant signatures of seismic airguns (Madsen et al., 2006). Balaenopterid whales exposed to moderate low-frequency signals similar to the ATOC sound source demonstrated no variation in foraging activity (Croll et al., 2001), whereas five out of six North Atlantic right whales exposed to an acoustic alarm interrupted their foraging dives (Nowacek et al., 2004). Although the received sound pressure level at the animals was similar in the latter two studies, the frequency, duration, and temporal pattern of signal presentation were different. These factors, as well as differences in species sensitivity, are likely contributing factors to the differential response. A determination of whether foraging disruptions incur fitness consequences will require information on or estimates of the energetic requirements of the individuals and the relationship between prey availability, foraging effort and success, and the life history stage of the animal.

Breathing —Variations in respiration naturally vary with different behaviors and variations in respiration rate as a function of acoustic exposure can be expected to co-occur with other behavioral reactions, such as a flight response or an alteration in diving. However, respiration rates in and of themselves may be representative of annoyance or an acute stress response. Mean exhalation rates of gray whales at rest and while diving were found to be unaffected by seismic surveys conducted adjacent to the whale feeding grounds (Gailey et al., 2007). Studies with captive harbor porpoises showed increased respiration rates upon introduction of acoustic alarms (Kastelein et al., 2001; Kastelein et al., 2006a) and emissions for underwater data transmission (Kastelein et al., 2005). However, exposure of the same acoustic alarm to a striped dolphin under the same conditions did not elicit a response (Kastelein et al., 2006a), again highlighting the importance in understanding species differences in the tolerance of underwater noise when determining the potential for impacts resulting from anthropogenic sound exposure.

Social Relationships —Social interactions between mammals can be affected by noise via the disruption of communication signals or by the displacement of individuals. Disruption of social relationships therefore depends on the disruption of other behaviors (e.g., caused avoidance, masking, etc.) and no specific overview is provided here. However, social disruptions must be considered in context of the relationships that are affected. Long-term disruptions of mother/calf pairs or mating displays have the potential to affect the growth and survival or reproductive effort/success of individuals, respectively.

Vocalizations (also see Masking Section)—Vocal changes in response to anthropogenic noise can occur across the repertoire of sound production modes used by marine mammals, such as whistling, echolocation click production, calling, and singing. Changes may result in response to a need to compete with an increase in background noise or may reflect an increased vigilance or startle response. For example, in the presence of low-frequency active sonar, humpback whales have been observed to increase the length of their ”songs” (Miller et al., 2000; Fristrup et al., 2003), possibly due to the overlap in frequencies between the whale song and the low-frequency active sonar. A similar compensatory effect for the presence of low frequency vessel noise has been suggested for right whales; right whales have been observed to shift the frequency content of their calls upward while reducing the rate of calling in areas of increased anthropogenic noise (Parks et al., 2007). Killer whales off the northwestern coast of the United States have been observed to increase the duration of primary calls once a threshold in observing vessel density (e.g., whale watching) was reached, which has been suggested as a response to increased masking noise produced by the vessels (Foote et al., 2004). In contrast, both sperm and pilot whales potentially ceased sound production during the Heard Island feasibility test (Bowles et al., 1994), although it cannot be absolutely determined whether the inability to acoustically detect the animals was due to the cessation of sound production or the displacement of animals from the area.

Avoidance —Avoidance is the displacement of an individual from an area as a result of the presence of a sound. Richardson et al., (1995) noted that avoidance reactions are the most obvious manifestations of disturbance in marine mammals. It is qualitatively different from the flight response, but also differs in the magnitude of the response (i.e., directed movement, rate of travel, etc.). Oftentimes avoidance is temporary, and animals return to the area once the noise has ceased. Longer term displacement is possible, however, which can lead to changes in abundance or distribution patterns of the species in the affected region if they do not become acclimated to the presence of the sound (Blackwell et al., 2004; Bejder et al., 2006; Teilmann et al., 2006). Acute avoidance responses have been observed in captive porpoises and pinnipeds exposed to a number of different sound sources (Kastelein et al., 2001; Finneran et al., 2003; Kastelein et al., 2006a; Kastelein et al., 2006b). Short term avoidance of seismic surveys, low frequency emissions, and acoustic deterrants has also been noted in wild populations of odontocetes (Bowles et al., 1994; Goold, 1996; 1998; Stone et al., 2000; Morton and Symonds, 2002) and to some extent in mysticetes (Gailey et al., 2007), while longer term or repetitive/chronic displacement for some dolphin groups and for manatees has been suggested to be due to the presence of chronic vessel noise (Haviland-Howell et al., 2007; Miksis-Olds et al., 2007).

Orientation —A shift in an animal's resting state or an attentional change via an orienting response represent behaviors that would be considered mild disruptions if occurring alone. As previously mentioned, the responses may co-occur with other behaviors; for instance, an animal may initially orient toward a sound source, and then move away from it. Thus, any orienting response should be considered in context of other reactions that may occur.

An acoustic source is considered a potential stressor if, by its action on the animal, via auditory or non-auditory means, it may produce a stress response in the animal. Here, the stress response will refer to an increase in energetic expenditure that results from exposure to the stressor and which is predominantly characterized by either the stimulation of the sympathetic nervous system (SNS) or the hypothalamic-pituitary-adrenal (HPA) axis (Reeder and Kramer, 2005). The SNS response to a stressor is immediate and acute and is characterized by the release of the catecholamine neurohormones norepinephrine and epinephrine (i.e., adrenaline). These hormones produce elevations in the heart and respiration rate, increase awareness, and increase the availability of glucose and lipids for energy. The HPA response is ultimately defined by increases in the secretion of the glucocorticoid steroid hormones, predominantly cortisol in mammals. The presence and magnitude of a stress response in an animal depends on a number of factors. These include the animal's life history stage (e.g., neonate, juvenile, adult), the environmental conditions, reproductive or developmental state, and experience with the stressor. Not only will these factors be subject to individual variation, but they will also vary within an individual over time. The stress response may or may not result in a behavioral change, depending on the characteristics of the exposed animal. However, provided a stress response occurs, we assume that some contribution is made to the animal's allostatic load. Any immediate effect of exposure that produces an injury is assumed to also produce a stress response and contribute to the allostatic load. Allostasis is the ability of an animal to maintain stability through change by adjusting its physiology in response to both predictable and unpredictable events (McEwen and Wingfield, 2003). If the acoustic source does not produce tissue effects, is not perceived by the animal, or does not produce a stress response by any other means, we assume that the exposure does not contribute to the allostatic load. Additionally, without a stress response or auditory masking, it is assumed that there can be no behavioral change.

In mammals, high-intensity sound may rupture the eardrum, damage the small bones in the middle ear, or over stimulate the electromechanical hair cells that convert the fluid motions caused by sound into neural impulses that are sent to the brain. Lower level exposures may cause a loss of hearing sensitivity, termed a threshold shift (TS) (Miller, 1974). Incidence of TS may be either permanent, referred to as permanent threshold shift (PTS), or temporary, referred to as temporary threshold shift (TTS). The amplitude, duration, frequency, and temporal pattern, and energy distribution of sound exposure all affect the amount of associated TS and the frequency range in which it occurs. As amplitude and duration of sound exposure increase, generally, so does the amount of TS and recovery time. Human non-impulsive noise exposure guidelines are based on exposures of equal energy (the same SEL) producing equal amounts of hearing impairment regardless of how the sound energy is distributed in time (NIOSH 1998). Until recently, previous marine mammal TTS studies have also generally supported this equal energy relationship (Southall et al., 2007). Three newer studies, two by Mooney et al. (2009a, 2009b) on a single bottlenose dolphin either exposed to playbacks of Navy MFAS or octave-band noise (4-8 kHz) and one by Kastak et al. (2007) on a single California sea lion exposed to airborne octave-band noise (centered at 2.5 kHz), concluded that for all noise exposure situations the equal energy relationship may not be the best indicator to predict TTS onset levels. Generally, with sound exposures of equal energy, those that were quieter (lower sound pressure level [SPL]) with longer duration were found to induce TTS onset more than those of louder (higher SPL) and shorter duration (more similar to noise from AS gunnery exercises). For intermittent sounds, less TS will occur than from a continuous exposure with the same energy (some recovery will occur between exposures) (Kryter et al., 1966; Ward, 1997). Additionally, though TTS is temporary, very prolonged exposure to sound strong enough to elicit TTS, or shorter-term exposure to sound levels well above the TTS threshold, can cause PTS, at least in terrestrial mammals (Kryter, 1985). However, these studies highlight the inherent complexity of predicting TTS onset in marine mammals, as well as the importance of considering exposure duration when assessing potential impacts.

PTS consists of non-recoverable physical damage to the sound receptors in the ear, which can include total or partial deafness, or an impaired ability to hear sounds in specific frequency ranges; PTS is considered Level A harassment. TTS is recoverable and is considered to result from temporary, non-injurious impacts to hearing-related tissues; TTS is considered Level B harassment.

Auditory trauma represents direct mechanical injury to hearing related structures, including tympanic membrane rupture, disarticulation of the middle ear ossicles, and trauma to the inner ear structures such as the organ of Corti and the associated hair cells. Auditory trauma is irreversible and considered to be an injury that could result in PTS. PTS results from exposure to intense sounds that cause a permanent loss of inner or outer cochlear hair cells or exceed the elastic limits of certain tissues and membranes in the middle and inner ears and result in changes in the chemical composition of the inner ear fluids. In some cases, there can be total or partial deafness across all frequencies, whereas in other cases, the animal has an impaired ability to hear sounds in specific frequency ranges. There is no empirical data for onset of PTS in any marine mammal, and therefore, PTS- onset must be estimated from TTS-onset measurements and from the rate of TTS growth with increasing exposure levels above the level eliciting TTS-onset. PTS is presumed to be likely if the hearing threshold is reduced by ≥ 40 dB (i.e., 40 dB of TTS). Relationships between TTS and PTS thresholds have not been studied in marine mammals, but are assumed to be similar to those in humans and other terrestrial mammals.

TTS is the mildest form of hearing impairment that can occur during exposure to a loud sound (Kryter, 1985). Southall et al. (2007) indicate that although PTS is a tissue injury, TTS is not because the reduced hearing sensitivity following exposure to intense sound results primarily from fatigue, not loss, of cochlear hair cells and supporting structures and is reversible. Accordingly, NMFS classifies TTS as Level B Harassment, not Level A Harassment (injury); however, NMFS does not consider the onset of TTS to be the lowest level at which Level B Harassment may occur (see Behavior section below).

Southall et al. (2007) considers a 6 dB TTS (i.e., baseline hearing thresholds are elevated by 6 dB) sufficient to be recognized as an unequivocal deviation and thus a sufficient definition of TTS onset. TTS in bottlenose dolphin hearing have been experimentally induced. For example, Finneran et al. (2002) exposed a trained captive bottlenose dolphin to a seismic watergun simulator with a single acoustic pulse. No TTS was observed in the dolphin at the highest exposure condition (peak: 207 kPa [30psi]; peak-to-peak: 228 dB re: 1 microPa; SEL: 188 dB re 1 microPa 2 -s). Schludt et al. (2000) demonstrated temporary shifts in masked hearing thresholds in five bottlenose dolphins occurring generally between 192 and 201 dB rms (192 and 201 dB SEL) after exposure to intense, non-pulse, 1-s tones at, 3kHz, 10kHz, and 20 kHz. TTS onset occurred at mean sound exposure level of 195 dB rms (195 dB SEL). At 0.4 kHz, no subjects exhibited threshold shifts after SPL exposures of 193dB re: 1 microPa (192 dB re: 1 microPa 2 -s). In the same study, at 75 kHz, one dolphin exhibited a TTS after exposure at 182 dB SPL re: 1 microPa but not at higher exposure levels. Another dolphin experienced no threshold shift after exposure to maximum SPL levels of 193 dB re: 1 microPa at the same frequency. Frequencies of explosives used at MCAS Cherry Point range from 1-25 kHz; the range where dolphin TTS onset occurred at 195 dB rms in the Schludt et al. (2000) study.

Preliminary research indicates that TTS and recovery after noise exposure are frequency dependent and that an inverse relationship exists between exposure time and sound pressure level associated with exposure (Mooney et al., 2005; Mooney, 2006). For example, Nachtigall et al. (2003) measured TTS in a bottlenose dolphin and found an average 11 dB shift following a 30 minute net exposure to OBN at a 7.5 kHz center frequency (max SPL of 179 dB re: 1 microPa; SEL: 212-214 dB re:1 microPa 2 -s). No TTS was observed after exposure to the same duration and frequency noise with maximum SPLs of 165 and 171 dB re:1 microPa. After 50 minutes of exposure to the same 7.5 kHz frequency OBN, Natchigall et al. (2004) measured a 4 -8 dB shift (max SPL: 160dB re 1microPa; SEL: 193-195 dB re:1 microPa 2 -s). Finneran et al. (2005) concluded that a sound exposure level of 195 dB re 1 μPa 2 -s is a reasonable threshold for the onset of TTS in bottlenose dolphins exposed to mid-frequency tones.

For the acoustic analysis of PSW activities, the exploding charge is characterized as a point source. The components of PSW activities pertinent to estimating impacts include the location of the explosions relative to the water surface and the number of explosions.

SDBs are intended to either strike a target on the surface of the water or detonate in the air over a target at an altitude of up to 25 ft (7.6 m) above the surface of the water. It is assumed that a surface target would be impacted at a point approximately five feet (1.5 m) above the surface. To calculate the range to NMFS' harassment thresholds, these two distances are used to bound the potential height of the explosion (although detonations could occur at any point in between). The effect of the target itself on the propagation of the shock wave into the water column is omitted for the purpose of determining the range to the harassment thresholds. This is considered to be a conservative measure because the target would likely reflect and diffuse the explosive pressure wave, but would not amplify or focus it. SDB “double shots” would involve two bombs being deployed from the same aircraft to strike the same target within a maximum of five seconds of each other. Under the “double shot” scenario, the NEW of each bomb is added in order to calculate the distance to energy thresholds; however, the pressure component is not additive, and pressure estimates are derived from a single charge weight.

The JASSM is intended to impact a target located on the surface of the water. Similar to the description of the SDB above, it is assumed that the missile may strike the target at some distance about the surface. However, the JASSM is substantially heavier than the SDB (approximately 2,240 lbs versus 285 lbs), and would potentially travel at a greater velocity on impact. Therefore, the JASSM would impact the target with greater force, and it is anticipated that the missile could puncture the target and explode in the water column. Under this type of scenario, detonation occurs a maximum of 120 milliseconds after contact with the water, which corresponds to a depth of 70 to 80 ft (21 to 24 m). As a result, impact range calculations are bounded by depth categories of 1 ft (0.3 m) and greater than 20 ft (6.1 m). Only one JASSM would be deployed per mission (i.e., no “double shots”), and both energy and pressure estimates are based on the NEW of one missile.

Table 4 provides the estimated range, or radius, from the detonation point to the various thresholds under summer and winter scenarios. The range is then used to calculate the total area of the zone of influence (ZOI). The Level B harassment (behavioral) threshold (177 dB re 1 µPa 2 -s EFD) is not included. Sub-TTS harassment is considered to occur when animals are exposed to repetitive disturbance, which for underwater impulsive noise is considered to be more than one detonation within a 24-hour period. No more than one explosion associated with PSW activities will occur within any 24-hour period. The SDB “double shot” is considered to be one detonation because the two explosions are intended to occur within five seconds of each other. In-water ranges for the 30.5 and 13 psi-msec thresholds for explosions occurring in the air are negligible.

The ZOIs calculated by using the threshold ranges in Table 4 are combined with the number of live shots (Table 1) and marine mammal densities (Table 3) to estimate the number of animals affected. Because of the mission location in relatively shallow continental shelf waters ranging from approximately 40 to 50 m, the species considered to be potentially affected by PSW mission activities include the bottlenose dolphin, Atlantic spotted dolphin, dwarf sperm whale, and pygmy sperm whale. Potential exposure to energy and pressure resulting from detonations could theoretically occur at the surface or at any number of depths below the surface with differing consequences. As a conservative measure, a mid-depth scenario was selected by Eglin AFB to ensure the greatest direct path for the harassment ranges, and to give the greatest impact range for the injury thresholds.

Tables 5, 6, and 7 provide the annual potential number of exposures associated with mortality, Level A harassment, and Level B harassment. In each case, a range of numbers is provided. The ranges represent the minimum and maximum number of potential takes, based on various combinations of explosion height, explosion depth, and season. In cases where dual criteria exist, the threshold with the greatest distance and corresponding ZOI is used. For example, for in-water JASSM detonations, the 23 psi threshold provides the largest Level B harassment zone when detonations occur near the surface, while the 182 dB EFD threshold provides the largest Level B harassment zone at depth.