This final rule is issued under the Minimum Quality and Handling Standards for Domestic and Imported Peanuts Marketed in the United States (Standards), as amended (7 CFR part 996), as established pursuant to Public Law 107-171, the Farm Security and Rural Investment Act of 2002 (Act). The Standards regulate the quality and handling of domestic and imported peanuts marketed in the United States.

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, reducing costs, harmonizing rules, and promoting flexibility. This action has been designated as a “non-significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the Office of Management and Budget (OMB) has waived the review process.

This action has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation would not have substantial and direct effects on Tribal governments and would not have significant Tribal implications.

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect and shall not abrogate nor nullify any other statute, whether State or Federal, dealing with the same subjects as this Act; but is intended that all such statutes shall remain in full force and effect except in so far as they are inconsistent herewith or repugnant hereto (7 U.S.C. 587).

There are no administrative procedures which must be exhausted prior to any judicial challenge to the provisions of this rule.

The Act requires that USDA take several actions with regard to peanuts marketed in the United States. These include ensuring mandatory inspection on all peanuts marketed in the United States; developing and implementing peanut quality and handling requirements; establishing the Board comprised of producers and industry representatives to advise USDA regarding the quality and handling requirements under the Standards; and modifying those quality and handling requirements when needed. USDA is required by the Act to consult with the Board prior to making any changes to the Standards.

Pursuant to the Act, USDA has consulted with Board members in its review of the changes to the Standards included in this final rule. This final rule implements the revisions to the minimum quality, positive lot identification, and reporting and recordkeeping requirements under the Standards. This final rule also makes numerous other changes to the Standards to better reflect current industry practices and to revise outdated language. The Board believes these changes will make additional peanuts available for sale, increase efficiencies, and reduce industry costs. These changes were recommended by the Board at its meetings on June 24, 2015, and November 18, 2015.

The Standards establish minimum incoming and outgoing quality requirements for domestic and imported peanuts marketed in the United States. Mandatory inspection is required to ensure that the quality regulations are met. The Standards also require an identification process so peanuts can be identified and tracked during processing and disposition. Finally, the Standards specify reporting and recordkeeping requirements for handlers and importers.

Sections 996.30 and 996.31 of the Standards outline the incoming and outgoing quality standards, respectively, for peanuts. The incoming standards currently prescribe specific requirements for segregation, moisture content, and foreign material (stones, dirt, sticks, etc.). The outgoing standards include specific requirements for damage, foreign material, and moisture for both shelled and inshell peanuts. The outgoing standards also require peanuts to be positive lot identified and tested and certified as negative for aflatoxin. Both the incoming and outgoing standards require inspection and certification by the Federal-State Inspection Service.

Section 996.15 establishes a definition for positive lot identification (PLI). Section 996.31 requires PLI on all peanuts designated for human consumption as part of the outgoing standards. Section 996.40 establishes handling standards for peanuts and includes specifics on how PLI will be used throughout the handling process, from initial identification through the sampling and testing process. Section 996.50 outlines the process for reconditioning failing lots and establishes PLI requirements to track and identify the peanuts throughout the reconditioning process. Section 996.74 outlines the compliance requirements for the Standards and includes penalties for failing to maintain proper PLI.

Sections 996.71 and 996.73 establish the reporting and recordkeeping requirements under the Standards. These sections specify, in part, the reports required and establish what records need to be maintained and for how long.

The Standards were last revised in 2005. In 2014, the American Peanut Shellers Association (APSA) started a review of the current Standards and developed a proposal to revise the Standards to reflect changes in the industry and to make other changes to bring the Standards up to date. These recommended revisions were shared with USDA and industry representatives and were then presented to the Board at its meeting on June 24, 2015. The Board voted to approve the recommendations from APSA in their entirety. In addition, a subcommittee was created to work with USDA to review and recommend any additional conforming changes to the Standards necessary to facilitate the revisions requested by the industry. At a meeting on November 18, 2015, the Board reviewed the modifications and conforming changes from the subcommittee and USDA, and approved them unanimously. Consequently, this final rule makes the following recommended changes.

This final rule revises the minimum quality requirements under both the incoming and outgoing standards. The industry originally thought the presence of foreign material in incoming peanuts could promote the growth of aflatoxin. Therefore, a limit on the amount of foreign material in incoming peanuts was established. However, the industry no longer believes there to be a correlation between foreign material and aflatoxin. In addition, due to advances in technology, foreign material is easily removed from incoming peanuts, and handlers are able to remove foreign material from incoming peanuts to a level that is lower than the limit currently specified in the incoming standards. Further, most handlers are setting their own tolerances for the presence of foreign material. Eliminating the maximum amount of foreign material that incoming farmers stock peanuts may contain from the Standards provides additional flexibility by allowing individual handlers to determine the amount of foreign material they are willing to accept. As such, this action removes the current limit of 10.49 percent on the amount of foreign material that incoming farmers stock peanuts may contain.

The outgoing quality standards currently include a table that outlines, in part, requirements for damage, minor defects, foreign material, and moisture. Two of the columns of the table deal with damage and defects. The first of these columns provides the allowance for damage to unshelled peanuts and kernels, and the second column provides the allowance for minor defects. Currently the allowance for major damage is 1.5 percent for lots excluding splits and 2 percent for lots of splits. The current allowance for minor defects is 2.5 percent, except for No. 2 Virginia peanuts, for which the allowance for minor defects is 3 percent.

Under the proposal from APSA, the two columns on damage will be merged into one column and will set one overall allowance for damage on unshelled peanuts, cleaned-inshell peanuts, and kernels at 3.5 percent. Over the years, the industry has found that growing practices such as no till farming and modern harvesting practices have increased the amount of damage to individual kernels. In addition, the shift to new peanut varieties that produce larger kernels has impacted the sampling of peanuts for damage. The larger kernels reduce the number of peanuts in the sample such that damaged kernels have a larger impact on the percentage of damage in the sample size. Increasing the allowable damage will allow additional peanuts to meet the Standards and be shipped for human consumption. In addition, relaxing the damage allowance will allow more lots of peanuts to move without being remilled, helping to reduce handling costs.

Peanuts are also used for many different products, including outlets where cosmetic damage is not as important, such as peanut butter, where the manufacturers are willing to purchase lots with a higher percentage of damage. Most manufacturers are setting their own tolerance levels for damage based on the products they manufacture. By increasing the amount of allowable damage, more peanuts will be available to be manufactured for human consumption, helping to maximize shipments and improving returns. Therefore, this final rule relaxes the allowance for damage and defects to 3.5 percent for all unshelled peanuts, kernels, and for cleaned-inshell peanuts.

This rule will also make changes to the PLI requirements and the recordkeeping and reporting requirements under the Standards. In the Standards, the PLI requirements are used to help maintain the identity of peanuts throughout the handling process, thus maintaining the integrity of lots being shipped to human consumption outlets, lots that are subject to the reconditioning process, and lots that are disposed of in non-human consumption outlets. PLI also helps ensure that peanuts certified for human consumption meet the outgoing standards for grade and aflatoxin. In addition, the PLI requirements are a useful tool in product traceability and helping to ensure compliance with the Standards.

The reporting and recordkeeping requirements also play a role in ensuring compliance. Handlers and importers are required to maintain all relevant documentation on the disposition of inedible peanuts. The documentation maintained must be sufficient to document and substantiate the proper disposition of all peanut lots that do not meet grade or aflatoxin quality standards. Reports and records are used to track and document the disposition of peanuts and to substantiate handler and importer compliance with the Standards.

In 2009, the peanut industry began the process of completely restructuring its tracking and reporting systems under an industry-wide food safety system, utilizing industry experts as well as guidance from the Food and Drug Administration, the Grocery Manufacturers Association, and finished product manufacturers. The industry also decided to work toward meeting the Global Food Safety Initiative (GFSI) standards that were being mandated by many major food manufacturers. GFSI certification requires, in part, that a company shall be able to trace all raw material product lots, including packaging, from its suppliers through all stages of processing and dispatch to its customers. The industry reports that in 2010, the industry had its first audits performed against the GFSI standards, and many in the industry are now certified under a GFSI scheme.

The purpose of this effort was to reduce the need for multiple audits while providing ongoing assurance of compliance within the industry with food safety initiatives. Under these new industry procedures, all raw peanuts are lot coded, and there is a traceability system in place to track them throughout the handling process. Handlers currently trace all peanuts from the warehouse to final disposition, including edible, blanched, and oil stock. Further, lots are segregated throughout the handling process in order to maintain identity should there be a recall notice issued.

In reviewing the Standards, the APSA thought it is important to maintain PLI on all lots meeting outgoing requirements. This preserves the integrity of these lots and provides assurance to buyers that the peanuts have met all requirements, have not been commingled with lower grade peanuts, and are ready to be utilized for human consumption. In addition, all peanut manufacturers require the official grade and aflatoxin certificate before taking possession of the peanuts to confirm that the analytical and physical tests required by law have been conducted.

However, given the industry's new requirements for tracking and traceability, the APSA found the remaining PLI requirements in the Standards to be redundant and no longer necessary. When the Standards were implemented in 2002, the current industry traceability systems had not yet been developed, and PLI was an important tool in maintaining compliance. The new traceability systems are used by the industry to help maintain the identity of peanuts throughout the handling process, the same way PLI is used. These systems are also used to track peanuts that are to be reconditioned or disposed of in non-human consumption outlets, such as for seed or animal feed. The industry reports that each peanut handler has designed a traceability system that is specifically integrated into their operations, and the industry believes that these systems largely perform all the same functions as PLI. Further, these systems were also designed to meet the new demands under food safety requirements, such as the Food Safety and Modernization Act, and the food safety and handling requirements set by the manufacturers. The industry believes having to utilize PLI in addition to its own tracking systems requires additional time and recordkeeping to follow peanuts that already have documented traceability.

The APSA proposal, as approved by the Board, recommends revision to the Standards to reflect current industry traceability programs. The industry believes that these changes will reduce handling and inspection costs and help improve the efficiency of handling operations. Consequently, this final rule will add language to § 996.73 of the Standards to define the necessary requirements for an industry-based traceability system and will provide allowances for systems meeting these requirements to be used in place of PLI prior to inspection and certification. The existing PLI system will also remain in place as a requirement for any handler who does not have a system in place that meets the requirements for an industry-based traceability system and for any handler who uses PLI in conjunction with their own traceability system. However, PLI will still continue to be required for all peanuts meeting the outgoing standards.

This final rule will also revise the reporting and recordkeeping requirements under the Standards. All handlers and importers are currently required to submit to USDA a monthly report documenting their monthly farmers stock acquisitions. Under these changes, the requirement to submit this monthly report will be eliminated. The industry stated that the information contained within the form was already being submitted to USDA on a daily basis as part of the farmers stock inspection process. Further, industry representatives stated that this data is maintained as part of the traceability systems now in place. Therefore, the industry supported the removal of this requirement.

Additional changes were recommended to recognize the reporting and recordkeeping done by the industry to meet the tracking and traceability requirements now required of the industry for food safety initiatives. In addition to records relating to peanuts meeting the outgoing standards, handlers and importers are required to maintain all relevant documentation on the disposition of inedible peanuts as part of their food safety traceability requirements. Given the traceability and recordkeeping requirements recommended to be added to the Standards and the recordkeeping requirements demanded under food safety requirements, the industry questioned the continued need for USDA to have access to all such records under the Standards. Industry representatives stated that they no longer see the need for USDA to require regular access to records other than those pertaining to peanuts meeting the outgoing requirements. Consequently, pursuant to the Board-approved recommendation, this final rule will modify the reporting requirements to specify that USDA will be permitted to inspect any peanuts meeting outgoing standards and any and all records pertaining to peanuts meeting outgoing quality regulations. However, pursuant to the Act, the Secretary shall work to provide adequate safeguards regarding all quality concerns related to peanuts. Therefore, this change will not preclude USDA from having access to all materials and records necessary should there be a situation necessitating an investigation or review to ensure compliance. The documentation maintained must still be sufficient to document and substantiate the proper disposition of all peanuts failing grade or aflatoxin quality standards.

Additionally, USDA would like to clarify that under this modified reporting requirement, USDA will continue to have access to all materials and records regarding any and all peanuts originally intended for human consumption. This applies whether the peanuts meet outgoing quality requirements or not.

The APSA proposal as approved by the Board also recommended revising the Standards to clarify that handlers and importers are not producing a finished product and that the peanuts require further processing prior to human consumption. This includes amending the definition for peanuts in the Standards to indicate that the peanuts covered under the Standards are raw peanuts and intended for further processing by manufacturers prior to human consumption. The definitions for inshell and shelled peanuts will also be revised to reflect that the peanuts covered by the Standards are in their raw, natural state. The definition of peanuts will continue to provide that green peanuts, which are raw, for consumption as boiled peanuts are not subject to regulation under the Standards. However, these green peanuts are sold mostly by producers, not by handlers and importers, and make up a small share of the peanut market. The change to the definition for peanuts will also state that peanuts intended for wildlife are not subject to regulation under the Standards.

This change will also eliminate all references to roasting in the Standards to further clarify that handlers and importers are not producing a finished product. At one time, roasting was used to reduce levels of aflatoxin and was included in the Standards for that purpose. However, roasting is no longer used to treat aflatoxin. The Board supported these changes to reduce any confusion that handlers and importers under the Standards are delivering a finished product ready for human consumption.

Finally, this final rule will also make numerous other changes throughout the Standards to update language and to reflect current industry practices and changes. Such changes include a change to the crop year, eliminating language relating to the old quota system, and updating outdated information, such as incorrect addresses, titles, and other contact information. It will also remove the requirement that peanuts testing at or above 301 ppb of aflatoxin can only be disposed of through crushing or export, as cleaning technology has improved to the point that peanuts testing at or above this level may possibly be cleaned to meet the outgoing standards.

The proposed changes approved by the Board also included a recommendation to remove the lot size limit of 200,000 pounds on peanuts presented for outgoing inspection. However, the 200,000 pound limit is required by USDA and the inspection service to ensure an accurate sampling protocol. Therefore, the 200,000 pound lot limit will be maintained.

USDA is also adding an additional change under this final rule that will revise the requirements for imported peanuts under § 996.60(a). This change modifies how importers submit their entry information to USDA. This section currently references the “stamp and fax” entry process, which is being replaced by the International Trade Data System, a system that will automate the filing of import and export information. This change will revise this section to reflect the new electronic entry process.

The Board believes these changes will bring the Standards closer in line with current industry practices, make additional peanuts available for sale, help reduce costs, and make operations more efficient. These changes are consistent with the Standards and the Act.

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

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened.

Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $750,000, and small agricultural service firms, including handlers and importers, are defined as those having annual receipts of less than $7,500,000 (13 CFR 121.201).

There are approximately 7,500 peanut producers; 65 peanut handlers, operating approximately 70 shelling plants; and 25 importers subject to regulation under this peanut program.

An approximation of the number of peanut farms that could be considered small agricultural businesses under the SBA definition can be obtained from the 2012 Agricultural Census, which is the most recent information on the number of farms categorized by size. There were 3,066 peanut farms with annual agricultural sales valued at less than $500,000 in 2012, representing 47 percent of the total number of peanut farms in the U.S. (6,561). According to the National Agricultural Statistics Service (NASS), peanut production for the 2014 and 2015 crop years averaged 5.756 billion pounds. The average value of production for the two-year period was $1.088 billion. The average grower price over the two-year period was $0.25 per pound. Dividing the two-year average production value of $1.088 billion by the approximate number of peanut producers (7,500) results in an average revenue per producer of approximately $145,000, which is well below the SBA threshold for small producers. Based on information and reports received by USDA, more than 50 percent of handlers may be considered small entities. Further, the estimated value of peanuts imported into the United States in 2014 was approximately $64 million. Based on that number, the majority of importers would meet the SBA definition for small agricultural service firms. Consequently, a majority of handlers, importers and producers may be classified as small entities.

The current 10 custom blanchers, 4 custom remillers, 3 oil mill operators, and 1 USDA and 17 USDA-approved private chemical (aflatoxin) laboratories are subject to this rule to the extent that they must comply with reconditioning provisions under § 996.50 and reporting and recordkeeping requirements under § 996.71. These requirements are applied uniformly to these entities, whether large or small.

This final rule will revise the minimum quality, positive lot identification, and reporting and recordkeeping requirements under the Standards. This action will also make numerous other changes to the Standards to better reflect current industry practices and to revise outdated language. The Board believes these changes will make additional peanuts available for sale, help increase efficiencies, and reduce costs to the industry.

This final rule is issued under the Minimum Quality and Handling Standards for Domestic and Imported Peanuts Marketed in the United States, as amended (7 CFR part 996), as established pursuant to Public Law 107-171, the Farm Security and Rural Investment Act of 2002.

It is not anticipated that this action will impose additional costs on handlers, producers, or importers, regardless of size. Rather, these changes should help the industry reduce costs by helping to increase efficiencies. The industry believes the requirement that they continue to use PLI in addition to its own internal traceability systems creates redundancy and additional costs. By recognizing its internal traceability programs as an alternative to PLI, this should improve efficiencies and reduce costs. In addition, this action should also make additional peanuts available for sale, helping to maximize shipments and improving industry returns.

This final rule is expected to benefit the industry. The effects of this rule are not expected to be disproportionately greater or less for small handlers, producers or importers than for larger entities.

USDA has considered alternatives to these changes. The Act requires USDA to consult with the Board on changes to the Standards. An alternative considered was to continue the Standards in their current form. However, the industry believes these changes will increase efficiencies, make additional peanuts available for sale, and help update the Standards. Therefore, because of the anticipated benefits of these changes, this alternative was rejected. USDA has met with the Board, which is representative of the industry, and has included nearly all of its recommendations in this final rule.

The Act specifies in § 1601(c)(2)(A) that the Standards established pursuant to it may be implemented without regard to the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35). However, USDA has considered the reporting and recordkeeping burden on handlers and importers under this program. Handlers and importers are only required to complete one form, the monthly acquisition of farmers stock peanuts. Under this final rule, this requirement will be removed, reducing the reporting burden. Recordkeeping requirements will remain the same. Accordingly, this rule will not impose any additional reporting or recordkeeping requirements on either small or large handlers or importers.

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

USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

The Board's meetings were widely publicized throughout the peanut industry, and all interested persons were invited to attend and participate in Board deliberations on all issues. Like all Board meetings, the June 26, 2015, and the November 18, 2015, meetings were public meetings, and all entities, both large and small, were able to express views on these issues.

Section 1601 of the Act also provides that amendments to the Standards may be implemented without extending interested parties an opportunity to comment. However, due to the nature of the proposed changes, interested parties were provided with a 60-day comment period.

A proposed rule concerning this action was published in the Federal Register on January 19, 2016 (81 FR 2775). Copies of the rule were mailed to all Board members, and a press release was issued regarding the proposed rule to notify the industry. Finally, the rule was made available through the internet by USDA and the Office of the Federal Register. A 60-day comment period ending March 21, 2016, was provided to allow interested persons to respond to the proposal.

Fifteen comments were received during the comment period in response to the proposal. The commenters included growers, shellers, manufacturers, congressional representatives, and an interested consumer. Fourteen of the comments were in support of the proposed rule. One comment was in opposition to the proposed changes to the outgoing quality requirements. Most of the points made by the commenter in opposition were discussed at the public meetings on June 26, 2015, and November 18, 2015, prior to the Board's vote.

All 14 of the positive comments expressed support for finalizing the proposed rule as issued. Five of these comments referenced support of the proposal's recognition of modern business management, food safety progress and technological change. Two commenters noted the changes will better reflect current industry practices while revising outdated language and reducing regulatory burden on the industry. One comment asserted that the changes will eliminate waste and costs to the industry. Another expressed that under the change to the outgoing requirements, users of peanuts can still request the desired level of damage by specification in their contracts. One commenter stated that food safety will not be affected by these changes since the outgoing standards for aflatoxin are unchanged.

The one negative comment received was from a manufacturer and opposed the proposed changes to the outgoing quality requirements. Specifically, the comment opposed the changes that will merge the previously separate categories for damage and minor defects for unshelled peanuts and kernels into one overall allowance for damage and increases that allowance to 3.5 percent, stating that the current requirements for damage and defects aligned with their requirements.

The commenter expressed concerns that the changes to the outgoing quality standards may hinder their ability to control the type of peanut being supplied from shellers and could result in additional inspections and added costs. However, the modification to the outgoing standards will not alter the customer's ability to specify conformity regarding damage or defect. The manufacturer's contract with the supplier can still specify the types of damage and defect, thereby maintaining the desired transparency and ensuring the visual and sensory product quality required by the manufacturer. The Federal-State Inspection Service can certify peanuts at the damage level requested, so this change should not result in the need for additional inspections.

Further, peanut customer requirements can vary depending on the end use of the peanuts. This is why the Board recommended increasing the allowable damage under the Standards. Some segments of the peanut industry do not require the same threshold for damage and defect. The proposed changes will allow for additional peanuts to be utilized for manufacturing in segments of the industry where cosmetic damage to the peanut is not as important.

The proposed changes to the outgoing quality requirement are designed to help improve the efficiency of handling operations and make additional peanuts available for all customers within the peanut industry. This was discussed during the public Board meetings on June 26, 2015, and November 18, 2015, prior to the Board's vote. During the meetings, Board members discussed the implication of adjusting the damage level to 3.5 percent and noted that the customer can still request a more stringent level than the Standards require. In fact, some manufacturers may already require tighter specifications for damage than currently allowed.

The commenter was also concerned with how these changes may affect aflatoxin levels and that the changes may result in more lots failing as to aflatoxin. All peanuts for human consumption will still be chemically analyzed by a USDA laboratory or a USDA-approved laboratory and certified “negative” as to aflatoxin. The criteria for the outgoing standard regarding aflatoxin was not modified as part of the proposed changes and still requires a certificate of analysis indicating that the level of aflatoxin does not exceed 15 parts per billion.

Accordingly, no changes will be made to the rule as proposed, based on the comments received.

After consideration of all relevant matter presented, including the information and recommendation submitted by the Board and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

For the reasons set forth in the preamble, 7 CFR part 996 is amended as follows:

I. Background

On October 9, 2014, The Department published a Notice of Proposed Rulemaking (NPRM) concerning occupations that regularly conduct drug testing at 79 FR 61013. The Department invited comments through December 8, 2014.

On February 22, 2012, President Obama signed the Act, Public Law 112-96. Title II of the Act amended section 303, SSA, to add a new subsection (l) permitting States to drug test UC applicants as a condition of UC eligibility under two circumstances. The first circumstance is if the applicant was terminated from employment with the applicant's most recent employer because of the unlawful use of a controlled substance. (Section 303(l)(1)(A)(i), SSA.) The second circumstance is if the only available suitable work (as defined in the law of the State conducting the drug testing) for an individual is in an occupation that regularly conducts drug testing (as determined in regulations by the Secretary). If an applicant who is tested for drug use under either circumstance tests positive, the State may deny UC to that applicant. On October 9, 2014, the Department published a Notice of Proposed Rulemaking (NPRM) concerning occupations that regularly conduct drug testing at 79 FR 61013. The NPRM proposed that occupations that regularly drug test be defined as those required to be drug tested in Federal or State laws at the time the NPRM was published. The NPRM also defined key terms:

• An “applicant” means an individual who files an initial claim for UC.

• “Controlled substance” is defined by reference to the definition of the term in Section 102 of the Controlled Substances Act. (This definition is in the Act.)

• “Suitable work” means suitable work as defined under the UC law of the State against which the claim is filed. It must be the same definition that the State otherwise uses for determining UC eligibility based on seeking work or refusal of work for an initial applicant for UC.

• Occupation means a position or class of positions.

• “Unemployment compensation” is defined as “cash benefits payable to an individual with respect to their unemployment under the State law.” This definition derives from the definition found in Federal UC law at Section 3306(h), FUTA.

The Department invited comments through December 8, 2014. This final rule defines those occupations that regularly conduct drug testing as required by section 303(l)(1)(A)(ii), SSA. The Department, separately from this rulemaking, issued guidance (Unemployment Insurance Program Letter (UIPL) No. 1-15) to States to address other issues related to the implementation of drug testing under 303(l), SSA.

The Department received sixteen (16) comments (by letter or through the Federal e-Rulemaking Portal) by the close of the comment period. Ten (10) of the comments were from individuals; one was from an employer advocacy group; one was from an industry association; one was from a worker advocacy group; and three (3) were from governmental officials or committees. The Department considered all timely comments and included them in the rulemaking record. There were no late comments.

These comments are discussed below in the Discussion of Comments. We address only those comments addressing the scope and purpose of the rule, the identification of occupations that regularly conduct drug testing. Therefore, comments received concerning the Department's previously issued guidance about drug testing in UIPL No. 1-15; comments supporting or opposing drug testing in general; and comments about drug testing procedures, the efficacy of drug tests, and the cost of drug tests, are not addressed as these issues fall outside the scope of the statutory requirement that is the basis for this regulation. We made one change, discussed below, in response to the comments.

A number of commenters opposed the limitation on the list of occupations requiring drug testing. Three commenters wrote that limiting the list of occupations requiring drug testing to those identified in Federal or State laws that were in effect on the date of publication of the NPRM (October 9, 2014) was not appropriate. Of those, one wrote it was uncertain if future amendments to the Federal regulations would incorporate future State law enactments mandating testing. One wrote that States would not be given sufficient time to enact legislation to add any occupations to the list already established by Federal or State law, and the public interest would be served by a broader interpretation of “regularly conducting drug testing.” One wrote it was an unnecessary obstacle to States using drug screening and testing to improve the chances that unemployed workers are ready to return to work.

One commenter wrote that the limitation was appropriate in order to provide the ability to assess the cost effectiveness of implementing drug testing in the UC program and that to do otherwise would circumvent the intent of Congress to limit authority to drug test to a small pool of workers for whom, because of their job requirements, drug testing is directly related to continued employment. The commenter asserted it was not the intent of Congress to cover a more expansive segment of the workforce, such as those subject to pre-employment screening.

The Department agrees with the commenters that the rule should not limit the list of occupations requiring drug testing, set forth in the NPRM, to those identified in specified Federal laws or those State laws that were in effect on the date of publication of the NPRM; thus, this provision is revised in the final rule to broaden its applicability as requested by commenters. In a dynamic economy, occupations change over time, sometimes rapidly, and new occupations are created, and it is important that this rule contain the flexibility necessary to allow States and the Federal government to adapt to those changes. Thus, the regulation has been expanded to encompass any Federal or State law requiring drug testing regardless of when enacted. Specifically, section 620.3(h) has been revised to specify that occupations that regularly conduct drug testing include any “occupation specifically identified in a State or Federal law as requiring an employee to be tested for controlled substances.” In recognition of the fact that new federal laws may be enacted that may require drug testing for other occupations, and that those occupations may not necessarily be included in § 620.3(a)-(g), the Department added “Federal law” to § 620.3(h). This additional change ensures the final rule is consistent with the policy change being made in response to the comments. Additionally, the final rule eliminates the reference to dates where the proposed rule referenced State law and the specified Federal regulations in § 620.3(a)-(g). The Department will monitor changes in Federal law that affect the definition of “occupations” for which drug testing is required and inform States of any changes through guidance.

There is no evidence of Congressional intent for the legislation to permit testing on any basis other than the plain language of the statute, i.e., occupations that regularly test for drugs. However, the Department agrees that changes to those occupations for which Federal or State law require drug testing should be accommodated by the regulation.

One commenter wrote that the proposed rule in Section 620.4(a), that drug testing is permitted only of an applicant, and not of an individual filing a continued claim for unemployment compensation after initially being determined eligible, would unduly limit drug testing to only the period after an applicant files an initial claim and before the applicant files a continued claim for unemployment compensation.

The plain language of Section 303(l), SSA, limits permissible drug testing to applicants for UC. “Applicants” are individuals who have submitted an initial application for UC. Once individuals have been determined eligible to receive UC, they are no longer applicants for UC. The act of certifying that certain conditions are met to maintain eligibility is different than making an application for UC benefits. This is illustrated throughout Title III, SSA. Section 303(h)(3)(B), SSA, requiring UC information disclosures to the Department of Health and Human Services, and Section 303(i)(1)(A)(ii)), SSA, requiring UC information disclosures to the Department of Housing and Urban Development, both refer to an individual who “has made application for” UC, distinguishing them from an individual who “is receiving” or “has received” UC. Similarly, Section 303(d)(2)(B), SSA, and Section 303(e)(2)(A), SSA, both refer to a “new applicant” for UC and then use the term “applicant” throughout the remainder of the subsection, signifying that the term is used to denote only an individual applying for UC for the first time. Thus, those provisions clarify that, as used in Section 303, SSA, an applicant is not a continuing claimant. Similarly, Section 303(l)(1)(B), SSA, permits the denial of UC based on the results of a drug test only to “applicants,” not as a condition of continued eligibility. As these provisions demonstrate, “applicant” refers to an initial claimant, not a continuing claimant; therefore, the final rule includes no changes to the requirements of Section 620.4(a).

Two commenters wrote that the rule arbitrarily narrows the definition of “occupations that regularly test for drugs” so that the potential number of applicants affected is negligible. They also noted that businesses regularly conduct drug testing in occupations without Federal or State mandate. For this reason, they believe the definition “occupations that regularly conduct drug testing” should include occupations for which employers already conduct drug testing outside those mandated by State or Federal law.

Section 303(l)(1)(A)(ii), SSA, requires the Secretary to identify those “occupations,” not employers, that regularly conduct drug testing. As explained in the NPRM, whether an occupation is subject to “regular” drug testing in private employment was not chosen as the standard here because it would be very difficult to implement in a consistent manner. Drug testing in occupations where it is not required by law is not consistent across employers, across industries, across the States, or over time; thus, we are unable to reliably and consistently determine which occupations require “regular” drug testing where not required by law. Even if certain employers do conduct drug testing for certain occupations when permitted to do so, that is not sufficient to show that those occupations are subject to regular drug testing because a significant number of employers may not drug test individuals working in those occupations. In addition, those employers who conduct drug testing when they are not required by law to do so do not necessarily limit the testing to applicants or employees working in a specific occupation. The determination by an employer to drug-test all of its employees is not a determination that all of the occupations in which its employees fall are occupations for which drug testing is appropriate, under the requirements of this rule, but rather a determination in keeping with that employer's beliefs about its business needs that drug testing is appropriate for all of its employees.

The final rule will permit States to require drug testing for UC eligibility for occupations that are subjected under State law to drug testing after the date of the NPRM publication, which ensures that there is flexibility for States to require drug testing for other occupations, while still providing predictability and consistency in identifying in this final rule what occupations are “regularly” drug tested. Thus, the Department has not changed the rule to address this concern.

One commenter wrote that the proposed rules would impose an unnecessary burden on the State agency to determine whether “suitable work” in a specific occupation is available in the local labor market.

The comment appears to misunderstand the proposed rule, which requires only that a State use the same definition of “suitable work” for UC drug testing as otherwise used in State UC law. The rule does not use the term “local labor market” when addressing suitable work. State UC agencies routinely make eligibility determinations about availability for work, search for work, and refusal of offers of suitable work. Whether work is available in the local labor market for UC claimants is one criterion for determining what constitutes “suitable” work under State UC law in some States, but this rule does not require it. For drug testing, section 303(l)(1)(A)(ii), SSA, provides, as one of the two permissible reasons for drug testing as a condition for the receipt of UC, that the applicant “is an individual for whom suitable work (as defined under the State law) is only available in an occupation that regularly conducts drug testing . . . ” [Emphasis added.] Thus, the NPRM required that drug testing is permitted only if the applicant's only suitable work requires it as a condition of employment. Because the rule's definition of “suitable work” allows the States to apply their own current laws, the definition of suitable work in the proposed rule would not impose any burden on States, and the Department has not changed the definition in the final rule.

One commenter wrote that the proposed rule, by limiting the scope of permissible drug testing, contradicts Congressional intent and the practices of many American businesses and the best interests of American workers.

The Department drafted the NPRM to be consistent with the language of the statute. The scope of drug testing contemplated in the NPRM is consistent with the statutory language; there is no evidence of Congressional intent in the legislative history which would require it to be interpreted more broadly than the Department interprets it in this regulation. Therefore, the Department declines to expand the scope of drug testing in this rule.

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. For a “significant regulatory action,” E.O. 12866 asks agencies to describe the need for the regulatory action and explain how the regulatory action will meet that need, as well as assess the costs and benefits of the regulation. 1 This regulation is necessary because of the statutory requirement contained in new section 303(l)(1)(A)(ii), SSA, which requires the Secretary to determine the occupations that regularly conduct drug testing for the purpose of determining which applicants may be drug tested when applying for State unemployment compensation. OMB has determined that this rule is “significant” as defined in section 3(f) of E.O. 12866. Before the amendment of Federal law to add new section 303(l)(1), SSA, drug testing of applicants for UC as a condition of eligibility was prohibited.

However, the Department has determined that this final rule is not an economically significant rulemaking within the definition of E.O. 12866 because it is not an action that is likely to result in the following: An annual effect on the economy of $100 million or more; an adverse or material effect on a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or Tribal governments or communities; serious inconsistency or interference with an action taken or planned by another agency; or a material change in the budgetary impact of entitlements, grants, user fees, or loan programs, or the rights and obligations of recipients thereof. In addition, since the drug testing of UC applicants as a condition of UC eligibility is entirely voluntary on the part of the States, and since Section 303(l), SSA, is written narrowly, the Department believes that it is unlikely that many States will establish a testing program because they will not deem it cost effective to do so. The Department sought comment from interested stakeholders on this assumption. We received no comments on this topic.

There are limited data on which to base estimates of the cost associated with establishing a testing program. Only one of the two States that have enacted a conforming drug testing law issued a fiscal note. That State is Texas, which estimated that the 5-year cost of administering the program would be $1,175,954. This includes both one-time technology personnel services for the first year to program the State UI computer system and ongoing administrative costs for personnel. The Texas analysis estimated a potential savings to the Unemployment Trust Fund of $13,700,580 over the 5-year period, resulting in a net savings of approximately $12.5 million. The Department believes it would be inappropriate to extrapolate the Texas analysis to all States in part because of differences in the Texas law and the requirements in this final rule. The Department has included this information about Texas for illustrative purposes only and emphasizes that by doing so, it is not validating the methodology or assumptions in the Texas analysis. Under the rule, States are prohibited from testing applicants for unemployment compensation who do not meet the narrow criteria established in the law. The Department requested that interested stakeholders with data on the costs of establishing a state-wide testing program; the number of applicants for unemployment compensation that fit the narrow criteria established in the law; and estimates of the number of individuals that would subsequently be denied unemployment compensation due to a failed drug test submit it during the comment period. We received no comments that provided the requested information.

In the absence of data, the Department is unable to quantify the administrative costs States will incur if they choose to implement drug testing under this rule. States may need to find funding to implement a conforming drug testing program for unemployment compensation applicants. No additional funding has been appropriated for this purpose and current Federal funding for the administration of State unemployment compensation programs may be insufficient to support the additional costs of establishing and operating a drug testing program. States will need to fund the cost of the drug tests, staff costs for administration of the drug testing function, and technology costs to track drug testing outcomes. States will incur ramp up costs that will include implementing business processes necessary to determine whether an applicant is one for whom drug testing is permissible under the law; developing a process to refer and track applicants referred for drug testing; and the costs of testing that meets the standards required by the Secretary of Labor. States will also have to factor in increased costs of adjudication and appeals of both the determination of applicability of the drug testing to the individual and of the resulting determinations of benefit eligibility based on the test results.

The benefits of the rule are equally hard to determine. As discussed above, because permissible drug testing is limited under the statute and this rule, the Department of Labor believes that the provisions will impact a very limited number of applicants for unemployment compensation benefits. Only one State has estimated savings from a drug testing program in a fiscal note and the Department cannot and should not extrapolate results from those estimates.

The purposes of the Paperwork Reduction Act of 1995 (PRA), 44 U.S.C. 3501 et seq., include minimizing the paperwork burden on affected entities. The PRA requires certain actions before an agency can adopt or revise a collection of information, including publishing a summary of the collection of information, a brief description of the need for and proposed use of the information, and a request for comments on the information collections.

A Federal agency may not conduct or sponsor a collection of information unless it is approved by OMB under the PRA, and displays a currently valid OMB control number, and the public is not required to respond to a collection of information unless it displays a currently valid OMB control number. Also, notwithstanding any other provisions of law, no person shall be subject to penalty for failing to comply with a collection of information if the collection of information does not display a currently valid OMB control number (44 U.S.C. 3512).

The Department has determined that this final rule does not contain a “collection of information,” as the term is defined. See 5 CFR 1320.3(c). The Department received no comments on this determination.

Section 6 of Executive Order 13132 requires Federal agencies to consult with State entities when a regulation or policy may have a substantial direct effect on the States or the relationship between the National Government and the States, or the distribution of power and responsibilities among the various levels of government, within the meaning of the Executive Order. Section 3(b) of the Executive Order further provides that Federal agencies must implement regulations that have a substantial direct effect only if statutory authority permits the regulation and it is of national significance.

This final rule does not have a substantial direct effect on the States or the relationship between the National Government and the States, or the distribution of power and responsibilities among the various levels of Government, within the meaning of the Executive Order. This is because drug testing authorized by the regulation is voluntary on the part of the State, not required.

This regulatory action has been reviewed in accordance with the Unfunded Mandates Reform Act of 1995 (the Reform Act). Under the Reform Act, a Federal agency must determine whether a regulation proposes a Federal mandate that would result in the increased expenditures by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more in any single year. The Department has determined that since States have an option of drug testing UC applicants and can elect not to do so, this final rule does not include any Federal mandate that could result in increased expenditure by State, local, and Tribal governments. Drug testing under this rule is purely voluntary, so that any increased cost to the States is not the result of a Federal mandate. Accordingly, it is unnecessary for the Department to prepare a budgetary impact statement.

The Department drafted this final rule in plain language.

The Department certifies that this final rule has been assessed according to section 654 of the Treasury and General Government Appropriations Act, enacted as part of the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Pub. L. 105-277, 112 Stat. 2681) for its effect on family well-being. The Department certifies that this final rule does not adversely impact family well-being as discussed under section 654 of the Treasury and General Government Appropriations Act of 1999.

The Regulatory Flexibility Act (RFA) at 5 U.S.C. 603(a) requires agencies to prepare and make available for public comment an initial regulatory flexibility analysis which will describe the impact of the final rule on small entities. Section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the proposed or final rulemaking is not expected to have a significant economic impact on a substantial number of small entities. This final rule does not affect small entities as defined in the RFA. Therefore, the rule will not have a significant economic impact on a substantial number of these small entities. The Department has certified this to the Chief Counsel for Advocacy, Small Business Administration, pursuant to the Regulatory Flexibility Act.

For the reasons stated in the preamble, the Department amends 20 CFR chapter V by adding part 620 to read as follows:

In the Federal Register of December 1, 2014 (79 FR 71259), we published a final rule establishing requirements for providing calorie declarations for food sold from certain vending machines. The final rule, which is codified primarily at § 101.8, will ensure that calorie information is available for certain food sold from a vending machine that does not permit a prospective purchaser to examine the Nutrition Facts Panel before purchasing the article, or does not otherwise provide visible nutrition information at the point of purchase. The declaration of accurate and clear calorie information for food sold from vending machines will make calorie information available to consumers in a direct and accessible manner to enable consumers to make informed and healthful dietary choices. The final rule applies to certain food from vending machines operated by a person engaged in the business of owning or operating 20 or more vending machines. Vending machine operators not subject to the rules may elect to be subject to the Federal requirements by registering with FDA.

The final rule also specifies how calories must be declared. In brief,

• Vending machine operators do not have to declare calorie information for a food if a prospective purchaser can view certain calorie information on the front of the package, in the Nutrition Facts label on the food, or in a reproduction of the Nutrition Facts label on the food subject to certain requirements, or if the vending machine operator does not own or operate 20 or more vending machines.

• Calorie declarations must be clear and conspicuous and placed prominently, and may be placed on a sign in, on, or adjacent to the vending machine, so long as the sign is in close proximity to the article of food or selection button.

• The final rule establishes type size, color, and contrast requirements for calorie declarations in or on the vending machines, and for calorie declarations on signs adjacent to the vending machines.

• The final rule establishes requirements for calorie declarations on electronic vending machines, those vending machines with only pictures or names of the food items, and those vending machines with few choices ( e.g., popcorn machines).

The final rule also requires vending machine operator contact information to be displayed for enforcement purposes.

The final rule implements provisions of section 403(q)(5)(H) of the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 343(q)(5)(H)).

In the preamble to the final rule (79 FR 71259 at 71282 through 71283), we stated that all covered vending machine operators must come into compliance with the rule's requirements no later than December 1, 2016.

Since we published the final rule in the Federal Register , several trade associations have contacted us to state that the type size requirement for calorie information on the package, often referred to as “front-of-pack” or FOP labeling, presents significant technical challenges to the packaged food industry. The trade associations asked us to amend the type size requirement for FOP labeling and to provide additional flexibility for providing calorie information for gums, mints, and roll candy (see Refs. 1 and 2).

With respect to FOP labeling, § 101.8(b)(2), states that articles of food sold from a vending machine are not “covered vending machine food” if the prospective purchaser can otherwise view visible nutrition information, including, at a minimum the total number of calories for the article of food as sold at the point of purchase. The visible nutrition information must appear on the food label itself, be clear and conspicuous and able to be easily read on the article of food while in the vending machine, and be in a type size at least 50 percent of the size of the largest printed matter on the label and with sufficient color and contrasting background to other print on the label to permit the perspective purchaser to clearly distinguish the information.

In the preamble to the final rule (79 FR 71259 at 71269 (see comment 16 and our response)), we discussed how FOP labeling could be a way to provide visible nutrition information for articles of food that are sold from a vending machine that are not “covered vending machine food” as interpreted by § 101.8(c). We also noted how some comments felt that the rule's type size requirement was too large, whereas others stated that the type size would be too small (79 FR 71259 at 71269). We explained that specifying the minimum type size for calorie information on vending machine food labels will provide greater clarity for both compliance and enforcement (id.).

Since the publication of the final rule, several trade associations indicated that the type size requirement would make the calorie declaration very large on some products and would make label redesign difficult and/or not practical. They noted the existence of voluntary FOP labeling programs whereby calorie information is presented in a FOP type size that ranges from 100 to 150 percent of the size of the “net quantity of contents” statement on the principal display panel. They also asked us to align the compliance date with that for the Nutrition Facts labeling rule (81 FR 33742, May 27, 2016) so that food companies can “make all changes to their food labels, including adding FOP calorie information, at the same time” (see Ref. 2). The compliance date for the Nutrition Facts label rule is July 26, 2018, for manufacturers with $10 million or more in annual food sales.

Consequently, with respect to § 101.8(b)(2), we have decided to extend the compliance date for certain food products sold from a glass-front vending machine that allow prospective purchasers to view packaged foods offered for sale. Specifically, if the food is:

• Sold from a glass-front vending machine that allows prospective purchasers to view packaged foods offered for sale;

• not a covered vending machine food within § 101.8(b)(2); and

• the label for such packaged foods provides front-of-package calorie disclosures that complies with all aspects of the final vending machine labeling rule except that the disclosure is not 50 percent of the size of the largest print on the label,

With respect to providing calorie information for gums, mints, and roll candy, our regulations, at § 101.8(c), establishes requirements for calorie labeling for certain food sold from vending machines. Under § 101.8(c)(2)(i)(C), the calorie declaration for covered vending machine food must include the total calories present in the packaged food, regardless of whether the packaged food contains a single serving or multiple servings. Under § 101.8(c)(2)(ii)(A), the calorie declarations for covered vending machine food must be clear and conspicuous and placed prominently on a sign in close proximity to the article of food or selection button so long as the calorie declaration is visible at the same time as the food, its name, price, selection button, or selection number is visible.

Several trade associations have disagreed with § 101.8(c)(2) insofar as it would apply to gums, mints, and roll candy. The trade associations contend that gums, mints, and roll candy suitable for vending machines are not typically amenable to FOP labeling due to the limited size of the principal display panel, and as a result, there are few options for compliance for these products. They also describe that in glass-front vending machines, these items are often placed together at the bottom of the machine with limited space for signage. In addition, the trade associations have asserted that providing calories declarations “per serving” for these items is preferable to providing calories “per container”, because consumers typically do not consume the entire packaged product at one time, and providing calorie declarations on a “per serving” basis would be consistent with our serving size requirements at 21 CFR 101.9. The trade associations also explained that these items typically contain insignificant amounts of all nutrients and are otherwise exempt from packaged food nutrition labeling, and that providing a sign with a range of 0 to 25 calories “per serving” for these items is sufficient for consumers to make informed choices (Ref. 1). Based on these distinct challenges, the trade associations also suggested that we amend § 101.8(c)(2) by adding a new paragraph that would, in effect, provide an exception for gums, mints, and roll candies that would allow the use of a range of calories (such as “25 calories or less/serving”) and the covered vending machine food:

• Contains at least three servings per package;

• has a “reference amount customarily consumed” (the portion size based on the amount the average person is likely to eat at one time) of 5 grams or less; and

• contains 25 calories or less per serving.

We addressed a similar issue in the preamble to the final rule (see 79 FR 71259 at 71276 through 71277 (see comment 24 and our response)) and explained why the calorie declaration requirement applies to the entire package rather than to a serving in the package. We disagree with the trade associations' suggestion that the final vending machine rule's serving size requirement should be consistent with that in our serving size rule. The vending machine rule applies to certain vending machine operators, whereas the serving size rule applies to food manufacturers. The statutory authority behind each regulation also differs; the vending machine label requirement is found in section 403(q)(5)(H) of the FD&C Act, which requires, generally, that food sold in certain vending machines disclose the number of calories contained in food, whereas section 403(q)(1)(A)(i) of the FD&C Act requires, with certain exceptions, that food that is intended for human consumption and offered for sale bear nutrition information that provides a serving size that reflects the amount of food customarily consumed and is expressed in a common household measure that is appropriate to the food. Section 2(b)(1)(B) of the Nutrition Labeling and Education Act further requires the Secretary of Health and Human Services to issue regulations to establish standards to define serving size. Nevertheless, we note that, in the preamble to the final vending machine rule, we said we would allow, in addition to the total calorie declaration for the food as vended, the voluntary declaration of calories per serving for covered vending machine foods (see 79 FR 71259 at 71277). The voluntary declaration of calories per serving, in addition to declaration of calories per container (required by § 101.8(c)(2)), should accommodate the trade associations' desire to disclose the number of calories per serving.

However, we also are mindful that the gums, mints, and roll candies mentioned by the trade associations tend to be sold in small packages that do not lend themselves to FOP labeling and often are located or placed in a small space in glass-front vending machines; the small space may limit the size of any sign(s) that would disclose calorie information for each gum, mint, or roll candy. For example, we are aware that some glass-front vending machines may have trays that are different sizes; the tray width for bags of potato chips is larger than the tray width for a roll of mints or hard candies or for a small package of gum. The smaller tray size for gums, mints, and roll candy may make it difficult to add information, inside the vending machine, beyond the product's price and selection number. Therefore, we are extending the compliance date for § 101.8(c)(2) to July 26, 2018, so that we may consider this issue further. This extension of the compliance date is limited to:

• Gums, mints, and roll candy sold in packages that are too small to bear FOP labeling and where the gums, mints, and roll candy are located in a small space within a glass-front vending machine that allows prospective purchasers to view packaged foods offered for sale;

• the space within the glass-front vending machine holding the gum, mints, and roll candy is so small such that it is not practicable to provide calorie information under each gum, mint, or roll candy; and

• the glass-front vending machine also does not or is not capable of providing calorie information electronically.

This limited change in the compliance date for § 101.8(c)(2) will give us time to consider issues relating to signage and vending machine design and give vending machine operators some flexibility in their disclosure of calorie information for gums, mints, and roll candies in small packages. In the interim, so consumers can make informed choices, we encourage vending machine operators to provide calorie information through a sign in close proximity to the gums, mints, and roll candy inside the vending machine that states the gums, mints, and roll candies provide “X” calories or less/serving, where X represents the value of the largest number of calories per serving for the gums, mints, and roll candies. We emphasize that this extension does not extend to other products in glass-front vending machines or glass-front vending machines that are capable of providing information electronically, nor does it extend to other types of vending machines. We also emphasize that the limited compliance date extension for § 101.8(c)(2) is intended to give vending machine operators more flexibility in providing calorie information for gums, mints, and roll candy in glass-front vending machines where those gums, mints, and roll candy are located or placed in a small space such that it is not practicable to provide calorie information under each gum, mint, or roll candy. Our final rule already gives vending machine operators other ways to comply with the calorie disclosure requirement; for example, vending machine operators can provide calorie declarations on a sign adjacent to the vending machine (see § 101.8(c)(2)(ii)(C)).

We have examined the impacts of the final rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct us to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). We have developed a comprehensive Economic Analysis of Impacts that assesses the impacts of this final rule (Ref. 3). We believe that this final rule is not a significant regulatory action as defined by Executive Order 12866.

The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the final rule changes the compliance date for § 101.8(b)(2) and (c)(2), under the limited circumstances described in this document, from December 1, 2016, to July 26, 2018, we certify that the final rule will not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes an assessment of anticipated costs and benefits, before issuing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $146 million, using the most current (2015) Implicit Price Deflator for the Gross Domestic Product. This final rule would not result in an expenditure in any year that meets or exceeds this amount.

This final rule contains no collection of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required.

We have determined under 21 CFR 25.30(k) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

The following references are on display in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852, and are available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; they are also available electronically at http://www.regulations.gov .

I. Background

ONRR is amending its civil penalty regulations.

On May 13, 1999, the Department of the Interior (Department) published a final rule (64 FR 26240) in the Federal Register (FR) governing Minerals Management Service (MMS) Minerals Revenue Management (MRM) issuance of notices of noncompliance and civil penalties.

On May 19, 2010, the Secretary of the Department (Secretary) reassigned MMS's responsibilities to three separate organizations. As part of this reorganization, the Secretary renamed MMS's MRM to ONRR and transferred it to the Assistant Secretary of Policy, Management and Budget. This change required the reorganization of title 30 of the Code of Federal Regulations (30 CFR). In response, ONRR published a direct final rule on October 4, 2010 (75 FR 61051), to establish a new chapter XII in 30 CFR; to remove certain regulations from Chapter II; and to recodify these regulations in the new Chapter XII. Therefore, all references to ONRR in this rule include its predecessor MRM, and all references to 30 CFR part 1241 in this rule include former 30 CFR part 241.

On May 20, 2014, ONRR published a Notice of Proposed Rulemaking (79 FR 28862) to amend ONRR's civil penalty regulations. In the preamble of the proposed rule, ONRR invited comments on all aspects of the proposed rule, including (1) the amount of the proposed processing fee for a hearing request, payment by Electronic Funds Transfer, and the form of identification to include with the fee; (2) the effect that the proposed processing fee could have on the filing of hearing requests; (3) the procedure to allow a motion for summary decision to be filed at any time after the case is referred to the Departmental Cases Hearings Division (DCHD), including before discovery commences; (4) whether industry should have the burden of showing by a preponderance of the evidence that it is not liable or that the penalty amount should be reduced; (5) whether the accrual of a penalty during the hearing process could be stayed; and (6) the definition of the term “ knowingly or willfully.”

The proposed rulemaking provided for a 60-day comment period, which ended on July 21, 2014. During the public comment period, ONRR received 19 written comments: 11 responses from members of industry, 7 responses from industry trade groups or associations, and 1 response from the Jicarilla Apache Nation.

ONRR has carefully considered all of the public comments that we received during the rulemaking process. We hereby adopt final regulations governing the application, assessment, and issuance of and request for hearing on a NONC, FCCP, and ILCP. These regulations will apply prospectively to a NONC, FCCP or ILCP issued on or after the effective date that we specify in the DATES section of this preamble.

This final rule reflects revisions to the proposed rule. Also, consistent with the proposed rule, it amends the current ONRR regulations to (1) apply the regulations to all Federal mineral leases onshore and on the OCS, to all Federally-administered mineral leases on Indian Tribal and individual Indian mineral owners' lands, and to all easements, rights of way, and other agreements on the OCS; (2) incorporate the civil penalty inflation adjustments made pursuant to the 2015 Act; (3) clarify and simplify the existing regulations for issuing a NONC, FCCP, and ILCP; and (4) provide notice that ONRR will post matrices for civil penalty assessments on its Web site. The maximum civil penalty amounts for ONRR penalties under 30 U.S.C. 1719(a)-(d) were established in 1983 in the Federal Oil and Gas Management Act (FOGRMA). The civil penalties were not subsequently adjusted for inflation. The proposed rule, published on May 20, 2014 [79 FR 28862], adjusted the civil penalty amounts by 10 percent pursuant to the Federal Civil Penalties Inflation Adjustment Act of 1990 (Pub. L. 101-410) (Inflation Adjustment Act). However, on November 2, 2015, the President of the United States signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (Sec. 701 of Pub. L. 114-74) (the 2015 Act), which further amended the Inflation Adjustment Act. The 2015 Act required Federal agencies to adjust each civil penalty amount with an initial catch-up adjustment through an interim final rulemaking. The 2015 Act also requires Federal agencies to make annual inflation adjustments. In accordance with the 2015 Act, in a separate interim final rule, ONRR replaced the established 1983 maximum civil penalty amounts for each of the four established civil penalty tiers specified in 30 U.S.C. 1719(a)-(d). Therefore, the maximum civil penalty amounts in this final rule are greater than the amounts in the proposed rule because this final rule incorporates the adjustments made pursuant to the 2015 Act. Also, this final rule reflects other non-substantive technical changes and additions made to the proposed rule for the purpose of clarity. We discuss the revisions and amendments in more detail below.

The majority of commenters expressed opposition to the proposed rule. The general comments fall into two categories: (1) The proposed rule is at odds with the FOGRMA civil penalty hierarchy, and (2) the proposed rule denies due process.

Public Comment: Industry contends that the proposed rule expands the definitions of statutory terms, establishes too lenient of standards for agency notification to industry members, and seeks to invent new knowing or willful violations. Industry further contends that Congress did not authorize ONRR to impose broad-ranging knowing or willful civil penalties entirely at ONRR's discretion. Rather, Congress established a purposeful hierarchy of civil penalties.

ONRR Response: We include language in the preamble of this final rule that clarifies ambiguities and simplifies the processes for issuing and contesting a NONC, FCCP, and ILCP. We may issue either a NONC or ILCP, depending upon the type of violation we discover and whether it is knowing or willful. We acknowledge that FOGRMA does not expressly define some statutory terms, such as “ knowingly or willfully,” “ submits,” or “ maintains.” Therefore, we clarify these terms as they relate to royalty and production information, collection, and management. We do not believe that the definitions expand on or redefine these terms, but rather clarify the terms to minimize ambiguity. We do not understand what industry means by a broad-ranging knowing or willful civil penalty. Congress authorized the Secretary to impose civil penalties for the specific violations identified in 30 U.S.C. 1719. The burden of proof lies with us to prove, by a preponderance of the evidence, the fact of the violation and the basis of the amount of the civil penalty.

Public Comment: Industry asserts that the proposed rule would deprive a lessee of due process, including (1) precluding a lessee's statutory right to a full hearing on the record before an administrative law judge (ALJ), (2) preventing them from obtaining a stay of penalty accrual pending appeal of a FCCP or ILCP, and (3) unfairly shifting the adjudicatory role from an independent arbiter—an ALJ—to the agency that issued the contested civil penalty.

ONRR Response: We address industry concerns regarding due process under Specific Comments on 30 CFR part 1241—Penalties.

Public Comment: ONRR received 13 comments stating that the definition of “ maintains” in proposed 30 CFR 1241.3 is invalid because it imposes liability under 30 U.S.C. 1719(d)(1) for failing to ensure the continued accuracy of information after it is provided to ONRR for a data system or other official record. Industry's position is that the proposed definition of “ maintains” makes two changes, exposing a lessee to potentially limitless liability for a knowing or willful violation under 30 U.S.C. 1719(d)(1). First, the proscribed conduct of knowingly or willfully maintaining false, inaccurate, or misleading information is converted from an affirmative act to the passive act or non-action of failing to correct information. Second, the duty to maintain is made applicable to external information; in other words, information already provided to ONRR. Industry emphasizes that the term “ maintains” applies only to a lessee's internal preservation of its own records for agency review or inspection. Industry notes that FOGRMA does not define “ maintains” and that the proposed definition would elevate 30 U.S.C. 1719(a) and (b) violations to a 30 U.S.C. 1719(d)(1) violation, which is not FOGRMA's intent. Industry further contends that, under the proposed definition, a lessee who is given prior notice of an inadvertent error will be subject to a knowing or willful civil penalty, which is reserved for a violation without prior notice.

Additionally, industry comments that the proposed 30 CFR 1241.3 and the preamble contain undefined “critical operative terms,” resulting in no guidance for a lessee. For example, industry contends that the proposed rule expands the scope of “ maintains” because ONRR may pursue a knowing or willful violation under 30 U.S.C. 1719(d)(1) if a lessee receives “an email, preliminary determination letter, . . . or any other written communication” identifying a violation and fails to correct the violation. Industry contends that this would violate a lessee's due process rights because a lessee cannot appeal any communication that is not an order.

ONRR Response: Under 30 CFR 1210.30 each reporter/payor must submit accurate, complete, and timely information to ONRR according to the requirements. If you discover an error in a previous report, you must file an accurate and complete amended report within 30 days of your discovery. The burden falls on us to prove that the alleged violator knew that the incorrect information existed on our data system—and the incorrect information remained uncorrected on our data system—or that the violator acted with reckless disregard or deliberate ignorance to the same.

Industry asserts that FOGRMA uses the term “ maintains” to refer exclusively to industry's internal recordkeeping. We conclude that “ maintains” refers to both a party's internal records and to external information that the party submitted into our industry-fed recordkeeping system. FOGRMA recognizes the importance of accuracy in this system, as evidenced by 30 U.S.C 1711, which mandates an accurate royalty accounting system. The statutory obligation to ensure the full and proper collection of a royalty owed for the production and sale of a Federal royalty-bearing resource depends on the accuracy of the information that a party reports.

In Statoil USA E&P, Inc. v. ONRR, 185 IBLA 302 (Apr. 29, 2015) (on interlocutory review of summary judgment ruling), the Interior Board of Land Appeals (IBLA) affirmed ALJ Harvey C. Sweitzer's conclusion that found the term “ maintains” applies to information regarding royalty computation and payment within a party's internal recordkeeping system and to such information that a party has reported to us. Id. at 314. The IBLA concluded that, when a party has already submitted a report to us and later comes to know, whether through a party's own efforts or notice from us, that the report is inaccurate and then fails to correct the report on time, that party has knowingly or willfully maintained inaccurate information and ONRR may assess a civil penalty under 30 U.S.C. 1719(d)(1). Id. at 315. Moreover, a party's due process rights are not violated because they may challenge the ILCP through the hearing process.

Public Comment: ONRR received 10 comments asserting that the definition of “ submits” in proposed 30 CFR 1241.3 is invalid. Industry asserts that ONRR's definition overreaches and directly “contradicts the knowing or willful standard within 30 U.S.C. 1719(d) and is unlawful” because it bypasses the lower hierarchy violations set out in 30 U.S.C. 1719(a) and (b). Additionally, industry contends that proposed 30 CFR 1241.60(b)(2) is unclear. It describes what information may be used as evidence of a knowing or willful violation, including lessee notification of a violation via a communication that is not an appealable order followed by correction of the violation and commission of “substantially the same violation in the future.” Industry contends that the quoted phrase is unclear because ONRR does not explicitly define what type of violation is “substantially the same.” Further, industry argues that ONRR should not be able to invoke the knowing or willful standard based on a communication that “does not even rise to the level of an appealable order.”

ONRR Response: The term “ knowingly or willfully” is not defined in FOGRMA, which is why we are clarifying the term in the regulation. Reporting requirements are already defined in 30 CFR part 1210 and elsewhere; therefore, we can reasonably expect that information submitted to an ONRR system or representative will conform to those requirements. A party holding an interest in a Federal or Indian property must submit information that is correct, accurate, and not misleading. Furthermore, we are not required to prove “specific intent” to defraud, only that a party submitting false, inaccurate, or misleading information did so with actual knowledge, deliberate ignorance, or reckless disregard.

The proposed regulation did not explicitly define what constitutes “substantially the same” violation. For clarity the term “ substantially” was removed from the final rule. ONRR will consider, on a case-by-case basis, a party's history of noncompliance for the purpose of determining the appropriate amount of the civil penalty. Although 30 U.S.C. 1719(d)(1), as amended by the 2015 Act, allows for a penalty assessment “of up to $58,871 per violation for each day such violation continues,” we rarely exercise our right to issue a penalty of this magnitude. FOGRMA provides that submission violations require no prior opportunity to correct before a civil penalty is issued. Therefore, industry's argument that we should issue an appealable order before issuing the civil penalty is inconsistent with FOGRMA's clear language.

Public Comment: ONRR received six comments from industry stating that the definition of the term “ knowingly or willfully” in proposed 30 CFR 1241.3 is invalid because ONRR is defining “ knowingly or willfully” to mean gross negligence, which is too low of a standard. Industry states that gross negligence requires ONRR to “show that a person has `failed to exercise even that care which a careless person would use.'” Industry argues that “ONRR cites no legal authority for equating `knowing or willful' under FOGRMA with `gross negligence.'”

ONRR Response: In 30 CFR 1241.3 of the final rule, the definition of the term “ knowingly or willfully” includes acting—or failing to act, as applicable—in reckless disregard of the facts surrounding the event or violation. Industry equates reckless disregard with gross negligence. Regardless of whether the terms are equivalent, the application of the reckless disregard standard is consistent with a recent ruling issued by ALJ Sweitzer in Cabot Oil & Gas Corporation, Case No. CP11-016 (DCHD June 5, 2015). ALJ Sweitzer held that the term “ willfully” in 30 U.S.C. 1719 includes acts undertaken with reckless disregard. Further, ALJ Sweitzer suggested that gross negligence may support a finding that the conduct is “ willful.” Consequently, the reckless disregard standard is an appropriate standard to measure a knowing or willful violation.

Public Comment: ONRR received 12 comments from industry stating that the “mens rea” standard of gross negligence in the definition of the term “ knowingly or willfully” in proposed 30 CFR 1241.3 is too low of a standard for a 30 U.S.C. 1719(d) violation. Conduct that violates 30 U.S.C. 1719(d) is also criminally punishable under 30 U.S.C. 1720. Industry mentions that “ willfully” can signify two different “mens rea” depending on whether it is being used in civil or criminal law. Industry argues that ONRR is improperly patterning the “mens rea” requirements for 30 U.S.C. 1719(d) on the lower civil “mens rea” requirements of the False Claims Act, despite the fact that a 30 U.S.C. 1719(d) violation is also punishable criminally.

The False Claims Act defines “ knowing” to include reckless disregard. Because FOGRMA makes no mention of reckless disregard, industry contends that FOGRMA requires the government to prove criminal “mens rea” to establish liability. “ONRR's Proposed Rule also fails to acknowledge that the “knowing or willful” standard in § 1719(d) is unique and must also warrant criminal liability under § 1720,” which would undercut Congress' hierarchy penalty system already established in FOGRMA and conflict with established principles of law.

ONRR Response: The proposed definition of the term “ knowingly or willfully” is consistent with the history and purpose of FOGRMA. Congress was concerned by reports from the U.S. General Accounting Office (GAO, now the U.S. Government Accountability Office) discussing the government's failure to collect royalties for oil and gas leases on Federal and Indian lands and the theft of oil and gas from those leases. The Secretary appointed the Linowes Commission (Commission) to address GAO's claims. The Commission found numerous deficiencies, concluding that “the industry is essentially on an honor system.” In response, Congress passed FOGRMA and empowered the Secretary with the authority to impose a civil penalty to guard against a FOGRMA violation. When Congress established the tiered system of penalties, Congress stated that “a balance must be struck between the need to deter violations of the Act and the need to avoid a situation in which exposure to very severe penalty liability for relatively minor or inadvertent violations of necessarily complex regulations becomes a major disincentive to produce oil or gas from lease sites on Federal or Indian lands.”

Though FOGRMA does not define the term “ knowingly or willfully,” courts generally do not dispute the meaning of the term “ knowingly,” which denotes actual knowledge or intentional blindness. However, the term “ willfully” may signify two different standards depending on whether it is being used in criminal or civil law. The IBLA considered the meaning of the term “ willful” in Meridian Oil, Inc., 147 IBLA 211 (1999), in the context of a civil penalty proceeding. The IBLA concluded that the term “ willfulness” can be demonstrated through reckless disregard as to whether a violation is occurring. In Cabot Oil, ALJ Sweitzer addressed whether the criminal law mens rea standard for the term “ willfully” should apply to knowing or willful violations under 30 U.S.C. 1719. ALJ Sweitzer concluded that “Congress intended the civil mens rea of reckless disregard for the law should be applied . . . ” to willful violations under 30 U.S.C. 1719. Thus, the final rule's definition of the term “ knowingly or willfully” is in accordance with administrative rulings interpreting the term, and does not violate FOGRMA's hierarchical penalty system.

Industry also commented that our proposed rule would improperly create criminal exposure for an individual who does not have the requisite “mens rea” for criminal conduct. The Supreme Court considered a similar argument made in Safeco Insurance Co. of America v. Burr, 551 U.S. 47, 56-60 (2007), in which Safeco claimed that the word “ willfully” in the civil provision of the Fair Credit Reporting Act (FCRA) cannot include recklessness because the criminal penalty provisions of the FCRA are triggered by actions that are engaged in knowingly and willfully. The Supreme Court disagreed, stating that “ . . . in the criminal law, `willfully' typically narrows the otherwise sufficient intent, making the government prove something extra, in contrast to its civil-law usage, giving the plaintiff a choice of mental states to show in making a case for liability.” Safeco Ins. Co., 551 U.S. at 60. ONRR recognizes the different standards for civil and criminal actions and will apply the civil standard for each civil penalty brought under 30 U.S.C. 1719.

The proposed 30 CFR 1241.75 notes that the United States may pursue a criminal penalty if a party committed an act for which a civil penalty is provided in 30 U.S.C. 1719(d) and 30 CFR 1241.60(b)(2). The proposed 30 CFR 1241.75 was intended to clarify and explain the application of 30 U.S.C. 1719(d) in a civil context. However, after further consideration, we do not believe that it is necessary to provide a regulation to discuss criminal prosecution. Therefore, 30 CFR 1241.75 is removed from the final rule. The removal of 30 CFR 1241.75 in no way limits our ability to refer a violation for criminal prosecution under 30 U.S.C. 1720 or another statute.

Public Comment: ONRR received nine comments from industry contending that proposed 30 CFR 1241.60(b)(2) untenably imposes “strict vicarious liability” on a lessee for the act and knowledge of its employee or agent. The proposed section describes what information we may use as evidence of a knowing or willful violation, including “the acts and failures to act of [a lessee's] employees and agents.” Industry opposes “strict vicarious liability” because ONRR would hold a lessee responsible for the knowledge of all its employees, even for a matter beyond the scope of the employee's “employment, experience or responsibility.” Further, industry notes that a “specific intent criminal-type standard” cannot be imputed to a corporation where an employee acts without apparent authority and outside of the scope of his or her responsibilities.

Industry states that ONRR is relying on the “strict vicarious liability” standards in the False Claims Act which imposes “strict vicarious liability” on a corporation for the act and knowledge of its employee. Industry contends that ONRR cannot apply those standards to FOGRMA because they are two entirely different statutes. Industry states that ONRR must conduct a case-by-case evaluation of the relevant factors and may impute liability to the corporation only if the agent's culpable act or knowledge is material to the agent's duties. Industry also states that, under FOGRMA, a lessee may designate an agent for a royalty related matter and that ONRR recognizes such designation when a company fills out and submits an Addressee of Record Designation for Service of Official Correspondence (form ONRR-4444). Industry states that the proposed regulation would circumvent an otherwise orderly system in which liability should only be imputed for an act or knowledge of a designated agent. Industry contends that it would be unfair to “strictly and vicariously” impose a large civil penalty on a lessee under proposed 30 CFR 1241.60(b)(2) if a lessee fails to comply with any communication that ONRR sends to any company employee. Industry likewise contends that it is unfair to impose a civil penalty if ONRR fails to send official correspondence to the designated person by authorized means.

ONRR Response: The proposed definition of the term “ knowingly or willfully” includes a situation where a corporation or individual in a corporation acts with actual knowledge, as well as a situation where the corporation acts with deliberate ignorance or reckless disregard. By holding the corporation vicariously liable for the employee's actions, the final rule deters management from recklessly disregarding or deliberately ignoring the actions of an employee or agent. To avoid the possibility of a civil penalty, a company must exercise sufficient quality control and management oversight to ensure that it reports and pays correctly. The principle that a company can be held liable for the conduct of its agent or employee acting under apparent or actual authority, regardless of the actual knowledge of corporate management, is especially applicable in a civil penalty case brought under FOGRMA. A corporation acts through its employee and empowers its employee to conduct business on its behalf. In dealing with us, a corporation designates an employee as a point of contact using form ONRR-4444. See 30 CFR part 1218, subpart H. A corporate employee who is designated or in regular contact with us, is an agent with the actual or apparent authority to communicate on behalf of, and bind, the corporation. And we reasonably and necessarily rely on the agent's authority to speak for the corporation. Further, relevant case law holds that knowledge of a non-managerial employee is imputed to a corporation regardless of the principal's or management's actual knowledge. See, for example, United States v. Shackelford, 484 F. Supp. 2d 669 (E.D. Mich. 2007) ( “Shackelford” ) (False Claims Act); ASME v. Hydrolevel Corp., 456 U.S. at 566-568 (1957) (antitrust); United States ex rel. Bryant v. Williams Bldg. Corp., 158 F. Supp. 2d 1001, 1006-1009 (D. S.D. 2001) (“ Bryant” ) (False Claims Act); see also United States ex rel. Ann Fago v. M&T Mortgage Corp., 518 F. Supp. 2d 108, 124-125 (D.D.C. 2007) (False Claims Act) (rejecting the principle that a corporation is not liable for the acts of a non-managerial employee absent knowledge or recklessness by the corporation as going “against the great weight of authority in [False Claims Act] cases”). Indeed, in Cabot Oil, ALJ Sweitzer agreed with us that the scienter of an oil and gas company's non-managerial employee should be imputed to the company—at least when the company designates the employee as its point of contact. Therefore, our application of the knowingly or willfully standard under this final rule is in accordance with judicial and administrative rulings and does not circumvent or undercut FOGRMA's intent or authority.

Public Comment: One commenter expressed concern regarding the application of the proposed rule to solid mineral leases. Since FOGRMA did not cover solid mineral leases until mandated by the 2009 and 2010 Appropriations Acts, the commenter believes that solid mineral leases were shoehorned into FOGRMA with no consideration of the unique provisions of these leases. In addition, this commenter suggested that a conflict exists with the Bureau of Land Management (BLM) regulation at 43 CFR 3485.1(e), which prescribes a different penalty for misreporting on a coal lease.

ONRR Response: FOGRMA established civil penalties relating to oil and gas development on Federal lands and the OCS. The 2009 and 2010 Appropriations Acts expanded the application of Section 109 of FOGRMA to any lease authorizing exploration for or development of coal, any other solid mineral, or any geothermal resource on any Federal or Indian lands and any lease, easement, right of way, or other agreement, regardless of form, for use of the OCS. If BLM issues a violation for misreporting on a coal lease, BLM regulation 43 CFR 3485.1(e) and any other pertinent BLM regulation will govern the penalty assessment. However, if we issue the violation for misreporting on a coal lease, we will follow the authority set forth in FOGRMA section 109 and any applicable lease terms.

Public Comment: ONRR received 14 comments stating that ONRR already possesses sufficient civil penalty tools to address a reporting error and failure to correct. Industry comments that ONRR does not explain why it is proposing wholesale changes to the current civil penalty regulation, given its existing clear and adequate enforcement path to address the conduct that it now seeks to shoehorn under 30 U.S.C. 1719(c) and (d).

Industry asserts that, under ONRR's preferred formulation, ONRR could sweep any reporting violation into 30 U.S.C. 1719(d), however alleged, that is not immediately corrected, thus merging the FOGRMA civil penalty provisions and eliminating the various hierarchy of violations that FOGRMA clearly established. Industry contends that ONRR lacks the authority to erase the graduated, proportionate, and strictly defined hierarchy of ascending civil penalties that Congress prescribed.

ONRR Response: We already possess the authority to issue a NONC, FCCP, or ILCP. This rule seeks to increase transparency and to clarify the purpose of each notice. Therefore, this final rule sets out more specific guidelines regarding the types of violations and how these violations prescribe the selection and issuance of each type of enforcement notice.

Moreover, in the 2009 and 2010 Appropriations Acts, Congress directed the Secretary to apply FOGRMA section 109 (30 U.S.C. 1719) to Federal and Indian solid mineral leases, geothermal leases, and agreements for OCS energy development under 43 U.S.C. 1337(p). This rule is necessary to effectively announce and clarify the authority set out in the 2009 and 2010 Appropriations Acts. The new 30 CFR 1241.2 states that this part will apply to all Federal mineral leases onshore and on the OCS, to all Federally-administered mineral leases on Indian Tribal and individual Indian mineral owners' lands, and to all easements, rights of way, and other agreements on the OCS.

Title 30 CFR 1241.3 provides definitions for terms that are not comprehensively defined or, in most instances, not defined at all in the current 30 CFR 1241. For example, we already possess the authority to issue a civil penalty for knowing or willful violations under 30 U.S.C. 1719(c) and (d). This rule simply clarifies what the term “ knowingly or willfully” means. Additionally, the definitions in this rule clarify broad terms. For instance, “ information” is a broad term that the final rule defines as it pertains to royalty collection and management.

FOGRMA established a tiered system of civil penalties and structured liabilities for relatively minor or inadvertent violations to major, complex, or severe violations. Congress delegated to the Secretary the authority to impose a civil penalty to deter FOGRMA violations. We may issue either a NONC or ILCP, depending upon the type of violation we discover and whether it is knowing or willful. 30 CFR part 1210 provides specific requirements for reporting, including discovering errors and submitting corrections. Thus, a party's action or inaction dictates the type of 30 U.S.C. violation assessed.

Public Comment: ONRR received five comments asserting that ONRR is expanding 30 U.S.C. 1719(d)(1) contrary to law. Industry contends that “a plain reading of 30 U.S.C. 1719(d)(1), particularly within its statutory context, reveals that it does not apply to mere delays in correcting alleged errors not knowingly or willfully made when originally submitted.” Further, industry contends that ONRR “parses out individual statutory terms and separately assigns new definitions created out of thin air,” then uses these definitions to manufacture a new violation under 30 U.S.C. 1719(d)(1). The commenters state that the proposed rule does not faithfully interpret the governing statute, but, instead, seeks to re-draft it.

ONRR Response: Industry comments that we are applying 30 U.S.C. 1719(d)(1) in matters of “mere delays in correcting alleged reporting errors.” In fact, we apply 30 U.S.C. 1719(d)(1) after confirming that the violator knowingly or willfully maintained incorrect information on our financial system and failed to make corrections on our financial system within a reasonable period of time. See, also, the discussion under Part II.B.1.a., above.

Public Comment: ONRR received three comments requesting that ONRR not revise its regulations implementing 30 U.S.C. 1719(c). Industry takes issue with proposed 30 CFR 1241.60(b)(1)(ii) setting forth the penalty for “knowingly or willfully fail[ing] to make any royalty payment . . .,” 30 CFR 1241.60(a)(1), or for “fail[ing] or refus[ing] to permit lawful entry, inspection, or audit.” 30 CFR 1241.60(a)(2). Industry objects to the addition of a new sentence in the proposed 30 CFR 1241.60(b)(1)(ii) that: “[ONRR] may consider [a party's] failure to keep, maintain, or produce documents to be a knowing or willful failure or refusal to permit an audit.” Industry states that “The proposed rule tries to impose a uniform `knowing or willful' definition for both [30 U.S.C.] 1719(c) and (d), when the applicable standard for [30 U.S.C.] 1719(d) must be considerably more strict.” Commenters state that ONRR “would convert any internal recordkeeping issue into an impediment of a hypothetical audit and thereby trigger greater penalties without notice.” And commenters state that “as written, proposed [30 CFR] 1241.60(b)(1)(ii) potentially could allow knowing or willful civil penalties based on an audit not even occurring.” The commenters state that ONRR cannot automatically impute 30 U.S.C. 1719(c) liability to a company for any alleged impediment of an audit by an employee.

ONRR Response: As stated in the preamble of the proposed rule, we issued a Dear Reporter Letter on March 10, 2011, explaining the recordkeeping requirements and the consequences of failing or refusing to produce requested documents. This letter warns of the penalty consequence for the failure to keep, maintain, or provide in a timely manner a document for an audit, compliance review, or investigation. Additionally, 30 U.S.C. 1713 and 30 CFR part 1212 include recordkeeping obligations that require a reporter to establish and maintain a record, make a report, provide information needed to implement FOGRMA, determine compliance with a regulation or order, and produce a record upon request. Moreover, 30 CFR part 1212 states, “When an audit or investigation is underway, records shall be maintained until the record holder is released by written notice of the obligation to maintain records.” Therefore, 30 CFR 1241.60(b)(1)(ii) does not deviate from existing regulations or practice.

A company is legally required to have records available and ready for inspection. If an audit cannot be performed because of a company's failure to produce documents, we are authorized to issue an ILCP for failing or refusing to permit an audit.

Public Comment: The Independent Petroleum Association of New Mexico (IPANM) contends that the proposed knowing and willful provisions do not work with the unbundling issue. IPANM states that unbundling requires “all natural gas producers to use specific formulae for each processing plant when calculating royalty payments to the [F]ederal government.” IPANM asserts that ONRR requires the use of an outdated unbundling cost allocation (UCA) to estimate a UCA for current and future reporting, which later requires replacement with an actual value. IPANM contends that this system creates uncertainty and will, ultimately, unfairly expose a company to liability for a knowing or willful violation.

ONRR Response: We are not required to provide a UCA, and a party is not required to use an ONRR-generated UCA. The use of an ONRR-generated UCA does not waive our statutory right to audit reasonable and actual costs for transportation and processing deductions. We will not assess a civil penalty simply because a party chooses to use an ONRR-generated UCA. A civil penalty may be assessed if a party is notified that an ONRR-generated UCA has changed and they knowingly or willfully failed to update their reporting.

Public Comment: ONRR received two comments from industry stating that ONRR's proposed rule contravenes FOGRMA as amended by RSFA because it treats a reporting error as a knowing or willful violation punishable under 30 U.S.C. 1719(d). Industry explains that RSFA amendments to FOGRMA reflect Congressional intent to establish a “fairer and more moderate approach to enforcing accurate royalty reporting.” Industry contends that “RSFA demonstrated Congress' intent that even `chronically submitted erroneous reports,' let alone minor reporting errors, do not warrant knowing or willful civil penalties under 30 U.S.C. 1719(d).” Industry continues to explain that, under 30 U.S.C. 1724(d)(4)(B), ONRR may issue an order to perform restructured accounting (RSO) when ONRR or a delegated State determines, during an audit, that a lessee “has made identified underpayments or overpayments . . . based upon repeated, systemic reporting errors. . . . ” However, industry notes that ONRR's proposed rule would do away with the statutory RSO requirements and, in effect, define the failure to comply with an RSO as a knowing or willful maintenance of an inaccurate report. Therefore, industry concludes that “the RSFA amendments enacted in 1996 collectively demonstrate that Congress did not contemplate that reporting errors, even chronic reporting errors, were routinely in the scope of 30 U.S.C. 1719(d) knowing or willful civil penalties.”

ONRR Response: As discussed elsewhere in this preamble, FOGRMA established a tiered system of civil penalties and structured liabilities for relatively minor or inadvertent violations and major, complex, or severe violations. Congress delegated to the Secretary the authority to impose a civil penalty to sanction and deter FOGRMA violations. Industry commented that the proposed rule would impact statutory RSO requirements. If ONRR issues a RSO, a party may appeal and exhaust all available administrative and judicial remedies. Should a party not timely appeal a RSO, or should a final determination be made that a RSO is valid, and the company fails to comply with the RSO, a civil penalty may be assessed under 30 U.S.C. 1719. Furthermore, neither FOGRMA nor its amendments in RSFA define the term “ knowingly or willfully,” leaving the definition to be clarified and established by regulations, judicial and administrative decisions, or both.

Public Comment: ONRR received three comments in which industry argues that ONRR's estimation of the proposed rule's annual financial impact is not credible. Commenters elaborate that “[t]he allowable daily civil penalties that could now accrue under ONRR's expanded use of [30 U.S.C.] 1719(c) [and] (d) are several times greater than penalties properly assessed under [30 U.S.C.] 1719(a) [and] (b).” Moreover, they assert that “under the Proposed Rule, penalty accrual could no longer be stayed and steep penalties could be pursued even when the lessor has not been deprived of substantial royalty.” Industry contends that “since ONRR could accumulate [civil] penalties without notice, there would be little to prevent ONRR from running up civil penalties before issuing an ILCP.” Additionally, industry states that “ONRR . . . relies on outdated gas penalty assessment data from 2007-2011.” Further, industry asserts that ONRR “seeks to bootstrap its ad hoc `initiative' and apply more severe penalties on a widespread basis, even absent to date any final Departmental or judicial determination of ONRR's novel interpretation of FOGRMA.” Finally, industry contends that ONRR's proposed rule does not accurately depict the economic impact on small businesses and Indian Tribes and individual Indian mineral interest owners.

ONRR Response: As required by the 2009 and 2010 Appropriations Acts, we are expanding the application of Section 109 of FOGRMA to any lease authorizing exploration for or development of coal, any other solid mineral, or any geothermal resource on any Federal or Indian lands and any lease, easement, right of way, or other agreement, regardless of form, for use of the OCS. Further, we have updated our economic analysis of the impact of this rule with data through the end of October 2015. See, the discussion under Part III.1.A.-D., below. With respect to industry's concern regarding the accrual of a steep penalty due to the removal of industry's right to a stay of the accrual of a penalty, the final rule leaves intact the right to request a stay. Furthermore, ONRR cannot “run up” a civil penalty before issuing an ILCP. The date on which the ILCP is issued has no effect on the amount of the civil penalty because a knowing or willful civil penalty only accrues for as many days as the violating party allows it to accrue. A party that knowingly or willfully commits a violation can stop the accrual of the civil penalty at any time by simply correcting the violation.

Public Comment: ONRR received five comments in which industry asserts that ONRR's proposed rule may have unintended consequences. Industry contends that the rule “would chill communication with ONRR out of fear that any agency feedback or guidance would be construed as notice forming the basis for potential knowing or willful civil penalties if that informal guidance is not strictly followed.” Additionally, industry argues that “total royalty collections may decrease as ONRR's significant expansion of the most egregious civil penalty provision provides a disincentive to lessees, particularly smaller entities, from producing on Federal lands, Indian lands, and the OCS in the first instance.”

ONRR Response: We disagree that the final rule will “chill” communications. Indeed, the final rule will improve communications because the language clarifies ambiguity and simplifies the process for issuing and contesting a notice. Although industry contends that this rule will have unintended consequences, a majority of its provisions are already in practice, especially with the changes made between the proposed and final rule, as discussed elsewhere in this preamble. Further, the final rule will (1) apply the regulations to all Federal mineral leases onshore and on the OCS, to all Federally-administered mineral leases on Indian Tribal and individual Indian mineral owners' lands, and to all easements, rights of way, and other agreements on the OCS; (2) incorporate the civil penalty inflation adjustments made pursuant to the 2015 Act; (3) clarify and simplify the existing regulations for issuing a NONC, FCCP, and ILCP; and (4) provide notice that we will post matrices for civil penalty assessments on our Web site. These are the dominant consequences of the final rule, all of which are intended.

Public Comment: ONRR received one comment from industry regarding complying with ONRR's royalty and reporting obligations in a situation where there are multiple lessees or leases. Industry stated that a lack of timely action from another surface management agency will result in a civil penalty action, specifically BLM's delay in approving a unit revision.

ONRR Response: We appreciate industry's comments; however, the action or inaction of another surface management agency is beyond the scope of this final rule. Further, we will evaluate each potential civil penalty matter on a case-by-case basis.

Public Comment: ONRR received five comments asserting that the proposed rule circumvents the ALJ's authority to review the appropriateness of a civil penalty. Further, industry expresses concern that civil penalty liability will be based on a communication that is not an appealable order. Moreover, industry states that “[a] lessee also would have no means to hold ONRR to its obligation to treat similar civil penalty cases in a similar manner; the aggrieved lessee would be foreclosed from ever questioning the agency's rationale for disparate treatment, and ONRR would have no obligation to provide one.”

ONRR Response: In light of industry comments and upon further consideration, the final rule will leave intact the ALJ's discretion and authority to review our issuance of a civil penalty. Proposed 30 CFR 1241.8 is removed from the final rule and replaced with 30 CFR 1241.8 addressing the ALJ holding a hearing and rendering a decision.

Public Comment: ONRR received 11 comments asserting that proposed 30 CFR 1241.12(b) would preclude any stay of the accrual of a penalty pending a hearing request before the ALJ or an IBLA appeal. Commenters argue that this proposed section prevents the appellant and the administrative tribunal from effectuating a stay in circumstances in which it is warranted, thereby taking away a lessee's basic appeal right. Consequently, proposed 30 CFR 1241.12(b) would force a lessee “to either (i) subject itself to additional penalties . . . plus accumulating interest . . . or (ii) comply with a directive (possibly informal) that the lessee may believe is incorrect. . . .” Additionally, the section “would needlessly burden the Federal Judiciary with otherwise premature Federal Court lawsuits to obtain preliminary injunctive relief.”

ONRR Response: In light of industry comments and upon further consideration, the final rule leaves intact the right to request a stay of the accrual of a penalty. Thus, proposed 30 CFR 1241.12(b) is modified and the hearing requester's opportunity to petition the ALJ to stay the accrual of a civil penalty is re-designated to 30 CFR 1241.11.

Public Comment: ONRR received eight comments asserting that the proposed rule makes ONNR the sole gatekeeper to a hearing on the record. Industry argues that proposed 30 CFR 1241.5 “would permit ONRR alone to decide whether [the] ALJ jurisdiction has been timely triggered to review either a NONC, [FCCP,] or [an ILCP.]” Proposed 30 CFR 1241.5 requires the hearing requester to provide certain information and a surety instrument or demonstration of financial solvency for an unpaid and accrued penalty plus interest within 30 days after service of the NONC, FCCP, or ILCP, and provides that, if a hearing request is incomplete, ONRR would not consider it to be filed and would return it to the lessee. Industry contends that proposed 30 CFR 1241.5 allows “unreviewable discretion to determine whether the appeal request is satisfactory, and imposes a blanket ban on extensions of the original 30-day period to provide that information.” Thus, the proposed rule potentially allows for a “right to a hearing on the record [to be] forever lost.”

Industry contends that the prerequisites to request a hearing set forth in proposed 30 CFR 1241.5 are burdensome and ambiguous. For instance, they contend that ONRR does not clearly articulate what is necessary for industry to explain its reasons for challenging a NONC, FCCP, or ILCP. Industry also contends that ONRR requires the submission of a surety instrument based on uncertain dollar amounts due, which is similar to using a “moving target to find the submitted security insufficient and deny a hearing on the record.” Moreover, industry disagrees with the requirement in proposed 30 CFR 1241.6 to use Pay.gov to pay the hearing request processing fee. Industry asserts that “ONRR must withdraw or revise and re-propose these proposed [hearing request] requirements.”

ONRR Response: The proposed rule invited public comment on new requirements pertaining to the filing of a hearing request on a NONC, FCCP, or ILCP. In light of industry comments and upon further consideration, the final rule does not include the proposed 30 CFR 1241.5 and 1241.6, which contained these new requirements. Title 30 CFR 1241.7 describes the method for filing all hearing requests, and 30 CFR 1241.5 and 1241.6 clarify which enforcement actions are and are not subject to a hearing.

Currently under 30 CFR 1241.54, a recipient of a NONC can request a hearing on its liability for the NONC. Under the current 30 CFR 1241.56, the recipient may request a hearing on only the amount of the penalty. Likewise, under the current regulations, a recipient of an ILCP can request a hearing on its liability for the ILCP under 30 CFR 1241.62, or on the amount of the penalty under 30 CFR 1241.64. We believe that having four sections to request a hearing that result in the same process is confusing and redundant. Therefore, 30 CFR 1241.7 consolidates all four sections.

Under the final 30 CFR 1241.7, a party may still request a hearing on a NONC, FCCP, or ILCP before an ALJ. A party will have 30 days from receipt of a NONC, FCCP, or ILCP to file a hearing request. This provision is the same as the current regulations in 30 CFR 1241.54 (hearing request for a NONC) and 30 CFR 1241.62 (hearing request for liability for an ILCP). However, this provision will change current regulations at 30 CFR 1241.56(b) (hearing request for a FCCP) and 1241.64(b) (hearing request on the amount of a civil penalty assessed in an ILCP). The current regulations allow only 10 days for a party to request a hearing on a civil penalty assessment. Title 30 CFR 1241.7 extends the period within which to request a hearing to 30 days. Final 30 CFR 1241.7 also clarifies that the 30-day period may not be extended.

Public Comment: ONRR received seven comments asserting that proposed 30 CFR 1241.8 allows ONRR to move for summary decision based on an alleged fact prior to an appellant initiating discovery to contravene that fact. Furthermore, they contend that ONRR is seeking to “reverse the black-letter rule that on a motion for summary [decision] disputed facts should be construed in favor of the non-movant.” Thus, they claim that ONRR is depriving a lessee of its right to a hearing on the record.

ONRR Response: Proposed 30 CFR 1241.8 allowed a motion for summary decision to be filed at any time after the case is referred to the DCHD, including before discovery commenced. Additionally, proposed 30 CFR 1241.8 included a new provision indicating that industry had the burden of showing by a preponderance of the evidence that it was not liable or that the penalty amount should be reduced. Furthermore, proposed 30 CFR 1241.9 outlined the requirements and standards for both parties to follow when filing a motion for summary decision, response, and reply.

After consideration of industry comments, we removed proposed 30 CFR 1241.8 and 1241.9 from the final rule. Nevertheless, the option of filing a motion for summary decision is available to either party upon the commencement of the case, and the burden will remain with the movant to demonstrate that there is no issue of material fact and that, as a matter of law, judgment is appropriate. The ALJ has the discretion to schedule and rule on any motion for summary decision. Additionally, even without a regulatory amendment, both parties should adhere to the customary standards for a motion for summary decision. Because proposed 30 CFR 1241.8 and 1241.9 are removed, 30 CFR 1241.8 is replaced with 30 CFR 1241.8 addressing the ALJ holding a hearing and rendering a decision, and proposed 30 CFR 1241.10, addressing the appeal of an ALJ's decision, is re-designated as 30 CFR 1241.9.

Public Comment: ONRR received five comments asserting that ONRR's “absolute barrier” to providing an extension to correct a violation identified in a NONC is “patently unreasonable.” See proposed 30 CFR 1241.50(c). Industry alleges that “[a] NONC may require the lessee to perform a scope of work that is impossible to complete within the default 20-day period.” Industry believes that an extension should be considered for a justifiable reason on a case-by-case basis.

ONRR Response: A company's compliance dictates whether or not we will issue a NONC. We are removing the language from 30 CFR 1241.50(c) that no extension will be given for a NONC. We provide a minimum of 20 days to correct a violation identified in a NONC, but hold the right to set out a longer cure period for a violation identified after taking into account all relevant factors and circumstances to achieve compliance.

Public Comment: ONRR received five comments stating that ONRR should only base liability for a civil penalty on an appealable communication. Furthermore, the appeal clock or civil penalty should only run upon ONRR's issuance of an order recognized under 30 CFR part 1290. Consequently, “the Proposed Rule creates unreviewable enforcement actions exempt from a hearing on the record, which could apply even where no opportunity existed to appeal the earlier communication.”

ONRR Response: When we issue an order, a company has the opportunity to appeal the order under 30 CFR part 1290 and can present new information and testimony (in the form of written affidavits) as part of that appeal. When we issue a FCCP or ILCP, a company has the opportunity to request a hearing. This rule clarifies that, if a party receives an ONRR order and does not appeal that order under current 30 CFR part 1290, that order is the final decision of the Department, and the order cannot be changed by subsequently requesting a hearing on a NONC, FCCP, or ILCP issued for failing to comply with that order.

Public Comment: ONRR received 12 comments requesting that ONRR eliminate proposed 30 CFR 1241.8(h)(1) in the final rule. Industry contends that the proposed rule is imposing on the ALJ's discretion and bars the ALJ from substantially reducing a penalty in circumstances where a reduction may be warranted. Additionally, industry alleges that ONRR may purposely delay the issuance of an ILCP in order to further penalize industry monetarily.

ONRR Response: The proposed rule would have prohibited the ALJ from reducing the penalty below half of the amount assessed, precluded the ALJ from reviewing our exercise of discretion to impose a civil penalty, and prohibited the ALJ from considering any factors in reviewing the amount of the penalty other than those specified in 30 CFR 1241.70. In light of industry's comments and upon further consideration, we dropped these provisions from the final rule.

We do not purposely delay the issuance of an ILCP in order to escalate the amount of a penalty assessment. Indeed, the date on which the ILCP is issued has no effect on the amount of the civil penalty because a knowing or willful civil penalty only accrues for as many days as the violating party allows it to accrue. A party that knowingly or willfully commits a violation can stop the accrual of the civil penalty at any time by simply correcting the violation, regardless of when we issue the ILCP.

Public Comment: ONRR received two comments stating that the incorporation of the combined proposed amendments will stack the deck in ONRR's favor. This would result in an “interference with due process and the statutory right to a hearing on the record.”

ONRR Response: In light of industry comments and upon further consideration, we have removed or modified portions of the proposed rule so that the final rule addresses industry concerns. Those changes are indicated in our responses to industry's comments in this preamble under the subheadings 3.a. Unreviewable Discretion of the Agency to Issue a Civil Penalty, 3.b. Inability of the ALJ or Board to Stay the Accrual of a Penalty Pending Review, 3.c. ONRR as Sole Gatekeeper to a Hearing on the Record, 3.d. Motion for Summary Decision, 3.e. Fixed Period to Correct, 3.f. Unreviewable Enforcement Actions, and 3.g. Inability of the ALJ to Reduce a Civil Penalty Amount.

Public Comment: ONRR received four comments stating that the proposed amendments to 30 CFR 1241.70(b) explicitly disregards the royalty consequence of an underlying violation when ONRR is determining the amount of the civil penalty to assess. Industry suggests that a paperwork error should not be in the same tier as a royalty underpayment because the central purpose and motivation behind the enactment of FOGRMA is royalty collection. Industry further suggests that “when enacting FOGRMA, Congress was keenly aware of the need to preserve basic principles of proportionality between the amount of the penalty and the severity of the underlying offense.” Industry declares that ONRR “not only ignores [the] basic tenet of proportionality but also explicitly calls for the agency to disregard it in imposing civil penalties.” Industry states that this is especially true regarding ONRR's new proposed definitions of “ maintains ” and “ submits ” in proposed 30 CFR 1241.3. “ONRR's disregard of the royalty consequences of alleged reporting errors ignores Congressional intent to impose penalties that will deter violators but not jeopardize future leasing and operations.” Finally, industry purports that “[s]ome of the factors that ONRR states it does intend to consider in setting penalty amounts also may result in unjust outcomes under ONRR's Proposed Rule.” Specifically, industry objects to ONRR considering prior violations when assessing a future civil penalty assessment. Moreover, industry contends that the “`size of [a party's] business' should only be a mitigating factor for a small business, and not an arbitrary multiplier for larger entities.”

ONRR Response: FOGRMA does not link the amount of a civil penalty to the royalty consequence of an underlying violation, and we will not issue a reduced penalty because the violation produced little or no royalty consequence. Civil penalties are designed to promote compliance with lease terms and royalty statutes and regulations, and to encourage accurate and timely reporting. As a result, Congress authorized the secretary to impose civil penalties for reporting errors and failing to submit data, regardless of the royalty consequence of those violations. Indeed, many reporting errors and failures to submit data delay an audit or prevent ONRR or a delegated State from performing an audit, which can be penalized under FOGRMA. Accurate reporting is paramount to our obligation to collect and disburse revenues in a timely manner. Regardless of whether a party owes an additional royalty, or if there is any royalty consequence to the violation, misreporting can lead to a myriad of repercussions that affect not only us, but also surface management agencies, States, Indian Tribes, and others that rely on that reported data.

ONRR determines the amount of the civil penalty by considering the three factors set forth in 30 CFR 1241.70. Industry is aware of the factors considered by ONRR when determining the amount of a civil penalty. Additionally, industry is aware of its reporting requirements set forth in the regulations. FOGRMA authorizes steep penalties for 30 U.S.C. 1719 violations, but our assessments are already far below the maximum allowable under the law. We determine the amount of the civil penalty in accordance with 30 CFR 1241.70 which is consistent with our current practice.

Public Comment: ONRR received two comments from industry stating that the proposed rule does not account for a situation when ONRR is erroneous in its assessment of wrongdoing or misreporting. Additionally, industry comments that ONRR's unresponsiveness, unwillingness to communicate, or both, is detrimental to the resolution of a time-sensitive issue.

ONRR Response: A party's right to request a hearing before an ALJ, and the right to appeal any ALJ decision, provides a party with recourse should we err in our assessment of wrongdoing or misreporting. Moreover, we evaluate each matter on a case-by-case basis. If we were unresponsive or unwilling to communicate, and our actions contributed to the delay giving rise to the civil penalty, we may consider this when determining whether to issue a civil penalty or as a mitigating factor when determining the appropriate amount of the civil penalty.

Public Comment: ONRR received one comment from industry requesting clarification regarding the start date of the civil penalty calculation.

ONRR Response: We typically serve a NONC, FCCP, or ILCP as set forth in FOGRMA section 109(h) (30 U.S.C. 1719) by registered mail or personal service to the addressee of record or alternate as identified in 30 CFR 1218.540 and will consider the notice served on the date when it was delivered. For an FCCP, the penalty calculation will begin running on the day when a party is served with the NONC. The penalty calculation for an ILCP will begin running from the day when the violation was committed.

This is a technical rule that will (1) apply the regulations to all Federal mineral leases onshore and on the OCS, to all Federally-administered mineral leases on Indian Tribal and individual Indian mineral owners' lands, and to all easements, rights of way, and other agreements on the OCS; (2) incorporate the civil penalty inflation adjustments made pursuant to the 2015 Act; (3) clarify and simplify the existing regulations for issuing a NONC, FCCP, and ILCP; and (4) announce our practice of publishing our civil penalty assessment matrices on our Web site. These changes will have no royalty impacts on industry; State and local governments; Indian Tribes; individual Indian mineral owners; or the Federal Government. As explained below, industry will not incur significant additional administrative costs under this final rule. However, industry can realize some increased penalties under this final rule. The Federal Government, and any States and Tribes that are eligible to share civil penalties under 30 U.S.C. 1736, will benefit from penalty amounts that we imposed, for the first time, on solid mineral and geothermal lessees. The cost and benefit information in item 1 of the Procedural Matters is used as the basis for Departmental certifications in items 2 through 10.

(1) Royalty Impacts. None.

(2) Administrative Costs—Processing Fee. None.

(3) Penalties. This final rule may result in some increase in civil penalties that lessees must pay. We collected an average of $1,879,264 in civil penalties annually for fiscal years 2007-2015. We estimated the potential increase in civil penalties due to application of part 1241 to solid mineral and geothermal leases by estimating how many lessees, operators, and royalty payors of solid mineral and geothermal leases there are in relation to all mineral leases that reported production and royalties as of October 2015. That estimate came to 9 percent of our current mineral reporter universe (135 solids and geothermal payors and reporters divided by 1,514 total payors and reporters (oil and gas; solids; and geothermal)). Therefore, we multiplied the $1,879,264 in average annual civil penalties by 9 percent (solid mineral and geothermal payors and reporters) to estimate an increase in civil penalties that we collect of $169,134.

(1) Royalty Impacts. None.

(2) Administrative Costs. None.

(3) Penalties. State governments having delegated audit authority under 30 U.S.C. 1735 will receive a 50-percent share of civil penalties collected as a result of their activities under our delegation of authority (30 U.S.C. 1736). However, the amount that a State government will receive due to the estimated increase discussed above is purely speculative.

(1) Royalty Impacts. None.

(2) Administrative Costs. None.

(3) Penalties. Indian Tribal governments that have cooperative agreements with us under 30 U.S.C. 1732 will receive a 50-percent share of civil penalties collected as a result of their activities under our delegation of authority (30 U.S.C. 1736). However, the amount that a Tribal government will receive due to the estimated increase discussed above is purely speculative.

(1) Royalty Impacts. None.

(2) Administrative Costs. The application of FOGRMA penalties to solid minerals and geothermal leases will produce a slight increase in the enforcement workload, which we likely will absorb using current staff.

(3) Penalties. As discussed above, we estimate that the Federal Government can receive $169,134 in increased civil penalties for solid and geothermal leases as a result of this rule if no State or Tribe shares in these civil penalties.

Executive Order (E.O.) 12866 provides that the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB) will review all significant rules. OIRA has determined that this rule is not significant.

E.O. 13563 reaffirms the principles of E.O. 12866, while calling for improvements in the Nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The executive order directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public, where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We developed this rule in a manner consistent with these requirements.

The Department certifies that this rule will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ).

This rule will affect lessees under Federal mineral leases onshore and the OCS and all Federally administered mineral lease on Indian Tribal and individual Indian mineral owners' lands. Federal and Indian mineral lessees are, generally, companies classified under the North American Industry Classification System (NAICS), as follows:

• Code 211111, which includes companies that extract crude petroleum and natural gas.

• Code 212111, which includes companies that extract surface coal.

• Code 212112, which includes companies that extract underground coal.

For these NAICS code classifications, a small company is one with fewer than 500 employees. The Department estimates that 1,855 companies that this rule affects are small businesses that submit royalty and production reports from Federal and Indian leases to us each month.

Per our analysis shown in item 1 above, we do not estimate that this rule will result in a significant economic effect on a substantial number of small entities because this rule will cost approximately a collective total of $169,134 per year to affected small businesses. Therefore, a Regulatory Flexibility Analysis will not be required, and, accordingly, a Small Entity Compliance Guide will not be required.

Your comments are important. The Small Business and Agriculture Regulatory Enforcement Ombudsman and ten Regional Fairness Boards receive comments from small businesses about Federal agency enforcement actions. The Ombudsman annually evaluates the enforcement activities and rates each agency's responsiveness to small business. If you wish to comment on our actions, call 1-(888) 734-3247. You may comment to the Small Business Administration without fear of retaliation. Allegations of discrimination, retaliation, or both filed with the Small Business Administration will be investigated for appropriate action.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

a. Does not have an annual effect on the economy of $100 million or more. We estimate that the maximum effect on all of industry will be $169,134 annually. As shown in item 1 above, the economic impact on industry; State and local governments; Indian Tribes and individual Indian mineral owners; and the Federal government will be well below the $100 million threshold that the Federal government uses to define a rule as having a significant impact on the economy.

b. Will not cause a major increase in costs or prices for consumers; individual industries; Federal, State, local government agencies; or geographic regions. See item 1 above.

c. Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises.

This rule does not impose an unfunded mandate on State, local, or Tribal governments or the private sector of more than $100 million per year. This rule does not have a significant or unique effect on State, local, or Tribal governments or the private sector. Therefore, we are not required to provide a statement containing the information that the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq. ) requires because this rule is not an unfunded mandate. See item 1 above.

Under the criteria in section 2 of E.O. 12630, this rule does not have any significant takings implications. This rule will not impose conditions or limitations on the use of any private property. This rule will apply to all Federal and Indian leases. Therefore, this rule does not require a Takings Implication Assessment.

Under the criteria in section 1 of E.O. 13132, this rule does not have sufficient Federalism implications to warrant the preparation of a Federalism summary impact statement. The management of all Federal and Indian leases is the responsibility of the Secretary, and we distribute monies that we collect from the leases to States, Tribes, and individual Indian mineral owners. This rule does not substantially and directly affect the relationship between the Federal and State governments. Because this rule does not alter that relationship, this rule does not require a Federalism summary impact statement.

This rule complies with the requirements of E.O. 12988. Specifically, this rule:

a. Meets the criteria of section 3(a), which requires that we review all regulations to eliminate errors and ambiguity and to write them to minimize litigation.

b. Meets the criteria of § 3(b)(2), which requires that we write all regulations in clear language using clear legal standards.

The Department strives to strengthen its government-to-government relationship with the Indian Tribes through a commitment to consultation with the Indian Tribes and recognition of their right to self-governance and Tribal sovereignty. Under the Department's consultation policy and the criteria in E.O. 13175, we evaluated this rule and determined that it will have no substantial effects on Federally-recognized Indian Tribes. Likewise, these amendments to 30 CFR part 1241, subpart B, will not affect Indian Tribes because the changes are only technical in nature.

This rule:

(a) Does not contain any new information collection requirements.

(b) Does not require a submission to OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ). See 5 CFR 1320.4(a)(2).

This rule does not constitute a major Federal action, significantly affecting the quality of the human environment. We are not required to provide a detailed statement under NEPA because this rule qualifies for categorical exclusion under 43 CFR 46.210(i) in that this rule is “. . . of an administrative, financial, legal, technical, or procedural nature. . . .” This rule also qualifies for categorical exclusion under the Departmental Manual, part 516, section 15.4.(C)(1) in that its impacts are limited to administrative, economic, or technological effects. We also have determined that this rule is not involved in any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA. The procedural changes resulting from these amendments have no consequences on the physical environment. This rule will not alter, in any material way, natural resources exploration, production, or transportation.

This rule is not a significant energy action under the definition in E.O. 13211; therefore, a Statement of Energy Effects is not required.

For the reasons discussed in the preamble, ONRR revises 30 CFR part 1241 to read as follows:

The Coast Guard will enforce the Seattle Seafair Unlimited Hydroplane Race special local regulation in 33 CFR 100.1301 from 8 a.m. on August 2, 2016 through 11 p.m. on August 7, 2016.

Under the provisions of 33 CFR 100.1301, the Coast Guard will restrict general navigation in the following area: All waters of Lake Washington bounded by the Interstate 90 (Mercer Island/Lacey V. Murrow) Bridge, the western shore of Lake Washington, and the east/west line drawn tangent to Bailey Peninsula and along the shoreline of Mercer Island.

The regulated area has been divided into two zones. The zones are separated by a line perpendicular from the I-90 Bridge to the northwest corner of the East log boom and a line extending from the southeast corner of the East log boom to the southeast corner of the hydroplane race course and then to the northerly tip of Ohlers Island in Andrews Bay. The western zone is designated Zone I, the eastern zone, Zone II. (Refer to NOAA Chart 18447).

The Coast Guard will maintain a patrol consisting of Coast Guard vessels, assisted by Coast Guard Auxiliary vessels, in Zone II. The Coast Guard patrol of this area is under the direction of the Coast Guard Patrol Commander (the “Patrol Commander”). The Patrol Commander is empowered to control the movement of vessels on the racecourse and in the adjoining waters during the periods this regulation is in effect. The Patrol Commander may be assisted by other federal, state and local law enforcement agencies.

Only vessels authorized by the Patrol Commander may be allowed to enter Zone I during the hours this regulation is in effect. Vessels in the vicinity of Zone I shall maneuver and anchor as directed by the Patrol Commander.

During the times in which the regulation is in effect, the following rules shall apply:

(1) Swimming, wading, or otherwise entering the water in Zone I by any person is prohibited while hydroplane boats are on the racecourse. At other times in Zone I, any person entering the water from the shoreline shall remain west of the swim line, denoted by buoys, and any person entering the water from the log boom shall remain within ten (10) feet of the log boom.

(2) Any person swimming or otherwise entering the water in Zone II shall remain within ten (10) feet of a vessel.

(3) Rafting to a log boom will be limited to groups of three vessels.

(4) Up to six (6) vessels may raft together in Zone II if none of the vessels are secured to a log boom. Only vessels authorized by the Patrol Commander, other law enforcement agencies or event sponsors shall be permitted to tow other watercraft or inflatable devices.

(5) Vessels proceeding in either Zone I or Zone II during the hours this regulation is in effect shall do so only at speeds which will create minimum wake, seven (07) miles per hour or less. This maximum speed may be reduced at the discretion of the Patrol Commander.

(6) Upon completion of the daily racing activities, all vessels leaving either Zone I or Zone II shall proceed at speeds of seven (07) miles per hour or less. The maximum speed may be reduced at the discretion of the Patrol Commander.

(7) A succession of sharp, short signals by whistle or horn from vessels patrolling the areas under the direction of the Patrol Commander shall serve as signal to stop. Vessels signaled shall stop and shall comply with the orders of the patrol vessel; failure to do so may result in expulsion from the area, citation for failure to comply, or both.

The Captain of the Port may be assisted by other federal, state and local law enforcement agencies in enforcing this regulation.

This notice is issued under authority of 33 CFR 100.1301 and 5 U.S.C. 552(a). If the Captain of the Port determines that the regulated area need not be enforced for the full duration stated in this notice, he or she may use a Broadcast Notice to Mariners to grant general permission to enter the regulated area.

On July 15, 2016, the Coast Guard published a temporary deviation entitled “Drawbridge Operation Regulation; Lake Washington Ship Canal, Seattle, WA” in the Federal Register (81 FR 45971). This document was necessary for Seattle Department of Transportation (SDOT) to temporarily deviate from the operating schedule for the Fremont Bridge, mile 2.6, crossing the Lake Washington Ship Canal at Seattle, WA. This modification adds an additional closure hour on August 14, 2016 for these events. The deviation is necessary to accommodate heavy pedestrian and cycling traffic across the bridge during the `Fun Ride' event and Lake Union 10K Run event. To facilitate these events, the double bascule draw of the bridge will not open for vessel traffic during the effective date and times. The Fremont Bridge provides a vertical clearance of 14 feet (31 feet of vertical clearance for the center 36 horizontal feet) in the close-to-navigation position. The clearance is referenced to the mean water elevation of Lake Washington. The normal operating schedule for the Fremont Bridge is found at 33 CFR 117.1051. Waterway usage on the Lake Washington Ship Canal ranges from commercial tug and barge to small pleasure craft. No early Sunday morning bridge opening requests have been received during August for the Fremont Bridge in the last five years.

Vessels able to pass through the bridge in the closed-to-navigation position may do so at anytime. The bridge will be able to open for emergencies, and there is no immediate alternate route for vessels to pass. The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessels can arrange their transits to minimize any impact caused by the temporary deviation.

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

Background: The Federal Civil Penalties Inflation Adjustment Act of 1990 (Inflation Adjustment Act) (28 U.S.C. 2461 note) provides for the regular evaluation of civil monetary penalties (CMPs) to ensure that they continue to maintain their deterrent value. The Inflation Adjustment Act required that each agency issue regulations to adjust its CMPs beginning in 1996 and at least every four years thereafter. The Department published its most recent cost adjustment to each CMP in the Federal Register on October 2, 2012 (77 FR 60047), and those adjustments became effective on the date of publication.

On November 2, 2015, the President signed into law the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 (the 2015 Act) (section 701 of Pub. L. 114-74), which further amended the Inflation Adjustment Act, to improve the effectiveness of civil monetary penalties and to maintain their deterrent effect.

The 2015 Act requires agencies to: (1) Adjust the level of civil monetary penalties with an initial “catch-up” adjustment through an interim final rulemaking (IFR); and (2) make subsequent annual adjustments for inflation. Catch-up adjustments are based on the percent change between the Consumer Price Index for all Urban Consumers (CPI-U) for the month of October in the year the penalty was last adjusted by a statute other than the Inflation Adjustment Act, and the October 2015 CPI-U. Annual inflation adjustments are based on the percent change between the October CPI-U preceding the date of each statutory adjustment, and the prior year's October CPI-U. 1

The Department is required to publish an IFR with the initial penalty adjustment amounts by July 1, 2016, and the new penalty levels must take effect no later than August 1, 2016. These adjustments will apply to all civil monetary penalties covered by the Inflation Adjustment Act.

A CMP is defined in the statute as any penalty, fine, or other sanction that is (1) for a specific monetary amount as provided by Federal law, or has a maximum amount provided for by Federal law; (2) assessed or enforced by an agency pursuant to Federal law; and (3) assessed or enforced pursuant to an administrative proceeding or a civil action in the Federal courts.

The formula for the amount of a CMP inflation adjustment is prescribed by law, as explained in OMB Memorandum M-16-06 (February 24, 2016), and is not subject to the exercise of discretion by the Secretary of Education (Secretary). Under the 2015 Act, the Department must use, as the baseline for adjusting the CMPs in this IFR, the CMP amounts as they were most recently established or adjusted under a provision of law other than by the Inflation Adjustment Act. In accordance with the 2015 Act, we are not using the amounts set out in 34 CFR part 36 in 2012 in the formula used to adjust for inflation because those CMP amounts were updated pursuant to the Inflation Adjustment Act. 2 Instead, the baselines we are using are the amounts set out most recently in each of the statutes that provide for civil penalties. Using these statutory CMPs, we have determined which year those amounts were originally enacted by Congress (or the year the statutory amounts were last amended by the statute that established the penalty) and used the annual inflation adjustment multiplier corresponding to that year from Table A of OMB Memorandum M-16-06. We then rounded the number to the nearest dollar and checked, as required by the Inflation Adjustment Act, to see if that adjusted amount exceeded 150 percent of the CMP amount that was established under 34 CFR part 36, and in effect on November 2, 2015. If any of the amounts exceeded 150 percent, we are required to use the lesser amount (the 150 percent amount). All of the adjusted amounts were less than 150 percent so we did not have to replace any of the amounts we calculated using the multiplier from Table A of OMB Memorandum M-16-06 with the lesser amount.

Purpose of Program: The purpose of the DIF Program, as provided by the Consolidated Appropriations Act, 2015 (Pub. L. 113-235), is to support innovative activities aimed at improving the outcomes of “individuals with disabilities,” as defined in section 7(20)(A) of the Rehabilitation Act of 1973, as amended (Rehabilitation Act) (29 U.S.C. 705(20)(A)).

Program Authority: Consolidated Appropriations Act, 2015 (Pub. L. 113-235).

We published a notice of proposed priorities, requirements, and definitions (NPP) for this competition in the Federal Register on April 13, 2016 (81 FR 21808). That notice contained background information and our reasons for proposing the particular priorities, requirements, and definitions.

Public Comment: In response to our invitation in the NPP, 10 parties submitted comments on the proposed priorities, requirements, and definitions. We group major issues according to subject. Generally, we do not address technical and other minor changes, or suggested changes the law does not authorize us to make under the applicable statutory authority. In addition, we do not address general comments that raised concerns not directly related to the priorities.

Analysis of Comments and Changes: An analysis of the comments and of any changes in the priorities, requirements, and definitions since publication of the NPP follows.

Comment: None.

Discussion: Upon review of the requirements for proposed Priority 1, we became aware that to ensure the replicability of the project model, we needed to clarify that the proposed project design must be replicable in similar contexts and settings and implemented at multiple local sites.

Changes: We have specified in the first sentence in paragraph (a) of the requirements for Priority 1 that the proposed project design must be replicable in similar contexts and settings. For emphasis, we also moved the requirement that the model be implemented at multiple local sites from the end of proposed paragraph (b) to the end of paragraph (a). In addition, we clarified in paragraph (a) of the requirements of Priority 1 that evidence of strong theory is required for the project design.

Comment: None.

Discussion: Upon review of Priority 1, we became aware that we needed to eliminate possible confusion about what is meant by the word “effective” and more accurately reflect the purpose of Priority 1.

The term “effective” in the context of education research and evaluation usually means that a high-quality study was conducted to assess the effectiveness of an intervention. While the purpose of Priority 1 is to build the evidence base and identify and demonstrate work-based learning interventions that are supported by evidence for students with disabilities, the priority does not require that the proposed interventions to be implemented under the project's model be supported by a specific level of effectiveness determined by a high-quality study. Accordingly, we believe that the term “supported by evidence” more accurately reflects the intent of the priority.

Changes: We have replaced the word “effective” with “supported by evidence” throughout the priority and requirements when referring to the applicant's proposed strategies, model, or project.

Comments: None.

Discussion: Upon further review of the notice, we removed the second sentence in paragraph (i)(2) of Requirements for Priority 1 because the summative evaluation is not an effectiveness evaluation and would not statistically prove the effectiveness of the model. Also, the intent of this sentence was redundant with paragraph (j) of the requirements for Priority 1.

Changes: We deleted the second sentence in paragraph (i)(2) under the Requirements for Priority 1.

Comment: One commenter stated that eligible applicants should include secondary schools and school districts. The commenter indicated that secondary schools are developing many great programs to provide career pathways and successful transitions to college and careers for students with disabilities.

Discussion: We recognize the importance of the partnerships between State vocational rehabilitation (VR) agencies and secondary schools or school districts in implementing strategies designed to successfully transition students with disabilities to college and careers. However, the purpose of Priority 1 is to identify models that State VR agencies will be able to replicate. We believe that the best way to accomplish this objective is to require the applicant to be a State VR agency working in collaboration with other key partners. This will allow the VR agency to make use of the expertise and experience of multiple partners and to implement models in multiple settings. Each applicant is required to develop a partnership, and chief among these partners are local educational agencies (LEAs).

Changes: None.

Comment: One commenter asked that the Department include national and community-based nonprofit organizations as eligible applicants. Although work-based learning is carried out at the local level, the commenter indicated that the bulk of the work—recruiting individuals with disabilities, connecting individuals to community work-based learning experiences, and providing follow-along supports—is actually done by service providers. In addition, the commenter stated that limiting eligible applicants to State VR agencies would narrow the ability of the Department to evaluate specific strategies with different populations in different parts of the country. The commenter explained that a national organization could, for example, operate a multi-community, multi-State demonstration to effectively evaluate work-based learning strategies on a large and diverse scale.

Discussion: We recognize the important role that service providers play in facilitating and supporting work-based learning experiences in the community. Nevertheless, as discussed earlier, we have decided to limit eligible applicants to State VR agencies because the purpose of Priority 1 is to identify models that State VR agencies will be able to replicate. Limiting applicants to State VR agencies will not narrow the ability of the Department to evaluate specific strategies with different populations in different parts of the country. Rather than having one national grant with multiple local sites, we elected to have multiple grants, each of which may propose variations in the evaluations conducted. These may require different methodologies and may lead to different, but nonetheless comparable, findings for specific populations in a variety of contexts.

Changes: None.

Comment: Given the emphasis on coordinated systems, interagency collaboration, and effective intervention at an individual and local level, one commenter asked whether the Department anticipates funding projects at a local or State level. The commenter further asked whether the Department will fund multiple-State consortia in this competition.

Discussion: The Department understands the importance of coordinated systems, interagency collaboration, and effective intervention at the individual, local, and State levels. While the eligible applicant is the State VR agency, the projects themselves would be carried out at the local level in collaboration with LEAs or, where appropriate, State educational agencies (SEAs) and other local partners. Given the limited funds that are available for this competition, we will only be able to support a small number of projects, depending on their scope and intensity. Funding multiple-State consortia would further limit the number of projects awarded and the number and variety of work-based learning models that they will produce.

Changes: None.

Comment: One commenter recommended that the required partners specifically be expanded to include disability service providers. The commenter listed several places in the requirements for Priority 1 where the term “disability service providers” should be included because the commenter wanted disability service providers to be involved in as many aspects of the project as possible.

Discussion: We recognize the important role that disability service providers and other community service providers play in assisting students with disabilities to achieve their educational and employment goals. Thus, the requirement to establish partnerships in developing and implementing a project's model in paragraph (c) of the requirements for Priority 1 includes “providers or other agencies that are critical to the development of work-based learning experiences in integrated settings for students with disabilities.” However, we believe that applicants should have the flexibility to determine which providers these are, as well as the extent to which disability service providers or other agencies are critical to the development of work-based learning experiences in the community.

Changes: None.

Comment: One commenter asked for clarification as to how Priority 1 will address the needs of out-of-school youth and young adults.

Discussion: The focus of this priority is students with disabilities. We believe that out-of-school youth and young adults would benefit from successful work-based learning opportunities that are developed and evaluated through these priorities; however, the narrower scope of these models, focusing specifically on students with disabilities, will help to ensure the rigorous evaluation of the models.

Changes: None.

Comment: One commenter requested that the Department revise Priority 1 to require applicants to develop and implement project designs that improve outcomes for students with disabilities, including low-incidence populations such as students who are deaf or hard of hearing. The commenter would also establish partnerships with entities or specific individuals with expertise in developing, evaluating, and disseminating innovative strategies for serving individuals from low-incidence populations, including students who are deaf or hard of hearing.

Discussion: The Department appreciates the commenter's interest in ensuring that the projects funded under this priority are designed to address work-based learning experiences for students with low-incidence disabilities. Nothing precludes an applicant from proposing to serve individuals from low-incidence populations, such as students who are deaf or hard of hearing. However, the Department declines to require all applicants to design projects to serve any specific disability population or place greater importance on serving one population over another under these priorities.

Changes: None.

Comment: One commenter recommended that work performed through work-based learning experiences be financially compensated. For example, the commenter stated that internships and apprenticeships should be paid work experiences.

Discussion: We are aware that research in this field indicates that paid work experiences result in better employment outcomes for youth with disabilities than do unpaid work experiences. Therefore, paragraph (e) of the requirements for Priority 1 requires that at least one of a student's work experiences be a paid experience. While we encourage grantees to arrange for paid work experiences whenever possible, we do not want to preclude a grantee from providing an unpaid work-based learning experience that would be beneficial and appropriate to the student's goals, particularly in instances where a paid work experience is unavailable.

Changes: None.

Comment: One commenter asserted that the proposed requirements for Priority 1 should include an increased emphasis on engaging people with disabilities in innovation, similar to investments in science, technology, engineering, and mathematics (STEM) skills, such as “creativity/making” skills and entrepreneurial skills.

Discussion: We agree that students with disabilities should be exposed to a wide variety of work-based learning experiences, including those in innovative fields ( i.e., STEM) and those involving entrepreneurship skills. Work-based learning experiences supported under this priority should take into consideration the student's career interests and goals, which may include some of the innovative fields and entrepreneurship skills that the commenter described, as well as information about labor market demand and career pathways. We disagree with the commenter, however, that we should emphasize innovation and entrepreneurship above other areas of career focus because that would unnecessarily limit both the scope of the projects proposed and the work-based learning experiences available to students with disabilities.

Changes: None.

Comment: One commenter asserted that it is critically important that any work-based learning program funded and evaluated by the Department include access to programs that ensure that work disincentives created by receiving benefits and assistance under Supplemental Security Income or Social Security Disability Insurance do not prevent young adults with disabilities from seeking employment.

Discussion: We agree that a grantee may implement strategies or activities that address potential work disincentives that discourage a student with a disability from seeking employment. Nothing in Priority 1 would preclude an applicant from forming partnerships with other providers or programs that work in this area.

Changes: None.

Comment: One commenter requested that instead of including transportation as an optional support service in paragraph (g) of the requirements for Priority 1, the Department require grantees to provide transportation education and travel training within their demonstrations. The commenter stated that adding a specific project requirement for transportation education would ensure that individuals participating in the demonstration projects have access to and know how to use transportation, both in the short-term (during their work-based learning opportunities) and in the long-term (when they transition into employment or post-secondary education). The commenter added that in the explanatory statement accompanying the Consolidated Appropriations Act, 2015, Congress highlighted the importance of transportation in transition outcomes and directed the Department to collaborate with transportation experts and implement transportation strategies.

Discussion: The Department agrees that transportation services, including education and travel training, are important services and can help many students with disabilities succeed in work-based learning. Transportation services are not optional, as the commenter suggested. Paragraph (g) of the requirements for Priority 1 requires the applicant to identify and provide support services, including transportation services, needed to ensure the student's success in participating in work-based learning experiences. The phrase “as appropriate” in the context of this requirement does not make a project's provision of transportation services optional. Rather, we recognize that not all project participants will require transportation services or the same types of transportation services. Projects are required to provide transportation services to all students with disabilities who may require such services to be successful in their work-based learning experiences. However, to address the commenters' concerns, we have modified paragraph (g) to make it clear that transportation services may include transportation education and travel training.

Changes: We have modified paragraph (g) in the requirements for Priority 1 to include transportation education and travel training as examples of transportation services that may be provided to ensure the student's success in participating in work-based learning experiences.

Comment: One commenter expressed concerns about the scope of the data required to be collected and specifically requested that data be collected on the type of assistive technology used by participants and the assistive technologies requested but not acquired.

Discussion: We agree that assistive technology allows many students with disabilities to achieve their education and employment goals and that providing access to assistive technology is a necessary element of any transition model. In recognition of assistive technology's importance, paragraph (h) of the requirements for Priority 1 requires the project to identify and provide or arrange for accommodations or assistive technology needed to ensure the student's success in participating in work-based learning experiences. The purpose of these priorities is to evaluate the extent to which the project's model of coordinated work-based learning practices and strategies helps ensure that students with disabilities are prepared for postsecondary education and competitive integrated employment. Thus, we would expect grantees to document the services and supports provided to project participants, including the provision of assistive technology. However, we are not requiring grantees to evaluate the use of specific assistive technology because we expect the types of assistive technology used will vary with the needs of project participants. Therefore, there is no need to increase the scope of the required data collection described in paragraph (j) of Priority 1 to document whether the assistive technology requested by participants was acquired.

Changes: None.

Comment: One commenter asked that the Department make outcome data aggregated from the transition work-based learning model demonstrations publicly available so researchers and service providers nationwide can benefit from and create new best-practice strategies from this relevant information. This commenter observed that the DIF-funded demonstrations will represent one of the most significant and coordinated efforts to study models supported by evidence to improve transition outcomes.

Discussion: We agree with the commenter and will require grantees to make outcome data available to the Department in order to publish such data on the National Clearinghouse of Rehabilitation Training Materials (NCRTM) and other publicly available sources so that successful practices may be shared and available for replication.

Changes: We have added a new paragraph (k) to the requirements for Priority 1 to require grantees to provide outcome data to the Department for publication through the NCRTM.

Comment: None.

Discussion: Upon review of Priority 2, we became aware that we needed to clarify the requirement that at least one component of the proposed project must be supported by evidence of promise.

Change: We have revised Priority 2 by requiring evidence of promise for at least one key component and at least one relevant outcome in the logic model for their proposed project and made conforming changes to the application requirements.

Comment: A commenter observed that Priority 3 outlined multiple approaches to determine the quality of evidence but also stated that the field would better benefit from controlled studies of interventions. The commenter asked whether the Department intends for these projects to incorporate randomized control treatment designs.

Discussion: We are not requiring a randomized control treatment design but also do not want to discourage applicants from proposing this type of design. We have revised Priority 3 and its associated requirements to clarify that proposed evaluations designed to produce evidence of effectiveness and likely to meet the What Works Clearinghouse Evidence Standards, such as a randomized control treatment design, are also permitted. In short, we would encourage applicants to use the most appropriate and strongest research design to answer their research questions.

Changes: We have revised Priority 3 and paragraph (b) of its associated requirements to state that an applicant may propose an evaluation design that, if well implemented, is likely to meet the What Works Clearinghouse Evidence Standards.

Priority 1: Transition Work-Based Learning Model Demonstrations.

We give priority to model demonstration projects designed to identify, develop, implement, and evaluate work-based learning models that are supported by evidence and will help ensure that students with disabilities are prepared for postsecondary education and competitive integrated employment. The model demonstration projects must provide work-based learning experiences, supported by evidence, in integrated settings, in coordination with other transition services, including pre-employment transition services, to students with disabilities, through State VR agencies, in collaboration with LEAs or, where appropriate, SEAs and other local partners.

Priority 2: Evidence of Promise Supporting the Proposed Model.

We give priority to applicants who propose projects supported by evidence of promise for at least one key component and at least one relevant outcome in the logic model for their proposed project.

Priority 3: Project Evaluation Designed to Meet the What Works Clearinghouse Evidence Standards.

We give priority to applicants that propose to conduct a rigorous and well-designed evaluation of their completed model demonstration project that, if the research design is well implemented, would meet the What Works Clearinghouse Evidence Standards.

Types of Priorities:

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

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

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

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

The Assistant Secretary announces the following project requirements for this competition. We may apply one or more of these requirements in any year in which this competition is in effect. Each of the following sets of requirements corresponds to one of the priorities.

Requirements for Priority 1:

To be considered for funding under Priority 1, applicants must describe their plans to carry out the following project requirements—

(a) Develop and implement a project design replicable in similar contexts and settings that is supported by strong theory. The model must be implemented at multiple local sites to ensure its replicability;

(b) Develop and implement a project demonstrating practices and strategies that are supported by evidence in the use of work-based learning experiences in integrated settings within the local community to prepare students with disabilities for postsecondary education and competitive integrated employment;

(c) Establish partnerships with the LEA or, as appropriate, the SEA, institutions of higher education, employers, and providers or other agencies that are critical to the development of work-based learning experiences in integrated settings for students with disabilities. At a minimum, the partnership must include representatives from the LEA, workforce training providers ( e.g., American Job Centers), and employers who will collaborate to develop and provide opportunities (such as internships, short-term employment, and apprenticeships) for students with disabilities served under the project;

(d) Provide career exploration and counseling to assist students in identifying possible career pathways (as defined in this notice) and the relevant work-based learning experiences;

(e) Develop work-based learning experiences in integrated settings, at least one of which must be a paid experience, that—

(1) Provide exposure to a wide range of work sites to help students make informed choices about career selections;

(2) Are appropriate for the age and stage in life of each participating student, ranging from site visits and tours, job shadowing, service learning, apprenticeships, and internships;

(3) Are structured and linked to classroom or related instruction;

(4) Use a trained mentor to help structure the learning at the worksite;

(5) Include periodic assessment and feedback as part of each experience; and

(6) Fully involve students with disabilities and, as appropriate, their representative in choosing and structuring their experiences;

(f) Provide instruction in employee rights and responsibilities, as well as positive work skills, habits, and behaviors that foster success in the workplace;

(g) Identify and provide support services, as appropriate, including transportation services ( e.g., transportation education and travel training), that are needed to ensure the student's success in participating in work-based learning experiences;

(h) Identify and provide or arrange for accommodations or assistive technology needed to ensure the student's success in participating in work-based learning experiences;

(i) Develop and implement a plan to measure the model demonstration project's performance and outcomes. A detailed and complete evaluation plan must include—

(1) A formative evaluation plan, consistent with the project's logic model, that—

(i) Includes evaluation questions, source(s) for data, a timeline for data collection, and analysis plans;

(ii) Shows how the outcome ( e.g., postsecondary education and competitive integrated employment) and implementation data will be used separately or in combination to improve the project during the performance period; and

(iii) Outlines how these data will be reviewed by project staff, when they will be reviewed, and how they will be used during the course of the project to adjust the model or its implementation to increase the model's usefulness, replicability in similar contexts and settings, and potential for sustainability; and

(2) A summative evaluation plan, including a timeline, to collect and analyze data on students and their outcomes over time, both for students with disabilities served by the project and for students with disabilities in a comparison group not receiving project services.

(j) Collect data necessary to evaluate the outcomes of the project, including the progress of the project in achieving its goals and outcomes, which, at a minimum, must include:

(1) The relevant available RSA-911 Case Service Report data for each student in the project;

(2) The number of students in the work-based learning project;

(3) The number of students in the project who complete at least one work-based learning experience;

(4) The number of work-based learning experiences that each student completes during the project;

(5) The types of work-based learning experiences in which students participated;

(6) The number of students who attain a recognized post-secondary credential and the type of credentials attained;

(7) The number of students who obtain competitive integrated employment; and

(8) An unduplicated count of students who obtain a recognized postsecondary credential and competitive integrated employment.

(k) Make outcome data available to the Department for publication through the National Clearinghouse of Rehabilitation Training Materials.

To be considered for funding under Priority 1, an applicant also must provide the following with its application:

(a) A detailed review of the literature that describes the evidence base for the proposed demonstration project, its components, and strategies for work-based learning experiences for students with disabilities;

(b) A logic model;

(c) A description of the applicant's plan for implementing the project, including a description of—

(1) A cohesive, articulated model of partnership and coordination among the participating agencies and organizations;

(2) The coordinated set of practices and strategies that are supported by evidence in the use and development of work-based learning models that are aligned with employment, training, and education programs and reflect the needs of employers and of students with disabilities; and

(3) How the proposed project will—

(i) Involve employers in the project design and in partnering with project staff to develop integrated job shadowing, internships, apprenticeships, and other paid and unpaid work-based learning experiences that are designed to increase the preparation of students with disabilities for postsecondary education and competitive integrated employment;

(ii) Conduct outreach activities to identify students with disabilities whom the work-based learning experiences would enable them to achieve competitive integrated employment; and

(iii) Identify innovative strategies, including development, implementation, and evaluation of approved models, methods, and measures that will increase the preparation of students with disabilities for postsecondary education and competitive integrated employment;

(d) A description of the methods and criteria that will be used to select the site(s) at which the project activities will be implemented;

(e) Documentation ( e.g., letter of support or draft agreement) that the State VR agency has specific agreements with its partners in the development and implementation of the project;

(f) A plan for evaluating the project's performance, including an evaluation of the practices and strategies implemented by the project, in achieving project goals and objectives.

Specifically, the evaluation plan must include a description of—

(1) A formative evaluation plan, consistent with the project's logic model that includes the following:

(i) The key questions to be addressed by the project evaluation and the appropriateness of the methods for how each question will be addressed;

(ii) How the methods of evaluation will provide valid and reliable performance data on relevant outcomes, particularly postsecondary and competitive integrated employment outcomes, including the source(s) for the data and the timeline for data collection;

(iii) A clear and credible analysis plan, including a proposed sample size and minimum detectable effect size that aligns with the expected project impact, and an analytic approach for addressing the research questions; and

(iv) How the key components of the project, as well as a measurable threshold for acceptable implementation and outcome data, will be reviewed and used to improve the project;

(2) A summative evaluation plan, including—

(i) How the outcomes and implementation data collected by the project will be used, separately or in combination, to demonstrate that the goals of the model were met;

(ii) How the outcomes for students with disabilities served by the project will be compared with the outcomes of students with disabilities not receiving project services.

(g) A plan for systematic dissemination of project findings, templates, resources, and knowledge gained that will assist State and local VR and educational agencies in adapting or replicating the model work-based learning demonstration developed and implemented by the project, which could include elements such as development of a Web site, resources ( e.g., toolkits), community of practice, and participation in national and State conferences;

(h) An assurance that the employment goal for all students served under Priority 1 will be competitive integrated employment, including customized or supported employment; and

(i) An assurance that the project will collaborate with other work-based learning initiatives.

To meet Priority 2, applicants must meet the following requirements:

(a) Applicants must identify and include a detailed discussion of up to two cited studies that meet the evidence of promise standard for at least one key component and at least one relevant outcome in the logic model for the proposed project. Both the critical component(s) and relevant outcome(s) must be specified for each study cited.

(b) The full names and links for the citations submitted for this priority must be provided on the Abstract and Information page of the application, or the full text of each study cited must be provided.

(c) Applicants must specify on the Abstract and Information page the findings in the studies that are cited as evidence of promise for the key component(s) and relevant outcome(s) and ensure that the citations and links are from publicly or readily available sources. Studies of fewer than 10 pages may be attached in full under Other Attachments in Grants.gov .

To meet Priority 3, applicants must describe in their applications how they would meet the following competition requirements:

(a) Conduct an independent evaluation (as defined in this notice) of its project. This evaluation must estimate the impact of the project on a relevant outcome.

(b) Use an evaluation design that, if well implemented, is likely to meet the What Works Clearinghouse Evidence Standards.

(c) Make broadly available the results of any evaluations it conducts of its funded activities, digitally and free of charge, through formal ( e.g., peer-reviewed journals) or informal ( e.g., newsletters) mechanisms. The grantee must also ensure that the data from its evaluation are made available to third-party researchers consistent with applicable privacy requirements.

(d) Cooperate on an ongoing basis with any technical assistance provided by the Department or its contractor and comply with the requirements of any evaluation of the program conducted by the Department.

We announce one new definition for use in connection with the priorities. The remaining definitions listed in the NPP and used in the final priorities and requirements in this notice are established defined terms in the Workforce Innovation and Opportunity Act (WIOA), the Rehabilitation Act, or 34 CFR part 77 and are provided in the notice inviting applications published elsewhere in this issue of the Federal Register . Specifically, the definitions for the terms “evidence of promise,” “logic model,” “randomized controlled trial,” “relevant outcome,” “quasi-experimental design study,” and “strong theory” are from 34 CFR part 77.

Definition:

The Assistant Secretary announces the following definition for this competition. We may apply this definition in any year in which this program is in effect.

Independent evaluation means an evaluation that is designed and carried out independent of, and external to, the grantee but in coordination with any employees of the grantee who develop a process, product, strategy, or practice that is currently being implemented as part of the grant's activities.

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

Note: This notice does not solicit applications. In any year in which we choose to use these priorities, requirements and this definition, we invite applications through a notice in the Federal Register .

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

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

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

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

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

This final regulatory action is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

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

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

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

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

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

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

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

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

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

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

Intergovernmental Review: This competition is subject to Executive Order 12372 and the regulations in 34 CFR part 79. However, under 34 CFR 79.8(a), we waive intergovernmental review in order to make an award by the end of FY 2016.

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

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Table of Contents I. Why is the EPA using a direct final rule? II. Does this action apply to me? III. Background A. The EPA's VOC Exemption Policy B. Petition To List HFE-347pcf2 as an Exempt Compound IV. The EPA's Assessment of the Petition A. Contribution to Tropospheric Ozone Formation B. Contribution to Stratospheric Ozone Depletion C. Toxicity D. Contribution to Climate Change E. Conclusions V. Direct Final Action VI. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review B. Paperwork Reduction Act (PRA) C. Regulatory Flexibility Act (RFA) D. Unfunded Mandates Reform Act (UMRA) E. Executive Order 13132: Federalism F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments G. Executive Order 13045: Protection of Children From Environmental Health and Safety Risks H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution or Use I. National Technology Transfer and Advancement Act (NTTAA) J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations K. Congressional Review Act (CRA) L. Judicial Review I. Why is the EPA using a direct final rule?

The EPA is publishing this direct final rule without a prior proposed rule because we view this as a noncontroversial action and anticipate no adverse comment. This action revises the EPA's regulatory definition of VOC for purposes of preparing state implementation plans (SIPs) to attain the national ambient air quality standards (NAAQS) for O 3 under title I of the CAA by adding HFE-347pcf2 to the list of compounds excluded from the regulatory definition of VOC on the basis that this compound makes a negligible contribution to tropospheric O 3 formation. However, in the “Proposed Rules” section of this Federal Register , we are publishing a separate document that will serve as the proposed rule to make this revision to the regulatory definition of VOC if adverse comments are received on this direct final rule. We will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. For further information about commenting on this rule, see the ADDRESSES section of this document.

If the EPA receives adverse comment, we will publish a timely withdrawal in the Federal Register informing the public that this direct final rule will not take effect. We would address all public comments in any subsequent final rule based on the proposed rule.

Entities potentially affected by this direct final rule include, but are not necessarily limited to: State and local air pollution control agencies that adopt and implement regulations to control air emissions of VOC; and industries manufacturing and/or using HFE-347pcf2 as a precision cleaning agent to remove contaminants including oil, flux, and fingerprints from items like medical devices, artificial implants, crucial military and aerospace items, electric components, printed circuit boards, optics, jewelry, ball bearings, aircraft guidance systems, film, relays, and a variety of metal components, among others.

Tropospheric O 3 , commonly known as smog, is formed when VOC and nitrogen oxides (NO X ) react in the atmosphere in the presence of sunlight. Because of the harmful health effects of O 3 , the EPA and state governments limit the amount of VOC that can be released into the atmosphere. Volatile organic compounds form O 3 through atmospheric photochemical reactions, and different VOC have different levels of reactivity. That is, different VOC do not react to form O 3 at the same speed or do not form O 3 to the same extent. Some VOC react slowly or form less O 3 ; therefore, changes in their emissions have limited effects on local or regional O 3 pollution episodes. It is the EPA's policy that organic compounds with a negligible level of reactivity should be excluded from the regulatory definition of VOC in order to focus VOC control efforts on compounds that significantly increase O 3 concentrations. The EPA also believes that exempting such compounds creates an incentive for industry to use negligibly reactive compounds in place of more highly reactive compounds that are regulated as VOC. The EPA lists compounds that it has determined to be negligibly reactive in its regulations as being excluded from the regulatory definition of VOC (40 CFR 51.100(s)).

The CAA requires the regulation of VOC for various purposes. Section 302(s) of the CAA specifies that the EPA has the authority to define the meaning of “VOC” and, hence, what compounds shall be treated as VOC for regulatory purposes. The policy of excluding negligibly reactive compounds from the regulatory definition of VOC was first laid out in the “Recommended Policy on Control of Volatile Organic Compounds” (42 FR 35314, July 8, 1977) (from here forward referred to as the 1977 Recommended Policy) and was supplemented subsequently with the “Interim Guidance on Control of Volatile Organic Compounds in Ozone State Implementation Plans” (70 FR 54046, September 13, 2005) (from here forward referred to as the 2005 Interim Guidance). The EPA uses the reactivity of ethane as the threshold for determining whether a compound has negligible reactivity. Compounds that are less reactive than, or equally reactive to, ethane under certain assumed conditions may be deemed negligibly reactive and, therefore, suitable for exemption from the regulatory definition of VOC. Compounds that are more reactive than ethane continue to be considered VOC for regulatory purposes and, therefore, are subject to control requirements. The selection of ethane as the threshold compound was based on a series of smog chamber experiments that underlay the 1977 policy.

The EPA has used three different metrics to compare the reactivity of a specific compound to that of ethane: (i) The rate constant for reaction with the hydroxyl radical (OH) (known as k OH ); (ii) the maximum incremental reactivity (MIR) on a reactivity per unit mass basis; and (iii) the MIR expressed on a reactivity per mole basis. Differences between these three metrics are discussed below.

The k OH is the rate constant of the reaction of the compound with the OH radical in the air. This reaction is often, but not always the first and rate-limiting step in a series of chemical reactions by which a compound breaks down in the air and contributes to O 3 formation. If this step is slow, the compound will likely not form O 3 at a very fast rate. The k OH values have long been used by the EPA as metrics of photochemical reactivity and O 3 -forming activity, and they have been the basis for most of the EPA's early exemptions of negligibly reactive compounds from the regulatory definition of VOC. The k OH metric is inherently a molar-based comparison, i.e., it measures the rate at which molecules react.

The MIR, both by mole and by mass, is a more updated metric of photochemical reactivity derived from a computer-based photochemical model, and has been used as a consideration of reactivity since 1995. This metric considers the complete O 3 -forming activity of a compound over multiple hours and through multiple reaction pathways, not merely the first reaction step with OH. Further explanation of the MIR metric can be found in Carter (1994), “Development of ozone reactivity scales for volatile organic compounds.”

The EPA has considered the choice between a molar or mass basis for the comparison to ethane in past rulemakings and guidance. In the 2005 Interim Guidance, the EPA stated:

The 2005 Interim Guidance also noted that concerns have sometimes been raised about the potential impact of a VOC exemption on environmental endpoints other than O 3 concentrations, including fine particle formation, air toxics exposures, stratospheric O 3 depletion, and climate change. The EPA has recognized, however, that there are existing regulatory and non-regulatory programs that are specifically designed to address these issues, and the EPA continues to believe in general that the impacts of VOC exemptions on environmental endpoints other than O 3 formation will be adequately addressed by these programs. The VOC exemption policy is intended to facilitate attainment of the O 3 NAAQS. In general, VOC exemption decisions will continue to be based solely on consideration of a compound's contribution to O 3 formation. However, if the EPA determines that a particular VOC exemption is likely to result in a significant increase in the use of a compound and that the increased use would pose a significant risk to human health or the environment that would not be addressed adequately by existing programs or policies, then the EPA may exercise its judgment accordingly in deciding whether to grant an exemption.

Asahi Glass Company, AGC Chemicals America, Inc. submitted a petition to the EPA on February 5, 2007, requesting that 1,1,2,2-Tetrafluoro-1-(2,2,2-trifluoroethoxy) ethane (HFE-347pcf2; CAS number 406-78-0) be exempted from the regulatory definition of VOC. The petition was based on the argument that HFE-347pcf2 has low reactivity relative to ethane. The petitioner indicated that HFE-347pcf2 may be used in a variety of applications as a precision cleaning agent to remove contaminants including oil, flux, and fingerprints from items like medical devices, artificial implants, crucial military and aerospace items, electric components, printed circuit boards, optics, jewelry, ball bearings, aircraft guidance systems, film, relays, and a variety of metal components, among others.

To support its petition, AGC Chemicals America, Inc. referenced several documents, including two peer-reviewed journal articles on HFE-347pcf2's reaction rates (Tokuhashi et al., 2000; Pitts et al, 1983). In 2014, AGC provided a supplemental technical report on the maximum incremental reactivity of HFE-347pcf2 (Carter, 2014). According to this report, the maximum incremental reactivity of HFE-347pcf2 ranges between 0.0007 g O 3 /g HFE-347pcf2 (best estimate) and 0.0013 g O 3 /g HFE-347pcf2 (high reactivity estimate) on the mass-based MIR scale. This reactivity rate is much lower than that of ethane (0.28 g O 3 /g ethane), the compound that the EPA has used for comparison to define “negligible” O 3 reactivity for the purpose of exempting compounds from the regulatory definition of VOC. The rate constant for the gas-phase reaction of OH radicals with HFE-347pcf2 (k OH ) has been measured to be 9.16 × 10 −15 cm 3 /molecule-sec at ~298 K (Pitts et al., 1983, Tokuhashi et al., 2000). Based on the measured reactivity rate of HFE-347pcf2 (Pitts et al., 1983), HFE-347pcf2 has a smaller k OH than ethane (k OH of ethane = 2.4 × 10 −13 cm 3 /molecule-sec at ~298 K) and, therefore, is less reactive than ethane.

To address the potential for stratospheric O 3 impacts, the petitioner contended that, given the atmospheric lifetime of HFE-347pcf2 and that it does not contain chlorine or bromine, it is not expected to contribute to the depletion of the stratospheric O 3 layer.

The EPA is taking direct final action to respond to the petition by exempting HFE-347pcf2 from the regulatory definition of VOC. This action is based on consideration of the compound's low contribution to tropospheric O 3 and the low likelihood of risk to human health or the environment. In this case, the EPA considered issues of contribution to stratospheric O 3 depletion, toxicity, and climate change. Additional information on these topics is provided in the following sections.

The reaction rate of HFE-347pcf2 with the OH radical (k OH ) has been measured to be 9.16 × 10 −15 cm 3 /molecule-sec (Tokuhashi et al., 2000); other reactions with O 3 and the nitrate radical were negligibly small. The corresponding reaction rate of ethane with OH is 2.4 × 10 −13 cm 3 /molecule-sec (Atkinson et al., 2006).

The overall atmospheric reactivity of HFE-347pcf2 was not studied in an experimental smog chamber, but the chemical mechanism derived from other chamber studies (Carter, 2011) was used to model the complete formation of O 3 for an entire single day under realistic atmospheric conditions (Carter, 2014). In 2014, Carter calculated a MIR value of 0.0007 to 0.0013 g O 3 /g VOC for HFE-347pcf2 for “averaged conditions,” versus 0.28 g O 3 /g VOC for ethane.

Table 1 presents the three reactivity metrics for HFE-347pcf2 as they compare to ethane.

I. Background

Section 172(c)(1) of the CAA provides that SIPs for nonattainment areas must include reasonably available control measures (RACM), including reasonably available control technology (RACT), for sources of emissions. Additionally, Maryland is in the Ozone Transport Region (OTR) established under section 184(a) of the CAA. Pursuant to section 184(b)(1)(B) of the CAA, all areas in the OTR must submit SIP revisions that include implementation of RACT with respect to all sources of VOCs in the states covered by a CTG. See CAA section 184(b)(1). EPA defines RACT as “the lowest emission limitation that a particular source is capable of meeting by the application of control technology that is reasonably available considering technological and economic feasibility.” 44 FR 53761 (September 17, 1979).

CTGs are intended to provide state and local air pollution control authorities information that should assist them in determining RACT for VOCs from various sources of fiberglass boat manufacturing. EPA has not published a previous CTG for fiberglass boat manufacturing materials, but did publish an assessment of VOC emissions from fiberglass boat manufacturing in 1990. The 1990 assessment defined the nature and scope of VOC emissions from fiberglass boat manufacturing, characterized the industry, estimated per plant and national VOC emissions, and identified and evaluated potential control options. In 2001, EPA promulgated the National Emission Standards for Hazardous Air Pollutants for Boat Manufacturing, 40 CFR part 63, subpart VVVV (2001 NESHAP). The 2001 NESHAP established organic hazardous air pollutant (HAP) emissions limits based on low-HAP resins and gel coats and low-emitting resin application technology. Several of the air pollution control districts in California have specific regulations that control VOC emissions from fiberglass boat manufacturing operations as part of their regulations for limiting VOC emissions from polyester resin operations. Several other states also have regulations that address VOC emissions from fiberglass boat manufacturing as part of polyester resin operations. After reviewing the 1990 VOC assessment, the 2001 NESHAP, and existing California district and other state VOC emission reduction approaches, and after considering information obtained since the issuance of the 2001 NESHAP, EPA developed a CTG entitled Control Techniques Guidelines for Fiberglass Boat Manufacturing Materials (Publication No. EPA 453/R-08-004; September 2008).

The CTG for fiberglass boat manufacturing materials provides control recommendations for reducing VOC emissions from the use of gel coats, resins, and materials used to clean application equipment in fiberglass boat manufacturing operations. This CTG applies to facilities that manufacture hulls or decks of boats from fiberglass or build molds to make fiberglass boat hulls or decks. EPA's 2008 CTG recommends that the following operations should be covered: Open molding resin and gel coat operations (these include pigmented gel coat, clear gel coat, production resin, tooling gel coat, and tooling resin); resin and gel coat mixing operations; and resin and gel coat application equipment cleaning operations.

EPA's 2008 CTG recommends the following VOC reduction measures: VOC emission limits for molding resins and gel coats; work practices for resin and gel coat mixing containers; and VOC content and vapor pressure limits for cleaning materials. Recommended VOC emission limits for open molding resin and gel coat operations are shown in Table 1.

On December 23, 2015, the Maryland Department of the Environment (MDE) submitted on behalf of the State of Maryland to EPA SIP revision #15-07 concerning implementation of RACT requirements for the control of VOC emissions from fiberglass boat manufacturing materials. Maryland has adopted EPA's CTG standards for fiberglass boat manufacturing materials, including the emission limits found in Table 1 of this rulemaking action, through a regulation, found at Code of Maryland Regulations (COMAR) 26.11.19 (relating to VOC from specific processes). This SIP revision seeks to add COMAR 26.11.19.26-1 (control of VOC emissions from fiberglass boat manufacturing materials) to the Maryland SIP and also includes an amendment to COMAR 26.11.19.26 (control of VOC emissions from reinforced plastic manufacturing) which was previously approved into the Maryland SIP. In addition to adopting EPA's CTG standards, COMAR 26.11.19.26-1 includes numerous terms and definitions to support the interpretation of the measures, as well as work practices for cleaning, compliance and monitoring requirements, sampling and testing, and record keeping requirements. The amendment to COMAR 26.11.19.26 at COMAR 26.11.19.26A exempts fiberglass boat manufacturing to avoid duplicative or conflicting requirements. Prior to Maryland's new COMAR 26.11.19.26-1, fiberglass boat manufacturing materials were covered under COMAR 26.11.19.26 which did not address fully EPA's CTG requirements. Thus, with COMAR 26.11.19.26-1 now addressing fiberglass boat manufacturing materials, Maryland has revised COMAR 26.11.19.26A to clarify and exempt fiberglass boat manufacturing materials from COMAR 26.11.19.26A as these are now clearly addressed in COMAR 26.11.19.26-1. EPA finds the provisions in COMAR 26.11.19.26-1 identical to the CTG standards for fiberglass boat manufacturing materials and therefore approvable in accordance with sections 172(c)(1) and 184(b)(1)(B) of the CAA.

EPA is approving the Maryland SIP revision adding new regulation COMAR 26.11.19.26-1 and amending COMAR 26.11.19.26, which was submitted on December 23, 2015, because it meets the requirement to adopt RACT for sources covered by EPA's CTG standards for fiberglass boat manufacturing materials. EPA is publishing this rule without prior proposal because EPA views this as a noncontroversial amendment and anticipates no adverse comment. However, in the “Proposed Rules” section of this Federal Register , EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This rule will be effective on September 30, 2016 without further notice unless EPA receives adverse comment by August 31, 2016. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

In this rulemaking action, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of COMAR 26.11.19.26-1 and an amendment to COMAR 26.11.19.26 into the Maryland SIP. EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or may be viewed at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

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

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

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

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

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

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

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

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

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

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

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 30, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the “Proposed Rules” section of this Federal Register , rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking action.

This action to approve the Maryland SIP revision adding new regulation COMAR 26.11.19.26-1 and amending COMAR 26.11.19.26 may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

40 CFR part 52 is amended as follows:

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

For the purpose of this document, we are giving meaning to certain words or initials as follows:

(i) The word or initials Act or CAA mean or refer to the Clean Air Act, unless the context indicates otherwise.

(ii) The initials ATC mean or refer to the authority to construct permit.

(iii) The word or initials BAAQMD or District mean or refer to the Bay Area Air Quality Management District.

(iv) The initials CFR mean or refer to Code of Federal Regulations.

(v) The initials or words EPA , we , us or our mean or refer to the United States Environmental Protection Agency.

(vi) The initials ERCs mean or refer to Emission Reduction Credits.

(vii) The initials FLM mean or refer to Federal Land Manager.

(viii) The initials FR mean or refer to Federal Register .

(ix) The initials NSR mean or refer to New Source Review.

(x) The initials PM 2.5 mean or refer to particulate matter with an aerodynamic diameter of less than or equal to 2.5 micrometers (fine particulate matter).

(xi) The initials PSD mean or refer to Prevention of Significant Deterioration.

(xii) The initials PTE mean or refer to potential to emit.

(xiii) The initials SIP mean or refer to State Implementation Plan.

(xiv) The initials SO 2 mean or refer to sulfur dioxide.

(xv) The initials TSD mean or refer to the technical support document for the proposed action.

On August 28, 2015, the EPA proposed a limited approval and limited disapproval of the rules listed in Table 1 that were submitted for incorporation into the California SIP. 80 FR 52236 (Aug. 28, 2015). Our detailed analysis of these rules is provided in the TSD and Federal Register notice for the proposed rulemaking for this SIP revision approval action.

We proposed a limited approval because we determined that these rules strengthen the SIP and are largely consistent with the relevant CAA requirements. We simultaneously proposed a limited disapproval because some rule provisions conflict with CAA section 110, including Parts C and D, and the regulations implementing those laws. The disapproved provisions include the following:

1. The definitions of “agricultural source” in Section 2-1-239 and “large confined animal facility” used in Section 2-1-424 rely on other definitions and provisions in District rules that are not SIP approved. (See our evaluation of Sections 2-1-239 and 2-1-424 in section 6.1.2 of the TSD.)

2. Section 2-1-234, subparagraph 2.2, is deficient because it does not satisfy the PSD provisions at 40 CFR 51.166(a)(7) and 51.166(r)(6) & (7), which require PSD programs to contain specific applicability procedures and recordkeeping provisions. (See our evaluation of Section 2-1-234 in sections 6.1.2 and 7.2.2 of the TSD.)

3. The same deficiency discussed above for the PSD provisions applies to the nonattainment NSR provisions. Section 2-1-234, subparagraph 2.1, does not satisfy the requirements of 51.165(a)(2) and 51.165(a)(6) & (7), which require nonattainment NSR programs to contain specific applicability procedures and recordkeeping provisions. (See our evaluation of Section 2-1-234 in sections 6.1.2 and 7.3.12 of the TSD.)

4. The definition of the term “PSD pollutant” as defined in Section 2-2-223, which is used in place of the federal definition for the term “regulated NSR pollutant,” is deficient because it explicitly excludes nonattainment pollutants. (See our evaluation of Sections 2-2-223 and 2-2-224 in sections 6.2.2 and 7.2.3 of the TSD.)

5. Section 2-2-305 does not require written approval of the Administrator prior to using any modified or substituted air quality model as provided in subsection 3.2.2 of 40 CFR 51, appendix W. (See our evaluation of Section 2-2-305 in sections 6.2.3 and 7.2.15 of the TSD.)

6. Section 2-2-611 does not include the requirement regarding “any other stationary source category which as of August 7, 1980, is being regulated under section 111 or 112 of the Act” in the list of source categories that must include fugitive emissions to determine whether a source is a major facility. (See our evaluation of Section 2-2-611 in sections 6.2.6 and 7.3.10 of the TSD.)

7. Section 2-2-401.4 only requires a visibility analysis for sources that are located within 100 km of a Class I area, rather than for any source that “may have an impact on visibility” in any mandatory Class I Federal Area, as required by 40 CFR 51.307(b)(2). (See our evaluation of Section 2-2-401.4 in sections 6.2.4 and 7.3.9 of the TSD.)

8. Section 2-2-411 pertaining to Offset Refunds does not contain any timeframe for obtaining an offset refund. (See our evaluation of Section 2-2-411 in section 6.2.4 of the TSD.)

9. The Offset Program Equivalence demonstration required by Section 2-2-412 does not provide a remedy if the District fails to make the required demonstration. (See our evaluation of Section 2-2-412 in section 6.2.4 of the TSD.)

10. Subsection 2-2-605.2 allows existing “fully-offset” sources to generate ERCs based on the difference between the post-modification PTE and the pre-modification PTE. Emission reductions intended to be used as offsets for new major sources or major modifications are only creditable if they are reductions of actual emissions, not reductions in the PTE of a source. (See our evaluation of Section 2-2-605 in sections 6.2.6, 7.3.3, 7.3.13, and 7.3.22 of the TSD.)

11. Subsection 2-2-606.2, as it applies to major modifications, does not require “fully-offset” sources to calculate the emission increases from a proposed major modification based on the difference between the post-modification PTE and the pre-modification actual emissions as required by 40 CFR 51.165(a)(3)(ii)(J). (See our evaluation of Section 2-2-606 in sections 6.2.6 and 7.3.22 of the TSD.)

In addition, we had proposed a limited disapproval of Section 2-2-308. (See our evaluation of Section 2-2-308 in sections 6.2.3 and 7.4.1 of the TSD.) We also proposed to find the rules were deficient because they did not require a demonstration that a new source meet all applicable SIP requirements as required by 40 CFR 51.160(b)(1). (See section 7.4.1 in the TSD.) For the reasons discussed in sections 2.2 and 2.3 of our Response to Comments document, we are not finalizing our proposed disapproval of Section 2-2-308 or the proposed deficiency based on the requirements of 40 CFR 51.160(b)(1).

Our August 28, 2015 proposed rulemaking provided a 30-day public comment period. The EPA granted a request from BAAQMD to extend the public comment period until November 12, 2015, which is the date the public comment period ended. We received comments from BAAQMD and the California Council for Environmental and Economic Balance (CCEEB). 1 We also received a comment letter from the Sacramento Metropolitan Air Quality Management District (SMAQMD) after the public comment period ended. We received an anonymous, non-substantive comment letter and a comment letter submitted on behalf of the California Air Pollution Control Officers Association (CAPCOA) that was withdrawn during the comment period. Our Response to Comments document in the docket for this action contains a summary of the comments and the EPA's responses. The full text of the public comments, as well as all other documents relevant to this action, are available in the docket (visit http://www.regulations.gov and search for Docket ID: EPA-R09-OAR-2015-0280). Below, we briefly summarize the significant comments and our responses to the major issues raised by commenters.

Comment 1: BAAQMD commented that the CAA is designed to achieve “cooperative federalism”, and that the EPA should defer to the District's policy choices on how to implement its NSR program.

Response 1: The EPA understands its role under the cooperative federalism approach established under the CAA and we have applied the appropriate standard in reviewing the BAAQMD's NSR rules.

Comment 2: BAAQMD disagrees with the EPA's limited disapproval of Section 2-2-308 as it relates to satisfying the requirements in 40 CFR 51.160(b).

Response 2: We are not finalizing our limited disapproval of Section 2-2-308 as it relates to 40 CFR 51.160(b)(2) for the reasons discussed in our Response to Comments document. Accordingly, the EPA is finalizing approval of Section 2-2-308.

Comment 3: BAAQMD disagrees with the EPA's limited disapproval of the District NSR rules because it did not contain a prohibition on the issuance of an ATC if the project does not meet all applicable requirements of the control strategy as required in 40 CFR 51.160(b)(1). BAAQMD commented that Sections 2-1-304 and 2-1-321 satisfy this requirement.

Response 3: The EPA is not finalizing our proposed limited disapproval of this issue because Section 2-1-304 satisfies the control strategy requirement in 40 CFR 51.160(b)(1). The EPA is finalizing approval of Section 2-1-304 as satisfying requirement in 40 CFR 51.160(b)(1).

Comment 4: BAAQMD disagrees with the EPA's proposed limited disapproval of Section 2-2-602.2 for determining the amount of offsets required for major modifications that will be constructed at major sources that have previously provided offsets equal to the source's PTE when the modification will not increase the PTE of the source.

Response 4: The EPA is finalizing our limited disapproval regarding this issue. 40 CFR 51.165(a)(3)(ii)(J) directs SIPs to include rules to ensure that the total tonnage of increased emissions, in tons per year, resulting from a major modification that must be offset in accordance with section 173 of the Act shall be determined by summing the difference between the allowable emissions after the modification and the actual emissions before the modification. This provision requires providing offsets for each major modification at a major source in an amount equal to the difference between pre-modification actual emissions and post-modification PTE.

Comment 5: BAAQMD disagrees with the EPA's proposed limited disapproval of the PTE-to-PTE calculation method for determining the amount of ERCs generated from sources that have provided offsets up to their full PTE and that are being shut down.

Response 5: The EPA is finalizing its limited disapproval on this issue because offsets are required to be generated from reductions in actual emissions consistent with CAA section 173(a) and (c) and 40 CFR 51.165(a)(3).

Comment 6: BAAQMD comments that the EPA cannot require nonattainment offsets for SO 2 because the San Francisco Bay Area is not designated as nonattainment for SO 2 .

Response 6: The EPA is finalizing its limited disapproval on this issue because 40 CFR 51.165(a)(1)(xxxvii) specifies that sulfur dioxide is a precursor in all PM 2.5 nonattainment areas and the BAAQMD is designated nonattainment for the 2006 PM 2.5 National Ambient Air Quality Standards.

Comment 7: BAAQMD comments that the EPA's visibility regulations at 40 CFR 51.307(b) do not specify what projects “may have an impact” on visibility at Federal Class I areas, therefore it is acceptable to use a 100-km radius to meet the requirement.

Response 7: The EPA is finalizing its limited disapproval on this issue because the EPA's visibility regulations require a new major source or major modification that “may have an impact on visibility” at a Federal mandatory Class I area to conduct a visibility analysis on a case-by-case basis in consultation with the applicable FLM.

Comment 8: BAAQMD requests that the EPA confirm that the limited approval and limited disapproval action will make the BAAQMD's NSR rules as a whole part of the California SIP and federally enforceable under the CAA.

Response 8: Regulation 2, Rules 1 and 2 will become the federally enforceable NSR program in the SIP for BAAQMD subject to an obligation to correct rule deficiencies listed in Section I of this Federal Register document.

For the reasons provided in our proposed rule and above in response to comments, pursuant to section 110(k) of the CAA, the EPA is finalizing a limited approval and limited disapproval of the submitted BAAQMD rules, listed in Table 1 above, into the California SIP. Regulation 2, Rules 1 and 2 will become the federally enforceable NSR program in the SIP for BAAQMD subject to an obligation to correct the rule deficiencies listed in Section I of this Federal Register document. We are finalizing a limited approval because incorporating the BAAQMD permitting rules will strengthen and update the BAAQMD portion of the California SIP. We are finalizing our limited disapproval because some of the BAAQMD permitting rules do not comply with federal NSR requirements.

We are finalizing our action as proposed, except for the limited disapprovals regarding Sections 2-2-308 and the requirements of 40 CFR 51.160(a) and (b). Accordingly, the EPA will finalize approval of these provisions.

Our limited disapproval action will trigger an obligation for the EPA to promulgate a Federal Implementation Plan under CAA section 110(c) unless California corrects the deficiencies that are the bases for the limited disapproval, and the EPA approves the related rule revisions, within 24 months of the effective date of this final action. In addition, sanctions will be imposed unless the EPA approves subsequent SIP revisions that correct the rule deficiencies within 18 months of the effective date of this action. These sanctions will be imposed under section 179 of the Act and 40 CFR 52.31.

The District has been implementing the federal PSD permitting program based on a delegation agreement with the EPA pursuant to 40 CFR 52.21(u). 2 Despite limited deficiencies, this final action approving the District's PSD permitting program into the SIP means that the District will be the PSD permitting authority on the effective date of this final action. Concurrent with the EPA's approval of the District's rules, all PSD permits for sources located in the BAAQMD issued directly by the EPA or under the PSD delegation agreement are being transferred to the District. A list of these EPA-issued permits is included in the docket for this rulemaking action.

The EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the BAAQMD rules described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these documents available electronically through http://www.regulations.gov and in hard copy at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

Additional information about these statutes and Executive Orders can be found at http://www2.epa.gov/laws-regulations/laws-and-executive-orders.

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

This action does not impose an information collection burden under the PRA because this action does not impose additional requirements beyond those imposed by state law.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities beyond those imposed by state law.

This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. This action does not impose additional requirements beyond those imposed by state law. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, will result from this action.

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

This action does not have tribal implications, as specified in Executive Order 13175, because the SIP is not approved to apply on any Indian reservation land or in any other area where the EPA or an Indian tribe has demonstrated that a tribe has jurisdiction, and will not impose substantial direct costs on tribal governments or preempt tribal law. Thus, Executive Order 13175 does not apply to this action.

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not impose additional requirements beyond those imposed by state law.

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

Section 12(d) of the NTTAA directs the EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. The EPA believes that this action is not subject to the requirements of section 12(d) of the NTTAA because application of those requirements would be inconsistent with the CAA.

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

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

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 September 30, 2016. 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:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. Organization of this document. The following outline is provided to aid in locating information in this preamble.

In the Clean Air Act Amendments of 1990, nonattainment new source review (NNSR) requirements were expanded to include ozone attainment areas within the Ozone Transport Region (OTR). The federal regulations at 40 CFR 51.165 contain the minimum elements that a State's preconstruction permitting program for major stationary sources in nonattainment areas (and in the OTR) must contain in order for EPA to approve the State's program into the SIP.

On November 29, 2005 (70 FR 71612), EPA promulgated the “Final Rule to Implement the 8-Hour Ozone National Ambient Air Quality Standard—Phase 2; Final Rule to Implement Certain Aspects of the 1990 Amendments Relating to New Source Review and Prevention of Significant Deterioration as They Apply in Carbon Monoxide, Particulate Matter, and Ozone NAAQS; Final Rule for Reformulated Gasoline” (Phase 2 Rule). Among other requirements, the Phase 2 Rule obligated states to revise their Prevention of Significant Deterioration (PSD) programs to explicitly identify nitrogen oxides (NO X ) as a precursor to ozone. This requirement was codified in 40 CFR 51.166, and requires that states submit SIP revisions incorporating the requirements of the rule, including specific provisions treating NO X as a precursor to ozone, by June 15, 2007. See 70 FR 71612 at 71683, November 29, 2005.

On May 16, 2008 (73 FR 28321), EPA issued the Final Rule on the “Implementation of the New Source Review (NSR) Program for Particulate Matter Less than 2.5 Micrometers (PM 2.5 )” (2008 NSR Rule). The 2008 NSR Rule finalized several new requirements for SIPs to address sources that emit direct PM 2.5, and other pollutants that contribute to secondary PM 2.5 formation. One of these requirements is for NSR permits to address pollutants responsible for the secondary formation of PM 2.5 , otherwise known as precursor pollutants. In the 2008 rule, EPA identified precursors to PM 2.5 for the PSD program to be sulfur dioxide (SO 2 ) and NO X (unless the state demonstrates to the Administrator's satisfaction, or EPA demonstrates, that NO X emissions in an area are not a significant contributor to that area's ambient PM 2.5 concentrations). The 2008 NSR Rule also specifies that volatile organic compounds (VOCs) are not considered to be precursors to PM 2.5 in the PSD program, unless the state demonstrates to the Administrator's satisfaction, or EPA demonstrates, that emissions of VOCs in an area are significant contributors to that area's ambient PM 2.5 concentrations. The explicit references to SO 2 , NO X and VOCs as they pertain to secondary PM 2.5 formation are codified at 40 CFR 51.166(b)(49)(i)( b ) and 52.21(b)(50)(i)( b ). As part of identifying pollutants that are precursors to PM 2.5, the 2008 NSR Rule also required states to revise the definition of “significant” as it relates to a net emissions increase or the potential of a source to emit pollutants. Specifically, 40 CFR 51.166(b)(23)(i) and 52.21(b)(23)(i) define “significant” for PM 2.5 to mean the following emissions rates: 10 tons per year (tpy) of direct PM 2.5 ; 40 tpy of SO 2 ; and 40 tpy of NO X (unless the state demonstrates to the Administrator's satisfaction, or EPA demonstrates, that NO X emissions in an area are not a significant contributor to that area's ambient PM 2.5 concentrations). The deadline for states to submit SIP revisions to their PSD programs incorporating these changes was May 16, 2011. See 73 FR 28321 at 28341, May 16, 2008.

The 2008 NSR Rule did not require states to immediately account for gases that could condense to form particulate matter, known as condensables, in PM 2.5 and PM 10 emission limits in NSR permits. Instead, EPA determined that states had to account for PM 2.5 and PM 10 condensables for applicability determinations and in establishing emissions limitations for PM 2.5 and PM 10 in PSD permits beginning on or after January 1, 2011. See 73 FR 28321 at 28334. This requirement is codified in 40 CFR 51.166(b)(49)(i)( a ) and 52.21(b)(50)(i)( a ). Revisions to states' PSD programs incorporating the inclusion of condensables were required to be submitted to EPA by May 16, 2011. See 73 FR 28321 at 28341.

On October 20, 2010, EPA issued the final rule on the “Prevention of Significant Deterioration (PSD) for Particulate Matter Less Than 2.5 Micrometers (PM 2.5 )—Increments, Significant Impact Levels (SILs) and Significant Monitoring Concentration (SMC)” (2010 PSD Rule). See 75 FR 64864. This rule established several components for making PSD permitting determinations for PM 2.5, including a system of “increments,” which is the mechanism used to estimate significant deterioration of ambient air quality for a pollutant. These increments are codified in 40 CFR 51.166(c) and 40 CFR 52.21(c). The 2010 PSD Rule also established a new “major source baseline date” for PM 2.5 as October 20, 2010, and a new trigger date for PM 2.5 as October 20, 2011. These revisions are codified in 40 CFR 51.166(b)(14)(i)( c ) and (b)(14)(ii)( c ), and 52.21(b)(14)(i)( c ) and (b)(14)(ii)( c ). Lastly, the 2010 PSD Rule revised the definition of “baseline area” to include a level of significance of 0.3 micrograms per cubic meter, annual average, for PM 2.5. This change is codified in 40 CFR 51.166(b)(15)(i) and 52.21(b)(15)(i).

Section 109 of the CAA directs EPA to establish NAAQS requisite to protect public health with an adequate margin of safety (primary standard) and for the protection of public welfare (secondary standard). Section 109(d)(1) of the CAA requires EPA to complete a thorough review of the NAAQS at 5-year intervals and promulgate new standards when appropriate. Additionally, Section 107 of the CAA requires the establishment of air quality control regions for the purpose of implementing the NAAQS.

On October 17, 2006 (71 FR 61144), EPA revised the primary and secondary 24-hour NAAQS for fine particulate matter (PM 2.5 ) to 35 micrograms per cubic meter and retained the primary and secondary 24-hour NAAQS for coarse particulate matter (PM 10 ) of 150 micrograms per cubic meter. EPA revoked the annual standard for PM 10 . This final rule became effective on December 18, 2006.

On March 27, 2008 (73 FR 16436), EPA revised the NAAQS for ozone, setting the level of the primary and secondary 8-hour standard to 0.075 parts per million. This final ozone standard rule became effective on May 27, 2008. On October 26, 2015 (80 FR 65292), EPA revised the NAAQS for ozone, setting the level of the primary and secondary 8-hour standard to 0.070 parts per million. This final ozone standard rule became effective on December 28, 2015.

On November 12, 2008 (73 FR 66964), EPA revised the NAAQS for lead, setting the level of the primary and secondary standard to 0.15 micrograms per cubic meter and revised the averaging time to a rolling 3-month period with a maximum (not-to-be-exceeded) form, evaluated over a 3-year period. The final lead standard rule became effective on January 12, 2009.

On February 9, 2010 (75 FR 6474), EPA revised the NAAQS for oxides of nitrogen as measured by nitrogen dioxide (NO 2 ). EPA established a 1-hour primary standard for NO 2 at a level of 100 parts per billion, based on the 3-year average of the 98th percentile of the yearly distribution of 1-hour daily maximum concentrations, to supplement the existing primary and secondary annual standard of 53 parts per billion ( See 61 FR 52852, October 8, 1996). The final NO 2 rule became effective on April 12, 2010.

On June 22, 2010 (75 FR 35520), EPA revised the NAAQS for oxides of sulfur as measured by sulfur dioxide (SO 2 ). EPA established a new 1-hour SO 2 primary standard at a level of 75 parts per billion, based on the 3-year average of the annual 99th percentile of 1-hour daily maximum concentrations. EPA also revoked both the previous 24-hour and annual primary SO 2 standards. EPA did not revise the existing secondary standard of 0.5 part per million averaged over 3 hours and not to be exceeded more than once per year. This final rule became effective on August 23, 2010.

On January 15, 2013 (78 FR 3086), EPA revised the primary PM 2.5 annual NAAQS, lowering the standard to 12.0 micrograms per cubic meter. The final rule became effective on March 18, 2013.

On August 9, 1993, the Vermont Department of Environmental conservation (VT DEC) submitted a revision to its State Implementation Plan (SIP) addressing the nonattainment new source review (NNSR) and reasonable available control technology (RACT) requirements of the 1990 Clean Air Act Amendments (1993 SIP submittal). The submittal consisted of several changes to the State's regulations as well as a SIP narrative. In 1998, EPA approved the revisions dealing with the RACT requirements. See 63 FR 19825, April 22, 1998.

In a letter dated July 13, 2016, Vermont withdrew the SIP narrative and a number of definitions that were either already approved into the SIP or were determined not to be required to be in the SIP. The State also withdrew certain provisions of APCR, Subchapter V, Sections 5-502(3), (6), and (7) because revised versions of those provisions were resubmitted by the State on February 14, 2011. We are therefore not acting on those provisions withdrawn by the State from the 1993 SIP submittal.

EPA is approving the definition of “Federally Enforceable” in Section 5-101 from the 1993 SIP submittal.

On February 14, 2011, the VT DEC submitted a revision to its SIP addressing EPA's Greenhouse Gas Tailoring Rule, certain other aspects of the State's preconstruction permitting requirements, and certain emissions limits for sources of nitrogen oxides and sulfur dioxide (2011 SIP submittal). In 2012, EPA approved the portions of the 2011 SIP submittal that related to EPA's Greenhouse Gas Tailoring Rule. See 77 FR 60907, October 5, 2012.

In a letter dated July 13, 2016, VT DEC withdrew some, but not all, of the revisions included in the 2011 SIP submittal. The State withdrew these provisions for various reasons; either because additional information needs to be submitted before EPA could approve certain provisions into the SIP, Vermont intends in the near future to revise certain provisions and resubmit them to EPA, certain provisions were already in the SIP, or certain provisions were determined not to be required to be in the SIP.

We are approving the following provisions contained in the 2011 SIP submittal:  1

a. A clarification to the definition of the term “Federal Land Manger.”

b. Provisions containing emissions limits for certain categories of sources that emit NO X and SO 2 . (In a letter dated July 13, 2016, Vermont submitted a technical demonstration consistent with section 110(l) of the Clean Air Act, showing that the changes to the applicability of these emissions limits will not interfere with any applicable requirement concerning attainment and reasonable further progress or any other applicable requirement of the CAA. See EPA's TSD for a more detailed analysis.)

c. A provision clarifying what type of operations would be considered asphalt batch plants and would be required to obtain a minor new source review permit for any new or modified source.

d. Provisions clarifying Vermont's authority to request sources to submit written reports.

e. Provisions (further revised in a 2014 SIP submission) providing the State with the authority to require air dispersion modeling on a case-by-case basis for minor sources, and containing the procedures a source must follow when providing an impact analysis on ambient air quality in order for the source to obtain a PSD permit.

f. Provisions requiring sources to obtain a permit prior to construction, and providing the State with the authority to deny a permit for a project that would not be in compliance with the state permitting regulations. (We note that these provisions are codified in the State's submittal as APCR Section 5-501(4). However, the existing approved SIP already contains an APCR Section 5-501(4) that relates to a different topic. Thus, our approval of this new APCR Section 5-501(4) will appear in the SIP after existing Section APCR 5-501(4). This codification issue arose because the State has amended its regulations over time at the state level and did not submit the entire revised regulation to EPA for approval into the SIP. EPA believes that implementation of the State's permitting program and the enforceability of these provisions as part of that program will not be compromised because the provisions will have been approved by EPA on separate dates. Thus, in future legal proceedings, a complete and accurate citation to one of these two provisions should also include the date upon which EPA approved the provision in question into Vermont's SIP in order to distinguish clearly one from the other.)

g. Provisions (further revised in a 2014 SIP revision) specifying which entities, including affected states and federal land managers, are to receive notification when a source is subject to major new source review. (We note that one of these provisions is codified in the State's submittal as APCR Section 5-501(6). However, the existing approved SIP already contains an APCR Section 5-501(6) that relates to a different topic. Thus, our approval of this new APCR Section 5-501(6) will appear in the SIP after existing APCR Section 5-501(6). This codification issue arose because the State has amended its regulations over time at the state level and did not submit the entire revised regulation to EPA for approval into the SIP. EPA believes that implementation of the State's permitting program and the enforceability of these provisions as part of that program will not be compromised because the provisions will have been approved by EPA on separate dates. Thus, in future legal proceedings, a complete and accurate citation to one of these two provisions should also include the date upon which EPA approved the provision in question into Vermont's SIP in order to distinguish clearly one from the other.)

h. A provision prohibiting a major new source or major modification from initiating construction prior to obtaining a construction permit.

i. Provisions (further revised in a 2014 SIP submittal) requiring new major sources and major modifications to conduct an air quality impact analysis.

j. Provisions containing requirements for major new sources and major modifications that are subject to nonattainment new source review under Part D of the CAA because Vermont is located within the ozone transport region.

EPA is approving the provisions identified above in subparagraphs a. through j. See EPA's TSD for more detailed information.

On July 25, 2014, the VT DEC submitted a revision to its SIP primarily addressing permitting requirements for PM 2.5 emissions (2014 SIP submittal). In a letter dated July 13, 2016, VT DEC withdrew some, but not all, of the revisions the State requested in its 2014 SIP submittal. The State withdrew these provisions for various reasons; either because more information would be needed before certain provisions could be approved by EPA into the SIP, one provision was erroneously submitted, or Vermont intends in the near future to revise certain provisions and resubmit them to EPA.

We are approving the following contained in the State's 2014 SIP submittal:

a. Nine new and two revised definitions in APC Section 5-101 that were contained in the 2014 SIP submittal. The new definitions are of the terms: (1) “Municipal Waste Combustor Acid Gases (measured as sulfur dioxide and hydrogen chloride)”; (2) “Municipal Waste Combustor Metals (measured as particulate matter)”; (3) “Municipal Waste Combustor Organics (measured as total tetra- through octa-chlorinated debenzo-p-dioxins and dibenzofurans)”; (4) “Municipal Solid Waste Landfill Emissions (measured as nonmethane organic compounds)”; (5) “Particulate Matter Emissions”; (6) “PM 10 ,”; (7) “PM 10 emissions”; (8) “PM 2.5 ”; and (9) “PM 2.5 direct emissions.” The two revised definitions are of the terms: (1) “Significant”; and (2) “Particulate Matter.”

b. A provision which removes an exemption for wood coating operations from the SIP rule for “Other Sources That Emit Volatile Organic Compounds.”

c. Provisions that revise the State's Ambient Air Quality Standards for the criteria air pollutants. 2

d. Provisions that (as stated earlier) contain requirements for sources to follow when submitting an ambient air impact analysis in relation to a PSD permit. The revision was made to clarify that a source's analysis must follow EPA's procedures at 40 CFR part 51, Appendix W.

e. Provisions that slightly revise the requirements that apply to a new or modified source that otherwise would have been subject to minor new source review to be classified as major based on the impact on ambient air from the source's allowable emissions.

f. Provisions (as stated earlier) require the State to notify certain entities of a proposed PSD permit, including affected states and federal land managers.

g. Provisions (as stated earlier) that require sources subject to PSD to conduct and submit an ambient air quality impact analysis.

h. A provision that requires a source subject to PSD to demonstrate that it will not cause an adverse impact on visibility or any air quality related value in any Class I area.

(i) A provision requiring a source subject to PSD to gather ambient monitoring data representative of the area in which the source is located. (We note that this provision is codified at APCR Section 5-502(8)(b) of the State's regulation and will be approved into the SIP with that same codification. Because the codification of, and provisions contained in, the State's regulations have changed over the years, and the State's 2014 SIP submittal did not include all of the State's current ambient air quality monitoring provisions, APCR Section 5-502(8)(b) will appear after and separately from the already approved SIP revisions in APCR Section 5-502(7), which also relate to ambient air quality monitoring; the one exception is that the current SIP provision at APCR Section 5-502(7)(b) will no longer be in the SIP because it is being replaced by APCR 5-502(8)(b). EPA believes that implementation of the State's permitting program and the enforceability of these provisions as part of that program will not be compromised because the provisions will have been approved by EPA on separate dates. Thus, in future legal proceedings, a complete and accurate citation to these provisions should also include the date upon which EPA approved the provision in question into Vermont's SIP in order to distinguish clearly one from the other.)

Based on the analysis contained in the Technical Support Document, EPA is approving the following sections of Vermont's APCR:

Within APCR Subchapter I: Definitions:

1. “Federal Land Manager”

2. “Federally Enforceable”

3. “Municipal Waste Combustor Acid Gases (measured as sulfur dioxide and hydrogen chloride)”

4. “Municipal Waste Combustor Metals (measured as particulate matter)”

5. “Municipal Waste Combustor Organics (measured as total tetra- through octa-chlorinated debenzo-p-dioxins and dibenzofurans)”

6. “Municipal Solid Waste Landfill Emissions (measured as nonmethane organic compounds)”

7. “Particulate Matter”

8. “Particulate Matter Emissions”

9. “PM 10 ”

10. “PM 10 emissions”

11. “PM 2.5 ”

12. “PM 2.5 direct emissions”

13. “Significant”

Within APCR Subchapter II: Prohibitions:

1. Section 5-5-251: Control of Nitrogen Oxide Emissions.

2. Section 5-252: Control of Sulfur Dioxide Emissions.

3. Section 5-253.20(a)(3): Applicability for Other Sources That Emit Volatile Organic Compounds.

Within APCR Subchapter III: Ambient Air Quality Standards:

1. Section 5-301: Scope.

2. Section 5-302: Sulfur oxides (sulfur dioxide).

3. Section 5-303: Reserved.

4. Section 5-304: Particulate Matter PM 2.5 .

5. Section 5-306: Particulate Matter PM 10 .

6. Section 5-307: Carbon Monoxide.

7. Section 5-308: Ozone.

8. Section 5-309: Nitrogen Dioxide.

9. Section 5-310: Lead.

Within APCR Subchapter IV: Operations and Procedures:

1. Section 4-401(2): Hot Mix Asphalt Batch Plants.

2. Section 4-402: Written Reports When Requested.

3. Section 5-406: Required Air Modeling.

Within APCR Subchapter V: Review of New Air Contaminant Sources:

1. Section 5-501: Review of Construction or Modification of Air Contaminant Sources. EPA is approving subsections (1), (4), (5), (6), and (7)(c) of this section.

2. Section 5-502: Major Stationary Sources and Major Modifications: EPA is approving subsections (2), (4)(a), (4)(b), (4)(e), (6)(b), and (8)(b).

The EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision should relevant adverse comments be filed. This rule will be effective September 30, 2016 without further notice unless the Agency receives relevant adverse comments by August 31, 2016.

If the EPA receives such comments, then EPA will publish a notice withdrawing the final rule and informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on the proposed rule. All parties interested in commenting on the proposed rule should do so at this time. If no such comments are received, the public is advised that this rule will be effective on September 30, 2016 and no further action will be taken on the proposed rule. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of Vermont's Air Pollution Control Regulations described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these documents generally available electronically through http://www.regulations.gov.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the 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 September 30, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's Federal Register , rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Part 52 of chapter I, title 40 of the Code of Federal Regulations is amended as follows:

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

Table 1 lists the rules addressed by this action with the dates that they were adopted by the local air agencies and submitted by the California Air Resources Board.

On January 19, 2016, the EPA determined that the submittal for VCAPCD Rule 74.15.1 met the completeness criteria in 40 CFR part 51, appendix V, which must be met before formal EPA review. On April 19, 2016, the EPA determined that the submittal for PCAPCD Rule 250 met the completeness criteria.

We approved an earlier version of PCAPCD Rule 250 into the SIP on August 23, 1995, in 60 FR 43713, and an earlier version of VCAPCD Rule 74.15.1 into the SIP on May 19, 2014, in 79 FR 28612.

NO X helps produce ground-level ozone, smog and particulate matter (PM), which harm human health and the environment. Section 110(a) of the CAA requires States to submit regulations that control NO X emissions. PCAPCD Rule 250 and VCAPCD Rule 74.15.1 both limit the emissions of NO X from their respective source categories. The revisions to PCAPCD Rule 250 include the removal of exemptions for emissions resulting from startup and shutdown operations, and simplification of the emission limits for stationary gas turbines. VCAPCD Rule 74.15.1 updates the testing regime and clarifies several exemptions for boilers, steam generators, and process heaters.

The EPA's technical support documents (TSDs) have more information about these rules.

SIP rules must be enforceable (see CAA section 110(a)(2)), must not interfere with applicable requirements concerning attainment and reasonable further progress or other CAA requirements (see CAA section 110(l)), and must not modify certain SIP control requirements in nonattainment areas without ensuring equivalent or greater emissions reductions (see CAA section 193).

SIP provisions cannot include exemptions from emission limitations for emissions during startup, shutdown, and malfunction (SSM) events. Thus, in order to be permissible in a SIP, emission limitations must apply continuously, i.e., they cannot include periods during which emissions are legally or functionally exempt from regulation (see CAA sections 110(a)(2) and 302(k)). EPA recently clarified this requirement for periods of startup, shutdown, and malfunction. See Restatement and Update of EPA's SSM Policy Applicable to SIPs, 80 FR 33839 (June 12, 2015).

Generally, SIP rules must require reasonably available control technology (RACT) for each major source of NO X in ozone nonattainment areas classified as moderate or above (see CAA sections 182(b)(2) and 182(f)). PCAPCD regulates an ozone nonattainment area classified as Severe for the 1994 1-hour ozone National Ambient Air Quality Standard (NAAQS), and for the 1997 and 2008 8-hour ozone NAAQS (40 CFR 81.305). VCAPCD also regulates an ozone nonattainment area classified as Severe for the 1994 1-hour ozone NAAQS and for the 1997 and 2008 8-hour ozone NAAQS (40 CFR 81.305). Therefore, PCAPCD Rule 250 and VCAPCD Rule 74.15.1 must both implement RACT as the Districts regulate ozone nonattainment areas classified as Severe.

Guidance and policy documents that we used to evaluate enforceability, revision/relaxation and rule stringency requirements for the applicable criteria pollutants include the following:

We believe these rules are consistent with the relevant policy and guidance regarding enforceability, RACT, SIP relaxations, and requirements for emissions that occur during SSM events. The TSDs have more information on our evaluation.

The TSDs describe additional rule revisions that we recommend for the next time the local agency modifies the rules but are not currently the basis for rule disapproval.

As authorized in section 110(k)(3) of the Act, the EPA is fully approving the submitted rules because we believe they fulfill all relevant requirements. 1 We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of this Federal Register , we are simultaneously proposing approval of the same submitted rule. If we receive adverse comments by August 31, 2016, we will publish a timely withdrawal in the Federal Register to notify the public that the direct final approval will not take effect and we will address the comments in a subsequent final action based on the proposal. If we do not receive timely adverse comments, the direct final approval will be effective without further notice on September 30, 2016. This will incorporate these rules into the federally enforceable SIP.

Please note that if the EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, the EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the PCAPCD and VCAPCD rules described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these documents available electronically through www.regulations.gov and in hard copy at U.S. Environmental Protection Agency Region IX (Air-4), 75 Hawthorne Street, San Francisco, CA, 94105-3901.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the 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 September 30, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the Proposed Rules section of today's Federal Register , rather than file an immediate petition for judicial review of this direct final rule, so that the EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. 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:

Throughout this document “we,” “us,” or “our” refer to EPA. This section provides additional information by addressing the following:

On September 29, 2015, (80 FR 58410), EPA published a notice of proposed rulemaking (NPR) for the State of Missouri. In the NPR, EPA proposed approval of Missouri's progress report SIP, a report on progress made in the first implementation period towards RPGs for Class I areas that are affected by emissions from Missouri sources. This progress report SIP and accompanying cover letter also included a determination that Missouri's existing regional haze SIP requires no substantive revision to achieve the established regional haze visibility improvement and emissions reduction goals for 2018.

States are required to submit a progress report in the form of a SIP revision every five years that evaluates progress towards the RPGs for each mandatory Class I Federal area within the state and in each mandatory Class I Federal area outside the state which may be affected by emissions from within the state. See 40 CFR 51.308(g). In addition, the provisions under 40 CFR 51.308(h) require states to submit, at the same time as the 40 CFR 51.308(g) progress report, a determination of the adequacy of the state's existing regional haze SIP. The first progress report SIP is due five years after submittal of the initial regional haze SIP. The Missouri Department of Natural Resources (MDNR) submitted its regional haze SIP on August 5, 2009, and a supplement on January 30, 2012, in accordance with 40 CFR 51.308(b). 1

On February 14, 2014, MDNR provided to the Federal Land Managers a revision to Missouri's SIP reporting on progress made during the first implementation period toward RPGs for Class I areas in the state and Class I areas outside the state that are affected by Missouri sources. Missouri has two Class I areas, Mingo National Wildlife Refuge (Mingo) and Hercules Glades Wilderness Area (Hercules Glades). Missouri also hosts an additional Interagency Monitoring of Protected Visual Environments (IMPROVE) monitoring site, located at El Dorado Springs. 2 Notification was published on MDNR's Air Pollution Control Program Web site on April 28, 2014. A public hearing was held on held at the St. Louis Regional Office on Thursday, May 29, 2014.

On August 5, 2014, MDNR submitted the five year progress report SIP to EPA. This progress report SIP and accompanying cover letter also included a determination that the state's existing regional haze SIP requires no substantive revision to achieve the established regional haze visibility improvement and emissions reduction goals for 2018. EPA proposed approval of Missouri's progress report SIP on the basis that it satisfies the requirements of 40 CFR 51.308(g) and (h).

On August 5, 2014, MDNR submitted a revision to Missouri's regional haze SIP to address progress made toward RPGs of Class I areas in the state and Class I areas outside the state that are affected by emissions from Missouri's sources. This progress report SIP also included a determination of the adequacy of the state's existing regional haze SIP. Missouri has two Class I areas within its borders, and maintains an additional IMPROVE monitoring site. MDNR utilized particulate matter source apportionment (PSAT) techniques for photochemical modeling conducted by the Central Regional Air Planning Association (CENRAP) to identify two Class I areas in nearby Arkansas potentially impacted by Missouri sources: Upper Buffalo Wilderness Area (UBWA) and Caney Creek Wilderness Area (CCWA).

The provisions in 40 CFR 51.308(g) require a progress report SIP to address seven elements. In the NPR, EPA proposed to approve the SIP as adequately addressing each element under 40 CFR 51.308(g). The seven elements and EPA's proposed conclusions in the NPR are briefly summarized below.

The provisions in 40 CFR 51.308(g) require progress report SIPs to include a description of the status of measures in the regional haze implementation plan; a summary of the emissions reductions achieved; an assessment of the visibility conditions for each Class I area in the state; an analysis of the changes in emissions from sources and activities within the state; an assessment of any significant changes in anthropogenic emissions within or outside the state that have limited or impeded visibility improvement progress in Class I areas impacted by the state's sources; an assessment of the sufficiency of the regional haze implementation plan to enable states to meet reasonable progress goals; and a review of the state's visibility monitoring strategy. As explained in detail in the NPR, EPA proposed Missouri's progress report SIP addressed each element and therefore satisfied the requirements under 40 CFR 51.308(g).

In addition, pursuant to 40 CFR 51.308(h), states are required to submit, at the same time as the progress report SIP revision, a determination of the adequacy of their existing regional haze SIP and to take one of four possible actions based on information in the progress report. In its progress report SIP, Missouri determined that its regional haze SIP is sufficient to meet its obligations related to the reasonable progress goals for Class I areas affected by Missouri's sources. The State accordingly provided EPA with a negative declaration that further revision of the existing regional haze implementation plan was not needed at this time. See 40 CFR 51.308(h)(1). As explained in detail in the NPR, EPA proposed to determine that Missouri had adequately addressed 40 CFR 51.308(h) because the visibility data trends at the Class I areas impacted by Missouri's sources and the emissions trends of the largest emitters in Missouri of visibility-impairing pollutants both indicate that the reasonable progress goals for 2018 for these areas will be met or exceeded. Therefore, in our NPR, EPA proposed to approve Missouri's progress report SIP as meeting the requirements of 40 CFR 51.308(g) and (h).

EPA is taking final action to approve Missouri's regional haze five-year progress report and SIP revision, submitted August 5, 2014, as meeting the applicable regional haze requirements as set forth in 40 CFR 51.308(g) and (h).

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 30, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

For the reasons stated in the preamble, EPA amends 40 CFR part 52 as set forth below:

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

Organization of this document. The following outline is provided to aid in locating information in this preamble.

The State of Maine PSD program is established in 06-096 Code of Maine Regulations (CMR), Chapter 100 (Definitions Regulation), Chapter 113 (Growth Offset Regulation), and Chapter 115 (Major and Minor Source Air Emission License Regulations). Maine implements its PSD program requirements under Chapter 115. Revisions to the PSD program were last approved into the Maine SIP on February 14, 1996 (61 FR 5690). Maine has authority to issue and enforce PSD permits under its SIP-approved PSD program.

On February 14, 2013, the State of Maine Department of Environmental Protection (DEP) submitted a formal revision to its SIP. The SIP revision included the amendments to certain portions of Chapter 100 and Chapter 115 to incorporate PM 2.5 into the PSD permitting program. On May 31, 2016, Maine DEP submitted additional revisions to its PSD program for SIP approval, which includes minor changes to: (1) The Chapter 100 definition of “ambient increment;” (2) a portion of the Chapter 100 definition of “regulated pollutant;” and (3) the Chapter 100 definition of “significant emissions increase.” Pursuant to section 110 of the CAA, EPA is approving these revisions into the Maine SIP.

EPA performed a review of Maine's proposed revisions and has determined that they are consistent with EPA's PSD program regulations. Maine submitted for approval amendments to the definition of “ambient increment” at Chapter 100.11, amendments to the definition of “baseline concentration” at Chapter 100.16, a new definition for “PM 2.5 ” at Chapter 100.133, amendments to the definition of “PM 10 ” at Chapter 100.134, amendments to a portion of the definition of “regulated pollutant” at Chapter 100.149(I); and amendments to the definition of “significant emissions increase” at Chapter 100.156. Maine also submitted amendments to the section of Chapter 115 related to “innovative control technology waivers” and also added a section to Chapter 115 relating to major new and modified source growth analyses.

The previously SIP-approved definition of “ambient increment” has been amended to include PM 2.5 as a pollutant of consideration and to add specificity related to the time period that must be considered when determining existing source baseline emissions for PM 2.5 , PM 10 , sulfur dioxide (SO 2 ), and nitrogen dioxide (NO 2 ). These changes are relevant to conducting an increment consumption analysis under the State's PSD permit program.

Maine's approach in determining baseline emissions for purposes of an increment consumption analysis remains unchanged when compared to the previously approved provisions in Maine's SIP. The SIP revisions we are approving in this document adds PM 2.5 as an additional pollutant to consider when conducting an increment analysis, and clarifies in the definition of “ambient increment,” the emissions baseline years used in the analyses for each covered pollutant. Although Maine's approach to establishing a baseline emissions concentration as part of an increment consumption analysis differs to some extent from the approach taken under the federal PSD regulations codified at 40 CFR 51.166, EPA has determined that those minor differences do not result in a different baseline emissions concentration calculation and Maine's approach is therefore functionally equivalent to the federal PSD regulations. For example, Maine's regulation identifies a specific year, e.g., 2010 for PM 2.5, to be used to calculate baseline emissions concentrations for an increment consumption analysis. Although the approach taken under the federal PSD regulations would result in the use of a slightly different time period for calculating baseline emissions, EPA has analyzed the relevant permitting transactions using Maine's time period and the federal PSD regulations' time period and concluded that the calculation yields the same result in each case. Thus, the baseline emissions calculation for PM 2.5 under Maine's regulation yields the same result calculated under the federal PSD regulations.

The definition of “baseline concentration” at Chapter 100.16 has been amended to include a reference to PM 2.5 as a pollutant of consideration. The definition has also been revised in terms of formatting when compared to the previously SIP-approved definition. The PM 2.5 baseline concentration date is October 20, 2010, meaning the actual emissions representative of sources in existence on that date shall be included in determining the ambient baseline concentration for purposes of an increment determination. Emissions increases and decreases after the baseline concentration date shall impact available increment in the baseline concentration area. In a note to the definition of “baseline concentration,” Maine states the baseline area is considered to be the entire State of Maine, which is consistent with how Maine's PSD program has functioned in previous EPA SIP-approved versions.

Maine's SIP revision also adds a definition of “PM 2.5 ” at Chapter 100.133. The definition is consistent with EPA's treatment of PM 2.5 in the definition of “Regulated NSR Pollutant” at 40 CFR 51.166(b)(49)(i)( a ), with one exception. EPA's definition of “regulated air pollutant” states, among other things, that “PM 2.5 and PM 10 emissions shall include gaseous emissions from a source or activity which condense to form particulate matter at ambient temperatures.” EPA's definition also states that “[o]n or after January 1, 2011, such condensable particulate matter shall be accounted for in applicability determinations and in establishing emissions limitations for PM 2.5 and PM 10 in PSD permits.” Maine's definition of PM 2.5 became effective as state law on December 1, 2012, and therefore does not include EPA's January 1, 2011 date. Maine DEP has confirmed in a communication with EPA Region 1 that Maine's definition requires consideration of condensable particulate matter as of the effective date of the State's regulation (there is no explicit date at all included in Maine's definition). EPA believes this is a reasonable approach. Maine's definition of PM 2.5 also includes clarification as to how PM 2.5 is to be measured and designated, by cross referencing 40 CFR part 50, appendix L (Reference Method for the Determination of Fine Particulate Matter as PM 2.5 in the Atmosphere) and 40 CFR part 53 (Ambient Air Monitoring Reference And Equivalent Methods). We are approving Maine's definition of PM 2.5.

Revisions to the Maine SIP also includes an amendment to the definition of “PM 10 ” at Chapter 100.134. As with Maine's definition of PM 2.5 , Maine's definition of PM 10 is consistent with EPA's treatment of PM 2.5 in the definition of “Regulated NSR Pollutant” at 40 CFR 51.166(b)(49)(i)( a ), with the one exception regarding the date after which condensable particulate matter must be considered for purposes of PSD permitting. Again, EPA believes that Maine's approach is a reasonable one. Similar to the State's definition of “PM 2.5 ,” Maine's definition of PM 10 includes clarification as to how PM 10 is to be measured and designated, by cross referencing 40 CFR part 50, appendix J (Reference Method for the Determination of Fine Particulate Matter as PM 10 in the Atmosphere) and 40 CFR part 53 (Ambient Air Monitoring Reference And Equivalent Methods). We are approving Maine's definition of PM 10 .

A portion of the definition of “regulated pollutant” at Chapter 100.149(I) is being amended to clarify what precursor pollutants are to be regulated under Maine's PSD permitting program. Maine's treatment of SO 2 and NO X as precursors to PM 2.5 and volatile organic compounds and NO X as precursors to ozone is consistent with EPA's treatment of these respective precursors for purposes of PSD permitting as found in the federal definition of “Regulated NSR Pollutant” at 40 CFR 51.166(b)(49)(i)( b ).

The definition of “significant emissions increase” at Chapter 100.156 is being revised to include significant emissions increase rates for PM 2.5 and precursors to PM 2.5 (NO X and SO 2 ). This revision to Maine's SIP is consistent with the federal definitions of “Significant” at 40 CFR 51.166(b)(23)(i) and “Significant emissions increase” at 40 CFR 51.166(b)(39).

Chapter 115 has been amended to include revised text to the State's “Innovative control technology waiver” provision at Chapter 115(4)(A)(4)(f)(i)(d)(iii). The innovative control technology provision of EPA's PSD program is an optional element found at 40 CFR 51.166(s) and allows for an owner or operator to request approval for a system of innovative pollution control. Maine's amendment adds a provision which states that PM 10 , PM 2.5 , SO 2 , or NO 2 emissions may not significantly impact any nonattainment areas during the time period the new or modified source is reducing continuous emissions to a rate greater than or equal to the rate that would have been required by virtue of a best available control technology (BACT) determination. We are approving this amendment to Maine's “Innovative control technology waiver” provision because it is consistent with the intent of EPA's PSD regulations.

Maine has requested an additional provision to be approved into the SIP at Chapter 115(4)(A)(4)(h), entitled “Growth Analysis.” The Maine provision requires a permit applicant to provide an analysis of air quality impacts from all general, commercial, residential, industrial, and other growth in areas affected by a major modification or a major new source. This provision aligns with EPA's regulations at 40 CFR 51.166(n)(3)(ii) and (o)(2). In conjunction with Maine's definition of “ambient increment” at Chapter 100.11, “baseline concentration” at Chapter 100.16, and Maine's air quality impact analyses requirements contained in Chapter 115, Maine's additional provision satisfies requirements to conduct an ambient increment determination, as specified in EPA's regulation at 40 CFR 51.166(k)(1)(ii). We are approving this provision into Maine's SIP.

The State of Maine regulations found within 06-096 CMR Chapters 100 and 115 have been amended numerous times under state law since they were originally approved into the SIP. Not all of these state law amendments were submitted to EPA as formal SIP revisions. These “state-only” amendments resulted in new text being added, existing text being rearranged, and, in some cases, changes to how Maine regulations are codified. Due to such “state-only” amendments to Chapters 100 and 115, there are instances where the state regulation being submitted for approval into the SIP at this time does not mesh precisely within the existing codification structure of the Maine SIP. As a matter of substantive legal requirements, however, the regulations approved into the Maine SIP, including those we are approving today, are harmonious and clear.

Below, we describe exactly how each definition and provision we are approving into Maine's SIP through this document will be incorporated into the SIP. In certain instances, the amendments to the SIP are straightforward and need no detailed explanation. In other instances, however, we explain below for purposes of clarity how the amendments mesh with the existing SIP's structure and codification.

In the existing Maine SIP, the definition of “ambient increment” is codified at Chapter 100.11. The revised definition of “ambient increment” being acted on in this document is also codified at Chapter 100.11. The revised definition will supplant the existing definition at Chapter 100.11.

In the existing Maine SIP, the citations for “baseline concentration,” “PM 10, ” and “significant emissions increase” do not coincide with the citations of those terms being approved in this document. The existing citation for “baseline concentration” is “Chapter 100.15;” the existing citation for “PM 10 ” is “Chapter 100.122” and; the existing citation for “significant emissions increase” is “Chapter 100.144.” The action we are taking in this document will involve removing the text of the former definitions of “baseline concentration,” “PM 10 ,” and “significant emissions increase” from Chapter 100.15, 100.122, and Chapter 100.144, respectively, and indicate those removals by using the term “reserved” in those locations of the Maine SIP.

The revised definitions of “baseline concentration,” “PM 10 ,” and “significant emissions increase” that we are approving in this document will be codified in the Maine SIP as Chapter 100.16, Chapter 100.134, and Chapter 100. 156, respectively, in the same manner that they are codified under current state regulation. This change, however, results in two different terms (with correspondingly different definitions), each of which has an identical codification.

Specifically, “Chapter 100.16” will now be the correct citation for two different terms, as follows. Prior to our approval in this document of Maine's revise definition of “baseline concentration,” Chapter 100.16 was the SIP citation for the term “Begin actual construction.” After our approval in this document of Maine's revise definition of “baseline concentration,” Chapter 100.16 will be the correct SIP citation for two separate terms and their definitions: (1) “Begin actual construction”; and (2) “Baseline concentration.” EPA believes that implementation of the State's permitting program and the enforceability of these terms as part of that program will not be compromised because the content of the two definitions clearly is different and will have been approved by EPA on separate dates. Thus, in future legal proceedings, a complete and accurate citation to one of these two definitions should also include the date upon which EPA approved the definition in question into Maine's SIP in order to distinguish clearly one from the other. This result was necessary because Maine did not submit its entire revised Chapter 100 to EPA for approval into the SIP.

The revised definition of “PM 10 ” that we are approving in this document will be codified in the Maine SIP as Chapter 100.134. Chapter 100.134 will now be the correct citation for two different terms, as follows. Prior to our approval in this document of Maine's revise definition of “PM 10 ,” Chapter 100.134 was the SIP citation for the term “Recovery boiler.” After our approval in this document of Maine's definition of “PM 10 ,” Chapter 100.134 will be the correct SIP citation for two separate terms and their definitions: (1) “PM 10 ”; and (2) “Recovery Boiler.” EPA believes that implementation of the State's permitting program and the enforceability of these terms as part of that program will not be compromised because the content of the two definitions clearly is different and will have been approved by EPA on separate dates. Thus, a complete and accurate citation in a future legal proceeding to one of these two definitions should also include the date upon which EPA approved the specific definition in question into Maine's SIP in order to distinguish clearly one from the other. This result was necessary because Maine did not submit its entire revised Chapter 100 to EPA for approval into the SIP.

The revised definition of “significant emissions increase” that we are approving in this document will be codified in the Maine SIP as Chapter 100.156. Chapter 100.156 will now be the correct citation for two different terms, as follows. Prior to our approval in this document of Maine's revise definition of “Significant emissions increase,” Chapter 100.156 was the SIP citation for the term “Title I Modification.” After our approval in this document of Maine's definition of “Significant emissions increase,” Chapter 100.156 will be the correct SIP citation for two separate terms and their definitions: (1) “Significant emissions increase”; and (2) “Title I Modification.” EPA believes that implementation of the State's permitting program and the enforceability of these terms as part of that program will not be compromised because the content of the two definitions clearly is different and will have been approved by EPA on separate dates. Thus, a complete and accurate citation in a future legal proceeding to one of these two definitions should also include the date upon which EPA approved the specific definition in question into Maine's SIP in order to distinguish clearly one from the other. This result was necessary because Maine did not submit its entire revised Chapter 100 to EPA for approval into the SIP.

The new definition of “PM 2.5 ” that we are approving through this document will be codified in the Maine SIP as Chapter 100.133. Chapter 100.133 will now be the correct citation for two different terms, as follows. Prior to our approval through this document of Maine's definition of “PM 2.5 ” Chapter 100.133 was the SIP citation for the term “Reconstruction or reconstructed.” After our approval through this document of Maine's definition of “PM 2.5 ” Chapter 100.133 will be the correct SIP citation for two separate terms and their definitions: (1) “PM 2.5 ”; and (2) “Reconstruction or reconstructed.” EPA believes that implementation of the State's permitting program and the enforceability of these terms as part of that program will not be compromised because the content of the two definitions clearly is different and will have been approved by EPA on separate dates. Thus, a complete and accurate citation in a future legal proceeding to one of these two definitions should also include the date upon which EPA approved the specific definition in question into Maine's SIP in order to distinguish clearly one from the other. This result was necessary because Maine did not submit its entire revised Chapter 100 to EPA for approval into the SIP.

With respect to our approval of a paragraph (I) of the definition of “Regulated pollutant” (codified at Chapter 100.149 in the current Maine regulation), we recognize the definition of “Regulated pollutant” already exists in the SIP-approved version of Chapter 100 (codified at Chapter 100.137). The existing SIP-approved definition does not contain the required precursor language for PM 2.5 and ozone, and thus EPA will add paragraph (I) from the current Maine definition of “Regulated pollutant” to the SIP version of “Regulated pollutant” at Chapter 100.137. After our approval through this document of Maine's definition of “Regulated pollutant,” Chapter 100.137(I) will be the correct SIP citation for two separate provisions within the same definition. EPA believes that implementation of the State's permitting program and the enforceability of these terms as part of that program will not be compromised because the content of the two provisions clearly is different and will have been approved by EPA on separate dates. Thus, a complete and accurate citation in a future legal proceeding to one of these two provisions should also include the date upon which EPA approved the specific provision in question into Maine's SIP in order to distinguish clearly one from the other. This result was necessary because Maine did not submit its entire revised Chapter 100 to EPA for approval into the SIP.

In this SIP action we are also approving an amendment to the State's “Innovative control technology waiver” provision at Chapter 115(4)(A)(4)(f)(i)(d)(iii). We are also approving a new provision entitled “Growth Analysis” at Chapter 115(4)(A)(4)(h). We provide below, an explanation relating to the fact that Maine's Chapter 115 has been restructured in terms of its codification scheme since EPA's last SIP approval action on the chapter. Due to this restructuring, the way in which Maine references provisions in its February 14, 2013 submittal (consistent with the codification scheme contained in current state regulations) is different than how the Maine SIP is structured in terms of its codification scheme.

Chapter 115(4)(A)(4)(f)(i)(d)(iii) (the State's current codification) expands on a list of existing conditions earlier approved by EPA into Maine's SIP concerning prohibitions applicable to an innovative control technology waiver. The provision being approved in this document will be inserted in the Maine SIP by adding the new condition in its appropriate place within the existing regulation earlier approved into the SIP. This will be the case despite the fact that its codification does not align neatly with the codification scheme previously approved for the innovative control technology waiver. Specifically, Chapter 115(4)(A)(4)(f)(i)(d)(iii) will be placed between the Maine SIP's provisions codified at Chapter 115(VI)(B)(1)(b)(iv)(b) and Chapter 115(VI)(B)(1)(b)(iv)(c). This result was necessary because Maine did not submit its entire revised Chapter 115 to EPA for approval into the SIP. EPA believes the difference in codification does not affect the enforceability of this provision and that, as a substantive legal requirement, the new provision meshes as it should with the existing substantive requirements.

In this SIP action we are also approving a revised provision entitled “Growth Analysis,” which is currently codified under state regulation as Chapter 115(4)(A)(4)(h). The provision concerns air quality impact information an applicant must supply to Maine DEP as part of a PSD permit application. This provision is an amendment to an existing provision previously approved into the Maine SIP and codified as Chapter 115(III)(B)(5). Maine DEP and EPA communicated on how best to codify the new provision entitled “Growth Analysis” at Chapter 115(4)(A)(4)(h). Maine DEP concurred with EPA's assessment that the new provision replaces the older provision, which was previously approved into the Maine SIP. In this action, the new provision will supplant the older provision, and the Maine SIP will reflect the updated language by marking Chapter 115(III)(B)(5) as “reserved” and adding the provision entitled “Growth Analysis” at Chapter 115(4)(A)(4)(h) immediately after Chapter 115(III)(B)(5) in the Maine SIP. This result is necessary because Maine did not submit its entire revised Chapter 115 to EPA for approval into the SIP. EPA believes the difference in codification does not affect the enforceability of this provision and that, as a substantive legal requirement, the new provision meshes as it should with the existing substantive requirements.

Pursuant to section 110 of the CAA, EPA is approving the provisions described above in this document as submitted in Maine's February 14, 2013 submission to EPA. The EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revisions should relevant adverse comments be filed. This rule will be effective September 30, 2016 without further notice unless the Agency receives relevant adverse comments by August 31, 2016.

If the EPA receives such comments, then EPA will publish a document withdrawing this final rule and informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on the proposed rule. All parties interested in commenting on the proposed rule should do so at this time. If no such comments are received, the public is advised that this rule will be effective on September 30, 2016 and no further action will be taken on the proposed rule. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

In this rulemaking action, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference state provisions as described above into the Maine SIP. EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or may be viewed at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

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

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

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

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

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

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

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

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

• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

Part 52 of chapter I, title 40 of the Code of Federal Regulations is amended as follows:

I. Background

On April 8, 2016 (81 FR 20598), EPA published a notice of proposed rulemaking (NPR) for the Commonwealth of Pennsylvania. In the NPR, EPA proposed approval of amendments to chapters 121 and 139 of title 25, Environmental Protection, of the Pennsylvania Code (25 Pa. Code). The formal SIP revision was submitted by the Commonwealth of Pennsylvania on June 15, 2015.

On June 25, 2015, the Commonwealth of Pennsylvania submitted a formal SIP revision that amends chapters 121 and 139 of 25 Pa. Code. Amendments to 25 Pa. Code section 121.1 in chapter 121 add definitions for the terms “condensable particulate matter” and “filterable particulate matter.” The amendments to 25 Pa. Code section 139.12 in chapter 139 add the requirement to measure and report filterable and condensable PM and explain the compliance demonstration process. The amendment to 25 Pa. Code section 139.53 specifies to whom monitoring reports must be submitted. Other specific requirements of chapters 121 and 139 of 25 Pa. Code and the rationale for EPA's proposed action are explained in the NPR and will not be restated here. No public comments were received on the NPR.

EPA is approving the June 25, 2015 Pennsylvania SIP revision that amends specific provisions within chapters 121 and 139 of 25 Pa. Code. The amendments clarify testing and sampling methods and reporting requirements for stationary sources of PM and add the requirement to measure and report filterable and condensable PM.

In this rulemaking action, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the revised Pennsylvania regulations, published in the Pennsylvania Bulletin, Vol. 44 No. 15, April 12, 2014, and effective on April 12, 2014. The EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or may be viewed at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

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

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

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

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

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

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

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

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

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

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

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 30, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This rulemaking action, approving amendments to Pennsylvania's regulations regarding testing and sampling methods for stationary sources of PM, including filterable and condensable PM, may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

40 CFR part 52 is amended as follows:

I. Background

On May 2, 2016 (81 FR 26188), EPA published a notice of proposed rulemaking (NPR) for the State of Maryland. In the NPR, EPA proposed approval of the “Baltimore Serious Nonattainment Area 0.08 ppm 8-Hour Ozone State Implementation Plan Demonstrating Rate of Progress for 2008, 2011 and 2012 Revision to 2002 Base Year Emissions; and Serious Area Attainment Demonstration, SIP Number: 13-07,” (the Serious Area Plan) submitted by the Maryland Department of the Environment (MDE) on July 22, 2013. The SIP revision submittal included updates to the 2002 base year emissions inventory and 2008 RFP plan that EPA previously approved into the Maryland SIP, RFP for 2011 and 2012, an attainment demonstration, including modeling and weight of evidence, RFP and attainment contingency measures, a reasonably available control measures (RACM) determination, and 2012 MVEBs. After EPA determined Baltimore had attained the 1997 8-hour ozone standard, Maryland, by letter dated October 20, 2015, withdrew the attainment demonstration, including modeling and weight of evidence, contingency measures for attainment, and the RACM analysis from consideration as a SIP revision. Therefore, those elements are not addressed in this rulemaking action.

On June 4, 2010, EPA approved Maryland's moderate area RFP that provided for a 15 percent (%) emissions reduction from 2002 to 2008, contained in the Moderate Area Plan. 75 FR 31709. Maryland, however, needed to update the 2008 target levels for its Serious Area Plan because they are the basis for the new 2011 and 2012 target level calculations for RFP. Maryland also needed to update its 2002 base year inventory, which is the basis for the 2008 target levels and its 15% RFP plan. In the Serious Area Plan, MDE updated its 2002 base year inventory and 15% RFP plan, including 2008 target levels, to reflect changes to EPA's approved model for on-road mobile sector emissions, from the Mobile Source Emission Factor Model (MOBILE) to the Motor Vehicle Emission Simulator (MOVES) model, as well as updates to EPA's NONROAD model.

Serious 8-hour ozone nonattainment areas are subject to RFP requirements in section 182(c)(2)(B) of the CAA that require an average of 3% per year of volatile organic compounds (VOC) and/or oxides of nitrogen (NO X ) emissions reductions for all remaining 3-year periods after the first 6-year period out to the area's attainment date (2008-2011 and 2011-2012). For a serious area, such as the Baltimore Area, with an approved 15% rate of progress (ROP) plan under the 1-hour standard, states can use reductions from VOC or NO X or a combination of either. The Serious Area Plan contains 2011 and 2012 RFP for the Baltimore Area, including the calculation of 2011 and 2012 target levels, 2011 and 2012 projected inventories, and an accounting of the emission reductions from permanent and enforceable emission control measures achieved to meet RFP. The Serious Area Plan also includes contains contingency measures for failure to meet the 2012 RFP milestone. Finally, the Serious Area Plan includes 2012 MVEBs the Baltimore Area, set at 93.5 tons per day (tpd) NO X and 40.2 tpd VOC.

EPA reviewed the RFP plan for the Baltimore Area submitted in the Serious Area Plan, including updates to the 2008 RFP target levels previously SIP approved by EPA, the 2011 and 2012 RFP targets levels, control measures used to meet RFP, and contingency measures for failure to meet the 2012 RFP target, and found them to be approvable. In addition, EPA determined that MDE used acceptable techniques and methodologies to update the 2002 base year and 2008 projected inventories, and to develop the 2011 and 2012 milestone year projected inventories and found them approvable. Furthermore, EPA has found the Baltimore Area's 2012 MVEBs adequate for transportation conformity purposes and approvable. For details on EPA's analysis, see the Technical Support Documents (TSDs) for this rulemaking action, which are available online at http://www.regulations.gov, Docket number EPA-R03-OAR-2015-0788.

Other specific requirements of the Baltimore Area serious area RFP plan, inventories, RFP contingency measures, and MVEBs, and the rationale for EPA's proposed action are explained in the NPR and will not be restated here. No public comments were received on the NPR.

EPA is approving the updates to the 2002 base year inventory, updates to the 2008 RFP plan and associated 2008 projected emissions inventory, the 2011 and 2012 RFP plan and associated projected emission inventories, the contingency measures for failure to meet 2012 RFP, and the 2012 MVEBs for the Baltimore Area submitted in MDE's July 22, 2013 Serious Area Plan. The other parts of the Serious Area Plan were withdrawn by Maryland.

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

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

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

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

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

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

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

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

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

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

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 30, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action.

This action, pertaining to the Baltimore Area serious RFP plan, inventories, RFP contingency measures, and MVEBs, may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

40 CFR part 52 is amended as follows:

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

Table 1 lists the rules under MCAPCD Regulation II, “Permit System” addressed by this action with the dates that they were adopted by the local air agency and submitted by the California Air Resources Board (CARB).

On February 28, 1991, the EPA determined that the submittal for the MCAPCD rules listed in Table 1 met the completeness criteria in 40 CFR part 51 Appendix V, which must be met before formal EPA review.

EPA approved the rules listed in Table 2 into the MCAPCD portion of the California SIP on the dates listed. When the rules listed in Table 1 are approved by EPA, those rules will take the place of the existing SIP approved rules listed in Table 2.

Section 110(a) of the CAA requires States to submit regulations that will assure attainment and maintenance of the National Ambient Quality Air Quality Standards (NAAQS). These rules were developed as part of the local agency's general programmatic requirement to implement the requirement commonly referred to as the minor or general New Source Review (NSR) program. The revisions contained in the submitted rules listed in Table 1 are mostly administrative in nature. Rule 2.3 prohibits the transfer of an Authority to Construct or Permit to Operate without written approval. Rule 2.5 provides the timeline for an Authority to Construct or an application for a Permit to Operate to expire and/or be extended. Rule 2.7 is renumbered from Rule 2.9 and provides additional enforceability by clarifying that equipment cannot be operated contrary to permit conditions specified in the permit. Rule 2.10 is a new rule that allows MCAPCD to require data, sampling, testing, and monitoring to determine a stationary source's emissions. There are no substantive relaxations to these rules.

The TSD, which is available in the docket for today's rulemaking, has more information about these rules.

SIP rules must be enforceable (see CAA section 110(a)(2)), must not interfere with applicable requirements concerning attainment and reasonable further progress or other CAA requirements (see CAA section 110(l)), and must not modify certain SIP control requirements in nonattainment areas without ensuring equivalent or greater emissions reductions (see CAA section 193). The submitted rules are revisions to existing SIP approved general NSR permit program requirements under 40 CFR 51.160-51.164. The revisions are primarily administrative in nature (reformatting, providing additional clarity and enforceability).

We believe these rules are consistent with the relevant policy and guidance regarding enforceability and SIP relaxations. These changes are mostly administrative in nature and their approval will not interfere with any applicable requirement concerning attainment and reasonable further progress, or any other CAA application requirement.

The TSD, which is available in the docket for today's rulemaking, has more information on our evaluation.

As authorized in section 110(k)(3) of the Act, the EPA is fully approving the submitted rules because we believe they fulfill all relevant requirements. We do not think anyone will object to this approval, so we are finalizing it without proposing it in advance. However, in the Proposed Rules section of this Federal Register , we are simultaneously proposing approval of the same submitted rules. If we receive adverse comments by August 31, 2016, we will publish a timely withdrawal in the Federal Register to notify the public that the direct final approval will not take effect and we will address the comments in a subsequent final action based on the proposal. If we do not receive timely adverse comments, the direct final approval will be effective without further notice on September 30, 2016. This action will incorporate these rules into the federally enforceable SIP.

Please note that if the EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, the EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the MCAPCD rules described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these documents available electronically through www.regulations.gov and in hard copy at U.S. Environmental Protection Agency Region IX (AIR-3), 75 Hawthorne Street, San Francisco, CA 94105-3901.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the 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 September 30, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the Proposed Rules section of today's Federal Register , rather than file an immediate petition for judicial review of this direct final rule, so that the EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. 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:

I. Background

NASA published a proposed rule in the Federal Register at 81 FR 23667 on April 22, 2016, to revise NFS 1816.4 and 1852.216-77 to clarify NASA's award fee evaluation and payment processes. One public comment was received in response to the proposed rule.

NASA reviewed the public comment in the development of the final rule. A discussion of the comment and the changes made to the rule as a result of this comment is provided, as follows:

No change was made in the final rule in response to the public comment received.

Comment: Respondent stated that they do not support this rule.

Response: The respondent did not identify any specific areas of concern. Accordingly, this rule provides needed clarification to NASA's award fee processes to enhance the efficient administration of award fee incentives.

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

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

NASA is amending the NFS to clarify award fee process by incorporating terms used in award fee contracting; guidance relative to final award fee evaluations; release of source selection information; and the calculation of the provisional award fee payment percentage in NASA end-item award fee contracts.

No changes were made to the proposed rule in developing the final rule. No comments from small entities were submitted in reference to the Regulatory Flexibility Act request in the proposed rule. Therefore, the proposed rule has been adopted as final.

NASA does not expect this final rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the guidance largely clarifies aspects relative to the award fee evaluation and payment process resulting in a more consistent use and administration of award fees within NASA providing all entities both large and small a positive benefit. An analysis of data in the Federal Procurement Data System (FPDS) revealed that award fee contracts are primarily awarded to large businesses with large dollar contracts. An analysis of FPDS data over the past three years (FY2013 through FY2015) showed an average of 157 award fee contracts were awarded at NASA per year, of which 33 (approximately 20%) were awarded to small businesses. Thus, the application of the award fee revisions contained in this rule do not apply to a substantial number of small entities.

The rule imposes no reporting, recordkeeping, or other information collection requirements. There are no significant alternatives that could further minimize the already minimal impact on businesses, small or large.

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

Accordingly, 48 CFR parts 1816 and 1852 are amended as follows:

The purpose of this final rule is to implement minimum performance standards, a scoring system, and a pass/fail threshold for new model transit buses procured with FTA financial assistance authorized under 49 U.S.C. Chapter 53. Consistent with 49 U.S.C. 5318(e), FTA recipients are prohibited from using FTA financial assistance to procure new buses that have not met the minimum performance standards established by this rule. The standards and scoring system address the following categories: Structural integrity, safety, maintainability, reliability, fuel economy, emissions, noise, and performance. Buses must meet a minimum performance standard in each of these categories in order to receive an overall passing score and be eligible for purchase using FTA financial assistance. Buses can achieve higher scores with higher performance in each category, and today's rule establishes a numerical scoring system based on a 100-point scale so that buyers can more effectively compare vehicles.

To minimize disruption to transit vehicle manufacturers, consistent with the proposal, today's rule adopts many of the existing testing procedures and standards used under the current bus testing program. The rule, however, imposes some changes including: (1) New inspections at bus check-in to verify the bus configuration is within its weight capacity rating at its rated passenger load and an inspection to determine if the major components of the test bus match those identified in the Buy America pre-audit report; (2) elimination of the on-road fuel economy testing and substituting the fuel economy results obtained during the emissions test; and (3) revision to the payloading procedure to recognize the manufacturer's “standee” passenger rating. The final rule does not add any new tests to the existing bus testing program—in fact, FTA is eliminating two tests, the on-road fuel economy test, as equivalent data could be derived from the more accurate dynamometer testing, and the shakedown test, which is considered redundant to the structural durability test and no bus models have historically failed this test.

Because FTA provides financial assistance to State and local agencies operating public transportation systems, covering up to eighty-five percent (85%) of a vehicle's capital cost, while the State or local government provides at least fifteen percent (15%) matching share, there is a strong incentive by FTA and local agencies to ensure that those funds are used effectively and efficiently. As part of its stewardship of those funds, Congress directed FTA in 1987 to establish a bus testing program whereby new model buses would first be tested to ensure their ability to withstand the rigors of regular transit service before FTA funds would be spent on those vehicles. In the following years, FTA accumulated comprehensive test data on the scores of buses that had undergone testing, but the program did not assign a comparative ranking to the vehicles. Further, because the program was intended to provide information on a vehicle's performance and Congress did not authorize FTA to use the test data to disqualify a vehicle from participating in FTA-assisted procurements, FTA did not establish a pass/fail performance baseline. Since that time, several tested buses did not meet their expected service lives at the cost of millions of dollars to transit agencies and significant inconvenience to transit riders. In MAP-21, Congress directed FTA to establish a new pass/fail standard for tested buses, including a weighted scoring system that would assist transit bus buyers in selecting an appropriate vehicle. FTA issued the Notice of Proposed Rulemaking (NPRM) for this action on June 23, 2015. Today's final rule establishes a new scoring system and a pass/fail standard for buses tested under FTA's existing bus testing program, as well as making other administrative changes.

Although Section 20014 of the Moving Ahead for Progress in the 21st Century Act (MAP-21) (Pub. L. 121-141) retained the existing bus testing categories of maintainability, reliability, safety, performance, structural integrity, fuel economy, emissions, and noise in the existing 49 U.S.C. 5318(a), Section 20014 also expanded 49 U.S.C. 5318(e) by adding three new requirements on the use of Chapter 53 funding to acquire new bus models. The first is that new bus models must meet performance standards for maintainability, reliability, performance (including braking performance), structural integrity, fuel economy, emissions, and noise. The second is that new bus models acquired with Chapter 53 funds must meet the minimum safety performance standards established pursuant to section 5329(b). The third is that the new bus model must satisfy an overall pass/fail standard based on the weighted aggregate score derived from each of the existing test categories (maintainability, reliability, safety, performance (including braking performance), structural integrity, fuel economy, emissions, and noise).

Today's rule does not address the minimum safety performance standards for public transportation vehicles required under 49 U.S.C. 5318(e)(1)(B)(ii). FTA proposed a National Public Transportation Safety Plan (81 FR 6372, February 5, 2016), pursuant to 49 U.S.C. 5329(b), which stated that the minimum safety performance standards may eventually be the subject of rulemaking, proposed voluntary vehicle performance standards in the interim, and sought comment on four questions posed in the proposed Plan.

Today's rule is taking the following actions, the first of which is required by MAP-21 as part of the new “pass/fail” requirement, and the remainder of which are discretionary actions to strengthen the program:

• Establish testing procedures and establish minimum performance standards, which are generally based upon the pre-MAP-21 tests, and a pass/fail scoring system for new bus models, with a minimum passing score of 60 points. A bus model could receive up to an additional 40 points based on its performance above the proposed minimum performance standard in particular test categories. Buses would need to achieve at least a minimum score in each category in order to pass the overall test and be eligible for procurement using FTA financial assistances.

• Establish check-in procedures, including FTA approval, for new bus models proposed for testing.

• Require transit vehicle manufacturers to submit Disadvantaged Business Enterprise (DBE) goals to FTA prior to scheduling a test.

• Determine a new bus model's total passenger load based on the manufacturer's maximum passenger rating, including accommodations for standees.

• Establish a simulated passenger weight of 150 lbs. for seated and standing (standee) passengers, and a weight of 600 lbs. for passengers who use wheelchairs.

• Require test model buses to identify the country-of-origin for the components of the test vehicle to facilitate a transit agency's ability to compare it with the actual production model.

• The replacement of the on-road fuel economy test with the fuel economy testing already conducted during the emissions test on the chassis dynamometer.

Generally, FTA is adopting the test procedures that were proposed in the NPRM, although FTA, is making a small number of changes to some test procedures as a result of comments received in response to the NPRM. FTA is adding a set of brake stops at gross passenger load as part of the Braking Test; measuring noise levels while traversing road irregularities as part of the Noise Test; and eliminating the Shakedown Test and moving its single point score value into the Structural Durability Test. Further, FTA is not adopting the proposal that the test unit bus must be Buy America-compliant. Instead, FTA only is requiring that the manufacturer provide the country of origin for the test vehicle's major components, which FTA believes will help transit agencies ensure that the tested bus is similar to the bus the will be completed in production. In addition, FTA is making a few non-substantive amendments, replacing the term “grantee” with “recipient” to bring it into conformity with standard FTA usage, and cross-referencing FTA Circular 5010's categorization of a vehicle's useful service life instead of repeating it in the regulatory text.

The NPRM sought comment on establishing testing procedures, performance standards, and a scoring system for remanufactured vehicles sold by third-party vendors and procured using FTA financial assistance. Based on the comments received, FTA has concluded that further consideration is warranted, and therefore, is not extending the bus testing requirement to remanufactured buses through today's final rule. Given the growing investment in Federal and local dollars in remanufactured buses, however, and the emphasis on public transit safety in MAP-21, FTA believes that it is responsible Federal stewardship to ensure that remanufactured buses meet expectations for reliability and durability and will address remanufactured buses in a subsequent rulemaking action.

Table 1 below summarizes the potential benefits and costs of this rule that FTA was able to quantify over 10 years and using a 3 and 7 percent discount rate. Quantified costs stem from shipping buses to the testing facility, manufacturer testing fees, having repair personnel for bus manufacturers available at the testing site, new paperwork requirements, and increases to the resources needed to operate the bus testing program (which represents most of the quantified costs). Unquantified costs include remedial actions to buses that do not pass the proposed test (which may extend to all the buses in a model represented by the tested bus) and potential improvements to buses to obtain a higher testing score. However, given that 41 of 49 buses tested between January 2010 and February 2013 would have satisfied the proposed performance standards without any design changes, FTA believes that the proposed requirements would not drive systemic changes to all transit bus models. Quantified benefits are from a reduction in unscheduled maintenance costs. The total annual program cost impact of this rule is estimated to be $159,369. The total annual program benefit is estimated to be $531,990. The resulting cost and benefits are presented in Table 1.

FTA's grant programs, including those at 49 U.S.C. 5307, 5310, 5311 and 5339, assist transit agencies with procuring buses. The Federal transit program allows FTA to provide up to 85% funding for each bus. In 2013, for example, FTA funds assisted in the procurement of 8,934 new vehicles, of which approximately 5,600 buses and modified vans were covered under the existing testing program. The testing program has its origins in Section 317 of the Surface Transportation and Uniform Relocation Assistance Act of 1987 (STURAA, Pub. L. 100-17), which provided that no funds appropriated or made available under the Urban Mass Transportation Act of 1964, as amended, were to be obligated or expended for the acquisition of a new model bus after September 30, 1989, unless a bus of such model had been tested to ensure that the vehicle “will be able to withstand the rigors of transit service” (H. Rept. 100-27, p. 230). In subsection 317(b), Congress mandated seven specific test categories—maintainability, reliability, safety, performance, structural integrity, fuel economy, and noise—augmenting those tests with the addition of braking performance and emissions testing through section 6021 of the Intermodal Surface Transportation Efficiency Act of 1991 (Pub. L. 102-240). These requirements were subsequently codified at 49 U.S.C. 5318.

FTA issued its initial NPRM in May 1989 (54 FR 22716, May 25, 1989) and an interim Final Rule three months later (54 FR 35158, August 23, 1989), establishing a bus testing program that submitted vehicles to seven statutorily-mandated tests resulting in a test report and requiring transit bus manufacturers to submit that completed test report to transit agencies before FTA funds could be expended to purchase those vehicles. Although Congress did not authorize FTA to withhold financial assistance for a vehicle based on the data contained in a test report, FTA expected that the test report would provide accurate and reliable bus performance information to transit authorities that could be used in their purchasing and operational decisions.

This system remained in place for over twenty years. During the intervening period, however, a handful of bus models that had documented problems in their test reports were able to enter transit service, most notably, a fleet of 226 articulated buses that one of the Nation's largest transit agencies ordered in 2001. After paying $87.7M of the $102.1M contract, the transit agency stopped payments in 2005 due to unresolved problems concerning the suspension systems and structural cracks around the articulation joint, near the axles, and in the rear door header, triggering years of litigation. In addition, in 2009, the transit agency abruptly pulled all of these models from service for safety concerns following a structural failure related to the articulation joint, resulting in lengthier and more crowded commutes for thousands of transit riders. In May 2012, a local court ruled that the transit agency could sell the buses for scrap metal, a move that generated only $1.2M for vehicles that had served barely half of their FTA-funded service lives.

In 2012, MAP-21 amended 49 U.S.C. 5318 by adding new requirements to subsection 5318(e), Acquiring New Bus Models. Importantly, it shifted the program to one where recipients could only use FTA funding to procure buses that passed FTA's testing program, which now included a bus model scoring system and a pass/fail standard based on the weighted aggregate score for each of the existing performance standards (maintainability, reliability, performance (including braking performance), structural integrity, fuel economy, emissions, and noise).

MAP-21 also amended section 5318(e) to require that new bus models meet the minimum safety performance standards to be established by the Secretary of Transportation pursuant to 49 U.S.C. 5329(b). In the recently-proposed National Public Transportation Safety Plan (81 FR 6372, February 5, 2016), FTA proposed to establish voluntary vehicle performance standards as an interim measure, acknowledging that minimum safety performance standards eventually may be the subject of rulemaking, and sought comment on four questions posed in the proposed Plan.

The primary purpose of today's rule is to establish minimum performance standards, a new bus model scoring system, and a pass/fail standard. In developing the proposals contained in the NPRM, FTA engaged in extensive discussions with transit industry stakeholders through the use of public webinars, teleconferences, and presentations at industry conferences. Participants in these public outreach efforts included transit vehicle manufacturers, component suppliers, public transit agencies, State departments of transportation, and Bus Testing Facility personnel, and their contributions were reflected in the aggregate scoring system and pass/fail criteria contained in the NPRM.

In addition to implementing the statutory mandates, FTA proposed other administrative changes that would adjust the passenger payloading process to better reflect industry practice and ensure that buses tested at the facility comply with FTA Civil Rights and Buy America requirements regarding disadvantaged business enterprises and domestic content, respectively.

Finally, FTA sought comment on establishing a bus testing requirement and scoring system for remanufactured buses sold by third parties and procured using FTA funds.

FTA received a total of 22 comments in response to the NPRM, including comments from transit bus manufacturers, remanufacturers of transit buses, national and state transit associations, and transit agencies procuring transit buses. FTA also received several comments from fire safety advocates and component manufacturers, who urged FTA to adopt fire safety standards for materials used in bus interiors, including bus seats, which exceed Federal Motor Vehicle Safety Standard (FMVSS) 302. As noted above, although Congress directed FTA to establish minimum safety performance standards for vehicles used in public transportation in 49 U.S.C. 5329(b), FTA has not yet initiated such a rulemaking and those comments, however well-intentioned, are beyond the scope of today's regulatory action.

Although today's final rule contains much of what was proposed in the NPRM, FTA is making some changes to the test procedures as a result of comments received in response to the NPRM. FTA is adding a set of brake stops at gross passenger load as part of the Braking Test; measuring noise levels while traversing road irregularities as part of the Noise Test; and eliminating the Shakedown Test and moving its single point score value into the Structural Durability Test. Further, FTA is removing the proposal that the test unit bus be Buy America-compliant, and instead, is only requiring the manufacturer to provide the country of origin for the test vehicle's major components, which FTA believes will help transit agencies ensure that the tested bus is similar to the bus that will be produced and delivered. In addition, FTA is making a few non-substantive technical amendments, replacing the term “grantee” with “recipient” to bring it into conformity with standard FTA usage, and cross-referencing FTA Circular 5010's categorization of a vehicle's useful service life instead of repeating it in the regulatory text.

FTA proposed to amend the purpose of the regulation to reflect a new pass/fail test and scoring system.

Comments Received: FTA did not receive any comments on this section.

Agency Response: FTA is including this section in the final rule without change.

FTA proposed no changes, as the requirements of this part continue to apply to recipients of Federal financial assistance under 49 U.S.C. Chapter 53.

Comments Received: FTA did not receive any comments on this section.

Agency Response: FTA is including this section in the final rule without change.

FTA proposed changing the definition of Curb Weight from “Curb weight means the weight of the empty, ready-to-operate bus plus driver and fuel.” to “ Curb weight means the weight of the bus including maximum fuel, oil, and coolant; but without passengers or driver.”

FTA proposed changing the definition of Gross Weight from “Gross weight, also gross vehicle weight, means the curb weight of the bus plus passengers simulated by adding 150 pounds of ballast to each seating position and 150 pounds for each standing position (assumed to be each 1.5 square feet of free floor space).” to “the seated load weight of the bus plus 150 pounds of ballast for each rated standee passenger, up to and including, the maximum rated standee passenger capacity identified on the bus interior bulkhead”.

FTA proposed changing the definition of Seated Load Weight from “Seated load weight means the weight of the bus plus driver, fuel, and seated passengers simulated by adding 150 pounds of ballast to each seating position.” to “the curb weight of the bus plus seated passengers simulated by adding 150 pounds of ballast to each seating position and 600 pounds per wheelchair position.” This 600 pound figure is based on the minimum load-bearing capacity for wheelchair lifts and ramps in the USDOT's accessible bus specifications at 49 CFR 38.23(b)(1) and (c)(1).

Comments Received: FTA received two comments on this section. One commenter suggested that buses be tested at their maximum Gross Vehicle Weight Rating (GVWR) and Gross Axle Weight Rating (GAWR), and that loading a bus based on the number of seated and standing passengers (using a simulated weight of 150 pounds for each passenger and 600 pounds for each wheelchair location) would not accurately reflect a fully loaded bus or actual operating conditions. The other commenter sought clarification about the simulated passenger payload of 150 pounds per person, believing that FTA had raised it to 175 pounds in a previous regulatory action.

Agency Response: FTA does not support testing a bus at its maximum GVWR and GAWR for several reasons. First, unlike trucks that transport cargo and axle loads that must be monitored, buses transport people and are loaded based on the number of available seat/wheelchair positions and the amount of open floor space where standees are allowed by the bus operator, regardless of the vehicle's weight ratings. Second, in actual transit use, the capacity of a transit bus is not based on the vehicle's GVWR or GAWR limit, but rather, on the vehicle's actual passenger capacity. FTA will allow bus manufacturers to request that the bus be loaded up to its maximum weight rating when the resulting gross vehicle weight at the manufacturer's rated passenger load is less than the GVWR to allow the manufacturer the flexibility to adjust the seating layouts up to the full weight capacity of the bus model. If a bus's advertised passenger capacity is well below its weight ratings, a manufacturer may not increase the length of the vehicle to accommodate additional passengers because an increase in the length of a tested bus model is considered a major change in configuration and could result in additional testing.

With regard to the commenter who sought clarification on the simulated passenger weight, FTA had proposed raising the weight from 150 pounds to 175 pounds in a 2011 Federal Register Notice (76 FR 13580, March 14, 2011), but that proposal was subsequently withdrawn (77 FR 76597, December 14, 2012).

Therefore, FTA is adopting this section in the final rule without change.

FTA also posed a series of questions seeking comment on whether remanufactured buses ( i.e., previously owned buses that have undergone substantial structural, mechanical, electrical, and/or cosmetic rebuilding and are sold to a transit agency other than the vehicle's original owner) should be subject to the bus testing requirement. As FTA explained in the NPRM, FTA had not previously extended the testing requirements to these types of buses because, until recently, transit agencies were only rebuilding their existing buses as part of their fleet maintenance. However, FTA is aware that remanufactured buses are now being offered by third-parties to transit agencies as a less expensive alternative to acquiring new buses. FTA therefore is concerned that these models could be introduced as de facto new buses or purchased in lieu of new buses, without having to go through the same testing requirements as a new bus model. However, because FTA had various questions about how to apply the bus testing program to this category of vehicles, FTA sought comment through the NPRM.

One manufacturer of new transit buses, one transit agency, one trade association, and two bus remanufacturers submitted comments, all of whom agreed that remanufactured buses need to meet safety and durability requirements, but disagreeing on the preferred method. The manufacturer of new buses supported the standardized testing of remanufactured buses, believing that “remanufactured buses should undergo the same rigorous testing that new buses and coaches must meet in order to ensure their safety and reliability,” recommending that the final rule include provisions that ensure that the original bus manufacturer is not referenced in a test report to limit confusion and to prevent a company from selling remanufactured vehicles using the original bus manufacturer's name for marketing purposes. In contrast, the remanufacturers said their vehicles already undergo extensive testing and analysis before, during, and after the remanufacturing process to ensure the vehicles' safety and durability, and that additional testing at Altoona would be ineffective and redundant.

FTA is also aware that procuring remanufactured buses is being advertised in trade magazines and at trade shows as a less expensive alternative to procuring a newly built bus, and submitting both new and remanufactured vehicles to the same testing program could place both on an equal footing and ensure the safety and reliability of each. Furthermore, the national trade association's comments noted some issues within the trucking industry related to remanufactured equipment that could compromise safety and reliability of vehicles. Given Congressional direction in MAP-21 to augment FTA's safety responsibilities and to strengthen the bus testing program through today's regulatory changes, FTA believes the subject of remanufactured buses should undergo further review and consideration and will address the subject in a later rulemaking.

FTA proposed to amend this section to reflect that the recipient must certify that a bus has received a passing test score, but acknowledging that parties may seek assistance from FTA, consistent with FTA's role in reviewing partial testing requests as described in section 665.11(d). FTA is also removing the term “Grantee” from the section heading and throughout this part, as FTA now uses the term “recipient.”

Comments Received: FTA did not receive any comments on this section.

Agency Response: FTA is including this section in the final rule without change.

FTA proposed new entrance requirements for a bus to enter the bus testing program. Before submitting a new bus model for testing, the transit vehicle manufacturer (TVM) would have to submit its disadvantaged business enterprise (DBE) goals to FTA consistent with the Department's DBE regulations in 49 CFR part 26. Test model buses would also need to comply with applicable FMVSS requirements in 49 CFR part 566, Manufacturer Identification; 49 CFR part 567, Certification; and 49 CFR part 568, Vehicle Manufactured in Two or More Stages—All Incomplete, Intermediate and Final-Stage Manufacturers of Vehicle Manufactured in Two or More Stages. Bus models would also need to identify the maximum rated quantity of standee passengers identified on the interior bulkhead in 2 inch tall or greater characters; be capable of negotiating the Durability Test course at the requisite test speed under all conditions of loading (curb weight, SLW, and GVW); and be capable of following the test duty cycles used for Fuel Economy and Emissions Tests within the test procedure for allowable speed deviation. Lastly, FTA proposed that bus models submitted would need to satisfy the domestic content requirements for rolling stock in 49 CFR part 661, Buy America Requirements.

FTA also proposed a technical amendment to section 665.11(g) reflecting the addition of Appendix B to this part, resulting in the relabeling of the former appendix as the new “Appendix A.”

Comments Received: FTA received multiple comments on this section. One commenter supported applying the Disadvantaged Business Enterprise (DBE) and Buy America requirement to bus models submitted for testing, stating that an inspection of a vehicle's domestic content prior to introducing a new foreign bus model is vital to preserve the integrity and reliability of the testing program and provides a level playing field among competitors, noting the importance of the test unit matching the composition of subsequent production units. Another commenter indicated that documentation of the vehicle's domestic content will assist future purchasers to assess the impact that changes in components could have on a vehicle's Buy America compliance. In contrast, several commenters opposed the Buy America content proposal—two noted that the buses submitted for testing are typically the private property of the bus manufacturer and are not being procured with FTA funds, with FTA funding serving as a determinant of Buy America applicability. Another commenter indicated that the requirement will discourage innovation by locking buses into a particular configuration and leaving no leeway for the introduction of new technologies. Another commenter requested that FTA consider alternative bus service life categories that account for the risk to grantees that procure new technology vehicles.

Agency Response: FTA is eliminating the proposed Buy America content requirement from section 665.11(a)(5) in the final rule. Instead, FTA will require that the manufacturing country of origin for the test vehicle's major components be documented by the TVM during the test scheduling process—these would include the vehicle shell, axles, brakes, propulsion power system and auxiliary power systems (engine, transmission, traction batteries, electric motor(s), fuel cell(s)), and the primary energy storage and delivery systems (fuel tanks, fuel injectors & manifolds, and the fuel injection electronic control unit).

This is a modification from the NPRM, which proposed that all buses submitted for testing meet the domestic content requirements of the FTA Buy America regulation. The primary focus of the proposal was to ensure that the design configuration of the test unit bus matched subsequent production units. However, commenters made FTA aware that the test unit bus may not be fully representative of all production units, and that grantees have the ability to specify changes in a production unit's components and configuration. These changes may subject the bus to additional testing, but that is a decision that the purchaser must knowingly make. In addition, bus models delivered for testing do not always include all of the ancillary systems (seats, wheelchair tie-downs, passenger information systems, etc.) that may well be part of the domestic content calculation of a particular bus procurement but these systems are not evaluated by the bus testing program, nor are they required in order for the vehicle to under testing. Finally, changes in, or the inclusion of, components may also alter a production vehicle's domestic content, and documenting the test unit vehicle's domestic content in a permanent test report may give a false indication of a vehicle's Buy America content. FTA acknowledges that the pre-award and post-delivery audits required by 49 U.S.C. 5323(m) and 49 CFR part 663 are the only acceptable confirmation of a vehicle's Buy America compliance and for that reason, TVMs will not be required to document a vehicle's compliance with Buy America during the check-in process.

However, because the primary objective of the proposed requirement was to ensure that the design configuration of the test unit bus (structure design and materials, axles and brakes, and propulsion system and fuel systems) was representative of the production unit buses that would be delivered to FTA grantees, FTA is requiring TVMs to provide information concerning the source of essential vehicle components so that purchasers will have an effective means of comparing the test unit bus against the specific vehicle they intend to procure.

Lastly, to acknowledge the broader applicability of FTA's service life categories other than simply as a means of determining a vehicle's testing procedure, FTA is removing the list of vehicle service life categories in section 665.11(e) and will instead incorporate the service life categories contained in FTA's Circular 5010.1.

FTA proposed adding language to this section that would require the Bus Testing Facility operator to score the test results using the performance standards and scoring system outlined in Appendix A of this part. FTA also proposed that the Bus Testing Facility operator obtain approval of the Bus Testing Report by the bus manufacturer and by FTA prior to its release and publication. Finally, FTA proposed that the Bus Testing Facility operator make the test results available electronically to supplement the printed copies.

Comments Received: FTA did not receive any comments on this section.

Agency Response: FTA is including this section in the final rule without change.

FTA proposed that all requests for testing, including requests for full or partial testing, be submitted to the FTA Bus Testing Program Manager prior to scheduling with the Bus Testing Facility operator. All test requests would provide: a detailed description of the new bus model to be tested, the service life category of the bus, engineering level documentation characterizing all major changes to the bus model, and documentation that demonstrates satisfaction of each one of the testing requirements outlined in section 665.11(a). FTA would review the test request and determine if the bus model is eligible for testing and which tests need to be performed. FTA would prepare a written response to the requester for use in scheduling the required testing with the Bus Testing Facility operator.

Comments Received: FTA received two comments on this section. Both comments asked FTA to commit to a maximum amount of time to review the test requests and provide a response to the requester.

Agency Response: FTA will commit to reviewing the test request and providing an initial response within five business days. Some requests, particularly requests for partial testing of a bus model that has undergone the testing process but is subsequently produced with a change in configuration or component, may require additional time to review the specific design and engineering changes proposed and provide a final response.

FTA proposed that the manufacturer's share of the test fee would be expended first during the testing procedure and that the Bus Testing Facility operator would obtain approval from FTA prior to committing FTA program funds.

Comments Received: FTA did not receive any comments on this section.

Agency Response: FTA is including this section in the final rule without change.

FTA did not propose any changes.

Comments Received: FTA did not receive any comments on this section.

Agency Response: FTA is including this section in the final rule without change.

FTA proposed additional language for this section to require the Bus Testing Facility operator to inspect the bus model configuration upon arrival to compare it to that submitted in the test request; to compare the gross vehicle weight and gross axle weights to the ratings on the bus; to determine if the bus model can negotiate the test track and maintain proper test speed over the durability, fuel economy and emission drive cycles; and to provide these results to the bus manufacturer and FTA prior to conducting testing using FTA program funds.

FTA also proposed additional language to require the Bus Testing Facility operator to investigate each occurrence of unsupervised maintenance and assess the impact on the validity of the test results and to repeat any impacted test results at the manufacturer's expense. FTA also proposed language to address modifications to bus models undergoing testing. Specifically, FTA proposed that the Bus Testing Facility operator perform or supervise and document the performance of bus modifications only after the modifications have been reviewed and approved by FTA. The language also stated that testing would be halted after the occurrence of unsupervised bus modifications and the Bus Testing Facility operator would not resume testing until FTA has issued a determination regarding the modifications.

In addition, FTA proposed moving the listing of test categories from Appendix A into section 665.27 and assigning performance standards to each of the test categories as MAP-21 requires. FTA proposed amending the Performance Test category by removing the language regarding the Braking Performance Test and moving it into the Safety Test category. FTA also proposed adding the requirement for a review of the Class 1 failures documented in the Reliability Test category to the Safety Test category.

Comments Received and Agency Response: FTA received numerous comments on this section. One commenter asked how many days FTA would need to perform the test readiness review and issue a decision regarding the start of testing. The other comments on this section were pertaining to the specific tests and the proposed performance standards, which are summarized as follows:

There were nine comments on the Structural Integrity test category and the associated performance standards. In response to comments, several refinements were applied to the final rule.

FTA received two comments concerning the Shakedown test and performance standard, with one recommending a maximum deflection of 0.100 inch to account for the floor load of a passenger on a wheeled mobility device, the second challenging the relevance of the test and considering it to be redundant with the test track durability test. The Shakedown test in section 665.27(h)(5)(i)(1) has been eliminated as FTA believes that this test is a legacy test procedure that pre-dates the bus testing program and provided a means to verify a level of structural integrity at a transit agency facility in lieu of performing a test track durability test. Any incremental value provided by the Shakedown test in light of the Structural Durability test performed on the test track is not apparent.

One commenter inquired whether the Dynamic Towing test would capture any structural or other types of failures throughout the bus and if the test was performed in a stop-and-go manner including the negotiation of turns. FTA is not making any changes to section 665.27(h)(5)(i)(4) regarding the Dynamic Towing test and performance standard. The Dynamic Towing test is a demonstration that the bus can be safely and effectively towed by a common heavy duty vehicle tow truck, without regard to operational usage or negotiation of turns. The test, however, does induce unique loads into the bus structure and on the rear axle of the bus, as the five-mile towing distance performed during the test is continuous around the paved test loop.

One commenter questioned the relevance of the Jacking test and recommend that FTA seek the input of transit operators. FTA is not revising section 665.27(h)(5)(i)(5), the Jacking test. FTA believes that this test remains relevant, that a bus model that fails to meet the performance standard could be a significant operational problem for transit operators, and that the time and cost burdens of conducting the test are minimal.

Another commenter suggested that FTA consider evaluating the corrosion resistance of bus models during the structural durability test. One commenter offered a proposal to evaluate the corrosion resistance of new bus models. FTA considered this proposal and believes that this non-testing based evaluation does not provide sufficient technical analysis on which to base a score, in addition to being outside the scope of this rulemaking.

One commenter proposed that FTA to make bus models available to component suppliers to use for partial testing programs to enable the development of robust aftermarket components and new technology subsystems. While this is an interesting proposal, this is also outside the scope of today's rulemaking and FTA would need a significant increase in funding in order to acquire and maintain a fleet of buses to serve as platforms for the testing of new components and technologies.

There were several comments requesting clarification on the implications of the proposed durability performance standards and suggestions for alternatives methods for evaluating both structural and powertrain durability of new bus models, components, and subsystems.

First, FTA was asked to clarify the types of failures that invoke a failure to meet the durability performance standard and the process for resolving those failures. The commenter wanted to know if there were certain types of failures that would automatically trigger a test restart, if FTA could commit to a response time to provide feedback about the proposed design remedy to resolve a durability failure. The commenter proposed that FTA consider not requiring a mile-for-mile validation of structural durability failures that are not Class 1 or Class 2 level reliability failures through the use of stress and strain measurements and common structure modeling techniques, and suggested that FTA allow the durability test to continue after a durability performance standard failure so that testing can progress while the bus manufacturer prepares the design remedy.

To clarify, then, for the structural durability performance standard, any discontinuity ( e.g., cracking, deformation, or separation) that develops during the test in any of the bus material elements that are permanently affixed, through welding or other bonding methods including non-serviceable fasteners such as rivets, whose function is to bear the weight of the vehicle or the weight of the passengers, or maintain the physical geometry of other load bearing elements and openings in the bus body, or that secure and retain other non-bonded bus body components will be considered a failure to meet this performance standard. Material discontinuities that develop during the test in the main frame rails and the frame cross-members on body-on-frame bus models will also be considered a failure of the structural durability performance standard. For the powertrain durability performance standard, all malfunctions of bus powertrain system will be classified as a failure of the powertrain durability performance standard until remedied and validated. Structural failures of the powertrain components, including any associated bracketry, mounts, cradles, and fasteners used to physically attach the components to the bus body or frame are also considered a failure of the powertrain durability performance standard.

If the Durability test reveals a durability performance standard failure, the structural durability test will be paused awaiting a proposed design remedy from the bus manufacturer. FTA will review the proposed remedy and provide a response to the proposed design remedy within five business days. The intent of the FTA review is to evaluate that the proposed design modification is relevant to the failure mode and that it is suitable for production.

FTA will employ the existing partial testing policy for powertrain changes or updates to new bus models that are subject to the Pass/Fail rule. Currently, FTA focuses on the engine, transmission fuel system, and drive axle to assess if partial testing is needed. Once each of these new components has been tested in a bus, FTA allows their use in subsequent bus models without additional testing based on FTA's experience that the replacement of these components is not likely to significantly alter existing test data in the Bus Testing Report. While the scope of the powertrain durability performance standard casts a wider net than the partial testing policy for powertrain changes, bus manufacturers will be allowed to substitute minor powertrain components not currently tracked by the current partial testing policy if a credible analysis is provided that demonstrates the component substitution is durable in a transit service environment and that secondary failures of the primary powertrain components are not induced if the substituted component fails. FTA does not believe that the supply of aftermarket parts available to transit operator for maintaining their buses will be negatively affected by the powertrain durability performance standard. FTA only requires that the buses remain in service for at least their designated service life. Grantees do not have to maintain the original design configuration throughout a vehicle's service life and may replace components and major subsystems over the vehicle's lifespan.

Commenters also sought clarification regarding the inclusion of electric bus model off-board charging equipment in the powertrain durability performance standard. Currently, all battery bus chargers are unique to the bus models. If the charging system fails to perform, the bus can only operate on the remaining charge. For bus fleets that employ bus models designed for overnight charging, FTA assumes that more than one battery charger will be available at the bus depot, providing a charging system redundancy that can be leveraged to maintain bus operations. These battery chargers would not be considered as part of the vehicle's powertrain. For bus models designed specifically for on-route charging, the off-board charging system and the on-board charging system interfaces are considered part of the bus powertrain. Additionally, since all bus charging systems are unique, all electric bus models are subject to the testing requirement. The Bus Testing Facility operator provides access to a high voltage source for the battery charger, while the TVM or component vendor is expected to provide the battery charger with the bus model to be tested. Once battery charging systems for buses become standardized, FTA will pursue their installation at the test site.

Various commenters also proposed alternative durability tests. First, one commenter proposed the use of a risk assessment and field monitoring process for the introduction of new bus technologies on an existing bus model as a substitute for performing partial testing. While this concept has some merit, it would not satisfy the current legislative mandate to conduct actual testing and additional program resources would need to be made available in order to execute this type of program. Another commenter requested that FTA reduce the amount of additional test mileage required to validate a design modification in the event of a failure to meet the durability performance standard. This commenter suggested a combination of stress and strain measurements and analytical models to be used to validate that the probability of the stress induced structural discontinuities in the bus have been reduced or eliminated with the new design. FTA considered the merits of this proposal and has decided that in cases where there is not enough remaining mileage in a test procedure to validate the design change on an actual mileage basis, FTA will consider the manufacturer's efforts to characterize the material stresses through measurements, analyses, and other engineering work to determine an adequate test distance to validate the analysis and the proposed design remedy.

There were multiple comments related to the Safety test category. Seven commenters recommended that FTA consider heightened standards with respect to the flammability of interior materials to address the inadequacies of Federal Motor Vehicle Safety Standard (FMVSS) 302. Although establishing fire safety standards for bus testing program is outside the scope of the NPRM, FTA reviewed the large number of vehicle interior fire safety information submitted by various commenters. FTA notes that updating FMVSS 302 is not within FTA's regulatory authority and suggests that commenters direct their comments to the National Highway Traffic Safety Administration, the U.S. DOT mode responsible for maintaining the FMVSS.

Another commenter suggested that FTA establish a requirement for the use of collision avoidance systems in transit buses, while another recommended that FTA establish crashworthiness test standards for buses. The commenter's recommendation to establish safety performance standards to require collision avoidance systems and crumple zone or other crashworthiness standards on transit buses are not within the scope of the NPRM, as is the proposal to establish braking standards for emergency stops on a grade and the recommendation to adopt performance standards for wheeled mobility device securement devices.

One recommended that the acceleration test be inserted into the Safety test category and that FTA adopt performance standards for mobility aid securement devices. The suggestion to move the acceleration test into the Safety test category is not being adopted because FTA believes this test is more pertinent to the vehicle's performance, rather than affecting the vehicle's safety.

Additional commenters sought clarification on the definition of Class 1 failures. With regard to the commenter who sought clarification on whether structural failures should be addressed as hazards, FTA considers the following types of test incidents as Class 1 reliability failures resulting in a failure to satisfy the hazards performance standard: (1) the loss or degradation of the obstacle avoidance capability (braking, steering, & acceleration/speed control) of the bus due to a component malfunction. For example, a loss of power steering is considered a Class 1 reliability failure due to the expected increase in the force required to turn the steering wheel, reducing the rate of directional change a driver can effect into the bus and compromising its ability to avoid an obstacle; (2) the occurrence of a fire or the potential for a fire ( e.g. fuel leak in the presence of an ignition source, electrical short circuit, leaks of other flammable fluids near an ignition or heat source); (3) major structural failures that can induce conditions (1) or (2) above, or lead to a physical compromise of the passenger compartment (an unintended exposure to the outside environment or physical trauma to a passenger) or degrades the ability of a passenger to exit the bus.

Regarding the proposed testing and performance standards for Braking, one commenter recommended the elimination of the brake stopping distance test and the use of FMVSS certification testing results. Another commenter recommended that the buses be weighted to the maximum gross passenger load for the braking test, and another asked FTA to establish additional brake performance requirements for stopping on a grade. The commenter's suggestion to eliminate the stopping distance test was not accommodated, as a braking performance test is required by statute, and FMVSS compliance is based on self-certification, whereas FTA's is based on actual test data. FTA is adopting the suggestion to conduct the stopping distance test at a full passenger load by conducting an additional set of brake stops at gross passenger load. However, the stopping distance performance standard will be assessed using the test results with the bus loaded to seated load weight as was proposed in the NPRM.

One comment to the Reliability test category and proposed performance standard recommended that flat tire incidents not be counted as a test failure, as flat tires are commonly caused by road debris and not by bus design.

FTA does not agree with the commenter's suggestion to ignore the occurrence of flat tires during the test and not count them against the Reliability performance standard. Flat tires that are the result of a physical interference or structural problem will need to be addressed and resolved prior to test completion, but flat tires due to the presence of debris on the test track will not be documented in the test report.

Two comments to the Noise test category and proposed performance standards were offered. The first requested clarification as to how the performance applied to electric bus charging systems. The second suggested that the noise levels, while traversing a fixed object, such as a speed bump, be measured during the noise test.

FTA will accommodate the request to measure noise levels while the bus traverses road irregularities, as the current audible vibration test is conducted over the road while travelling from the test track to the main maintenance shop area in Altoona. In addition to the over the road segment this general interior noise test will be conducted on the test track. However, there is no minimum performance standard or scoring associated with this test, and noise testing of an electric bus will not be conducted while it is being charged, as it is not directly related to the vehicle's durability or performance.

Two similar comments on the Performance test category and performance standard suggested that FTA conduct the tests in this test category at a fully-weighted or gross passenger load.

With regard to the suggestion to conduct acceleration and gradeability tests at the maximum gross passenger load, current tests are conducted at a seated passenger load and there is no technical basis to conduct additional test runs. However, expected performance standards for acceleration and gradeability can be extrapolated using the results from the seated passenger load test runs.

For the check-in procedures outlined in section 665.27(b), FTA has revised the language to provide FTA five business days to review the results from the procedure outlined in 665.27(a) and provide a decision to either start the test or to request clarification about the results of that review. To prevent administrative test delays, the Bus Testing Facility operator has the authority to commence specific tests where FTA does not provide a response within five business days and the performance of those tests is not dependent on FTA's determination.

FTA proposed adding tables as Appendix A to graphically illustrate the new Bus Model Scoring System and the Pass/Fail Standard.

Four commenters expressed a concern that the aggregate score will encourage grantees to use the score blindly and not read the actual content of the test reports. They also expressed a concern that a procurement protest could be filed if they selected a bus model that did not have the highest score of those submitted for bid. In addition, one commenter wanted to know if they would be allowed to apply a different weighting to the scoring system than the weights assigned by FTA.

FTA also received several comments regarding the fuel economy test and the fuel economy scoring system. Two commenters were concerned that the new dynamometer based fuel economy test method will not differentiate the efficiency differences between heating, ventilation, and air conditioning (HVAC) systems installed on the test buses and that the new test methodology does not fully reveal the potential of the new hybrid bus technologies. Two commenters strongly recommended that FTA employ a universal fuel economy scoring system for use with all fuel types, to illustrate the higher fuel economy of electric and hybrid-electric vehicles. Another commenter recommended that the fuel economy scores for 60-foot bus models be adjusted higher by 150 percent to reflect the additional weight of the vehicle.

Agency Response: In regards to the concerns about the use of the scoring system as a primary determinant in procurement decisions, FTA will insert a disclaimer in test reports explaining that the using the test scores as the determinative factor in a competitive procurement is not required. Grantees may use their own specified selection criteria, so long as the selected bus model received a passing test score. Grantees are allowed to establish evaluation criteria more stringent than those used in FTA's testing program or to use an alternative weighting for the scoring of the test results, provided that those criteria do not violate FTA's requirement for full and open competition (See 49 U.S.C. 5323(a)).

Based on comments that the Shakedown test is redundant in light of the broader Structural Durability test, FTA is eliminating the Shakedown test and moving the base points (1.0) associated with the test into the S tructural Durability test category, increasing the value of the later test from 12.0 to 13.0 points. Regarding the comments requesting modification of the Fuel Economy test procedure to reflect the effect of HVAC operation on fuel consumption, neither the existing test track test procedure nor the dynamometer procedures are capable to testing the effects of various HVAC systems on the measured fuel economy. While the testing is conducted with the ventilation fan engaged, the air conditioning and the heating system controls are set to the equivalent of an “off” state. Although evaluating the effect of HVAC systems on fuel economy is technically possible, it would require that the dynamometer facility be capable of maintaining extreme temperatures to accurately stress the HVAC systems and the overall thermal performance of the bus body. Performing this type of testing would require a significant capital investment in the test facility and also would require a significant increase in testing fees.

Both the test track and dynamometer-based fuel economy tests do not expressly inhibit engine-off hybrid buses from turning their engines off during the test procedure. Two of the three dynamometer-based test cycles are actual transit duty cycles. Because buses are designed to operate in an efficient manner, a bus should end with the battery state of charge (SOC) at the same level or higher than at the start of the test cycle. This may require the vehicle to idle for an additional time period to restore the battery's SOC.

Several commenters on the proposed fuel economy scoring scale recommended using a single scoring for all fuel types instead of the individual fuel-specific scales proposed in the NPRM. A scale such as Miles per Gallon diesel equivalent (MPGde), conceptually based on the current Miles Per Gallon equivalent (MPGe) scale developed by the Environmental Protection Agency (EPA) for light duty vehicles  1 and adjusted to the diesel fuel energy equivalent, was considered. The MPGe scale expresses the fuel economy of all other vehicle fuel types in terms of the energy equivalent of a gallon of gasoline. This methodology examines the efficiency of each vehicle's energy to power conversion from the fuel tank to the wheels but does not account for the efficiency of producing and delivering the fuel to the vehicle.

FTA strongly believes that given the wide range of fuel types available in the transit bus marketplace, the best and most commonly cited scoring metric for fuel economy is fuel cost per operating mile. However, due to the volatility of fuel prices, regional fuel price variances, and the variance in the availability of various fuels, establishing a standardized baseline for fuel economy test results based on fuel cost per operating mile is inherently problematic for inclusion in the rule.

FTA examined the use of MPGde for the scoring of the fuel economy test results but declines to adopt such an approach for several reasons. First, MPGde does not factor the energy cost efficiency of each fuel type into the calculation. High values of MPGde do not always indicate low overall fuel operating costs which is a top bus performance priority for most agencies. For example, hydrogen fuel cell buses would be expected to have an MPGde rating more than twice as high as a diesel bus but the fuel currently costs more than three times that of diesel fuel on a gallon equivalent basis resulting in higher overall fuel operating costs. Similarly, CNG buses would be expected to have an MPGde rating about 20% lower than that of a diesel bus but the fuel itself costs less than half that of diesel making it a popular choice in many locales even when the capital and operating costs of the fueling stations are considered.

Second, MPGde does not account for the significant fueling infrastructure costs of most alternative fuels introduced into transit fleets, nor does MPGde account for the significant differences in maintenance facilities, maintenance practices and tools, and maintainer skill sets required for each fuel type. While the choice between gasoline and diesel is not an issue for private owners of passenger vehicles, who can take the vehicle to any number of car dealers or maintenance garages, switching or adding a new bus fuel type can be a significant undertaking for most agencies with respect to bus maintenance. Although MPGde could be considered relevant to an overarching Federal interest in minimizing transportation energy consumption, FTA believes that MPGde is not used by transit agencies as it is not a clear indicator of fuel operating costs.

Third, MPGde only assesses the fuel efficiency of the vehicle from the vehicle's fuel tank to the wheels and not the true “well-to-wheels” efficiency of the complete fuel chain. This methodology generates an artificially high MPGde value for electric vehicles as most of the costs of generating and delivering electric “fuel” take place off-board the vehicle at the electric powerplant and along the power transmission lines. For instance, a bus can consume compressed natural gas (CNG) and achieve one MPGde value, versus burning CNG to fuel an electric powerplant and delivering the electricity over wires to charge an electric bus, with a resultant MPGde rating approximately five to six times greater than that of the CNG bus due primarily to the efficiency accounting methodology and not the actual well-to-wheels fuel efficiency. Therefore, FTA believes that adopting MPGde is not a suitable scoring mechanism to indicate the Federal priorities for energy sustainability to the transit industry.

Lastly, if FTA scored the fuel economy results using MPGde, the resulting inflated electric vehicle MPGde values will require expanding the range of the scoring scale significantly. Due to the current scale having a fixed number of points, the resolution of the scale will be reduced, making all bus models of the same size class and fuel type look identical with respect to the score. This defeats the primary purpose of the program which is to provide agencies objective information for the selection of bus models during the bus procurement process.

By maintaining the separate proposed fuel economy scoring scales, the well-to-wheels efficiency differences of different fuel types are neutralized as each fuel type has its own scale. This approach highlights the efficiency differences between bus models of the same fuel type which is very useful for transit agencies while still supporting the Federal interest in reducing transportation fuel consumption.

This rulemaking is a significant regulatory action within the meaning of Executive Orders 13563 and 12866, and FTA has determined that it is also significant under DOT regulatory policies and procedures because of substantial State, local government, congressional, and public interest. However, this rule is not “economically significant,” as defined in Executive Order 12866.

This section explains the purpose of the bus testing program, why FTA is establishing a pass/fail requirement with a point-based system and how that fits within FTA's mission, the alternative scoring systems FTA considered, the logic that FTA employed in determining the weights assigned to the different test categories, FTA's rationale for prioritizing use of the manufacturer's portion of the testing fee, and FTA's analysis of the costs and benefits.

While reviewing and developing scoring systems to meet the MAP-21 requirements, FTA considered a number of alternatives. To begin, FTA considered the importance of the entirety of the safety tests within the existing Bus Testing Program. Noting how integral to the bus testing program each of the testing categories were, FTA wanted to ensure that the buses that were tested, at the very least, met all of the minimum performance standards, regardless of the scoring system that FTA adopted. Stated differently, FTA resolved that the scoring system would have to preclude a bus model from passing the test solely by attaining additional points in other categories (while failing in one or more key categories), resulting in points greater than the threshold that FTA set for the pass/fail standard. FTA also wanted to ensure that whatever system FTA adopted would be relatively simple, straightforward, and easy to understand, and provide meaningful information to both transit agencies and manufacturers. Using these principles, FTA assessed various systems that FTA could adopt or implement to meet the requirements of MAP-21.

FTA first considered various qualitative systems. FTA reviewed a “five-tier” based system, as used by other organizations. FTA liked the simplicity of the five-star system for grading buses that met the minimum requirement of passing all of the tests. While FTA's review of various systems indicated that such qualitative systems are simple to implement, they can be very subjective. Moreover, the five-tier system did not capture the level of detail and differential information that FTA desired to convey to the transit industry and manufacturers. FTA also reviewed and considered an “A to D” based grading system. Again, while this would have resulted in a fairly simple and straightforward system, it did not convey the level of information or the level of detail to inform transit agencies who are purchasing the vehicles. Thus, FTA rejected these two qualitative systems. While they were simple, straightforward, and easy to understand, they did not meet FTA's goal of providing meaningful information to transit agencies and manufacturers.

Next, FTA considered quantitative point-based systems with the minimum threshold requirement of passing all of the tests. FTA considered various scales. FTA rejected a 50-point based scale for lack of simplicity. FTA considered an 80-point scale (10 points for each test category) and rejected it because it did not capture the relative importance or weighting of the categories. FTA also considered various levels for the pass/fail threshold for each of the scales. Finally, FTA settled on a 100-point scale due to its universality. FTA initially considered a minimum passing score of 40 points, believing the 60 discretionary points would provide purchasers with a greater range with which to evaluate different vehicles, but given the grading systems used in academia and other applications, FTA established a minimum passing threshold of 60 points with 40 discretionary points. This quantitative scale with the minimum threshold of passing all of the tests met all of FTA's goals that the scoring system is relatively simple, straightforward, and easy to understand, and will provide meaningful information to transit agencies and manufacturers.

After deciding to propose a 100-point scale for the Bus testing program, FTA had to weigh the importance of each of the test categories within the Bus testing program. FTA determined that the Structural Integrity and Safety Tests were the most important components of the bus testing program, as both were critical to the operation of the vehicle while on the road. Therefore, FTA allotted 50 of the total 100 points to these two tests. Between the two tests, FTA determined that while both were important, the Structural Integrity Test was more important than the Safety Test, based on its greater importance in evaluating a vehicle's construction, design, and ability to meet service life requirements. Hence, FTA assigned 60 percent of the points for these tests to the Structural Integrity Test and the remaining 40 percent to the Safety Test.

Within the Structural Integrity Test are six sub-test categories, of which five are pass/fail tests. Thus, FTA allotted one point each for the Distortion, Static Towing, Dynamic Towing, Hydraulic Jacking, and Hoisting Tests. The Durability Test, as the most important component of the Structural Integrity Test, received the remaining 25 points. Within these Durability Tests, FTA allocated 13 points to structural durability and 12 points to powertrain durability due to importance to meeting service life requirements.

For the Safety sub-tests, FTA determined that the Hazards Test was as important as the other two sub-tests within this category and allotted it one-half of the total 20 points. The Stability and Braking Tests have three component tests that require a pass/fail grading and one that is a performance based allocation. FTA valued each of these tests equally, based on their relative importance when evaluating a vehicle. Hence, FTA apportioned 25 percent of the remaining points to each test.

For the Maintainability and Reliability Tests, FTA assessed the Maintainability Test to be twice as important as the Reliability Test, but both tests to be as important as the remaining tests, as both directly affect a transit agency's operating costs. Maintainability reflects how much time and resources the transit agency should expect to budget over the course of a vehicle's service life to perform routine maintenance, and reliability reflects a vehicle's ability to meet its service life requirements without significant service disruptions caused by unscheduled maintenance. For ease of assigning points within the weightings, FTA allocated 24 points (or just less than one-half of the 50 points for the remaining tests) to these two tests. Hence, within FTA's weighting scheme, the Maintainability Test received 16 percent of the total points and the Reliability Test received eight percent of the total points.

Assessing the remaining four tests, Fuel Economy, Emissions, Noise, and Performance Tests, FTA determined that each was about the same level of importance based on comments from transit agencies, but that two, Fuel Economy and Emissions Tests, were slightly more important in terms of helping a transit agency to budget for a vehicle's fuel consumption over its lifetime and in calculating the vehicle's incremental benefit towards meeting Clean Air Act requirements. Therefore, as opposed to assigning equal weighting to each of the remaining tests, FTA allocated slightly more weight to the Fuel Economy and Emissions Tests than the Noise and Performance Tests. This resulted in a point allocation of seven points or 27 percent of the remaining points for to the Fuel Economy and Emissions Tests and an average of six points or 23 percent of the remaining points for the Noise and Performance Tests.

The Fuel Economy Test allocates points on a performance basis determined by the output of the type of fuel. For the Emissions Tests, FTA apportioned one-half point for each of the five Emissions Tests that are already regulated by other Federal agencies and the remaining points for the Carbon Dioxide Test. This weighting for carbon dioxide captures the importance of alternative fuels with respect to greenhouse gases.

The Noise Test allocates points on a performance basis determined by the level of decibels produced. FTA weighted the Interior Noise and Exterior Noise Test equally (3.5 points each). As for the Performance Test, FTA weighted the bus model performance on a 2.5 percent grade and the performance during the acceleration test as being equally important and together being worth 60 percent of the five points available. The performance on a 10 percent grade was valued at 40 percent of the Performance test category.

In order to preclude buses that are not ready to complete the bus testing program, the NPRM proposed to exhaust the manufacturer's 20 percent contribution for the total testing fee prior to employing funds from FTA's 80 percent contribution. This prioritizing of the manufacturers' portion of the test fee will incentivize transit vehicle manufacturers to ensure that the bus model submitted will, at a minimum, clear the initial check-in inspections, passenger loading, and initial testing operations. FTA estimates that, depending on the bus model, the first 20 percent of the testing fee should encompass the check-in process and threshold tests.

Based on previous testing experience, FTA determined that bus models that fail these preliminary activities will not perform well during subsequent tests. This policy minimizes the cost to FTA from bus models submitted before they are ready for testing, thereby conserving Federal resources and ensuring that the proper incentive structures are in place. This will encourage manufacturers to ensure their product can withstand the rigors of bus testing. FTA would continue to pay the 80 percent Federal match for one retest and would contribute no Federal funds for a third test or subsequent tests required to achieve a passing test score.

This section contains FTA's analysis of the benefits and costs of the rule. FTA estimated the rule's benefits and costs through two steps: First, FTA identified and analyzed the costs of the existing Bus testing program (baseline). Second, FTA identified and analyzed the expected costs of the rule relative to the baseline. To determine the benefits and costs of the rule, FTA reviewed the test data for all bus models that had been tested at the Bus Testing Facility between January 2010, when the Environmental Protection Agency's (EPA's) current Diesel Engine Emission Standards took effect (40 CFR part 86, as amended, 66 FR 5002, January 18, 2001), and February 2013, when this rulemaking commenced. The resulting diesel engine exhaust after-treatment systems used to satisfy the 2010 requirements potentially impacted the reliability, maintainability, fuel economy, emissions, and noise test results for a portion of the 49 buses. Additionally, there were OEM product updates to many of the medium-duty chassis used by the five, seven, and ten year service life buses that would affect test results in several test categories.

A total of 49 buses had been tested over this period. FTA believes that the test results for these 49 bus models tested since 2010 provide the best available source of information for determining the cost of the rule on future buses that would be tested (and the models they represent). All bus types and sizes are included in the group of 49, from accessible vans to 60-foot articulated bus models. Buses fueled by compressed natural gas (CNG), electricity, diesel, gasoline, and liquefied petroleum gas (LPG) are included within this group. To determine qualitative benefits, FTA also examined the test results and the transit experience with two bus models tested (prior to 2010) that failed to meet their service life requirements in transit service. FTA has placed the test results of the buses that it analyzed in the docket for this rulemaking.

A summary of the results of FTA's cost analysis is presented in Table H-1. Eight categories of costs were identified, analyzed, and annualized:

1. Cost of Required Bus Design Changes: This category is the estimated annual cost of applying the design changes and components necessary to comply with all of the proposed performance standards to all affected bus models produced in one year.

2. Lost Value of Test Buses: This category estimates the depreciation cost of a bus subjected to the testing process. For each of the 49 buses models tested from 2010 through 2012, the full retail value was estimated by identifying a recent purchase value from the 2013 APTA Fleet Report and applying a depreciation factor of 50% to bus models that underwent a durability test and a factor of 20% for bus models that only underwent performance and other non-durability related tests.

3. Shipping of Test Buses: This category estimates the cost of shipping the test buses to the Bus Testing and Research Center and back to the manufacturer. The actual/estimated distance that each of the 49 bus models traveled was determined and was used for FTA's calculations. Table H-0 presents this data. For 10-, 7-, 5-, and 4-year buses, a cost of $2.00 per mile was used to estimate the shipping cost. This cost is based on a recent shipment of a mid-sized bus on a truck. For heavy-duty 12-year diesel fueled buses, a cost of $1.61 per mile was used to cover the costs of driving the bus to the test center and back. The estimated fuel costs were calculated using the bus model's measured highway fuel economy and a fuel price of $3.00 per gallon was added. For heavy-duty buses powered by natural gas or electricity, a shipping cost of $4.00 per mile was applied. This cost represents the cost to ship these bus models on a truck.

Background

On July 15, 2013, we received a petition from WildEarth Guardians to list 81 marine species or subpopulations as threatened or endangered under the ESA. This petition included species from many different taxonomic groups, and we prepared our 90-day findings in batches by taxonomic group. We found that the petitioned actions may be warranted for 24 of the species and 3 of the subpopulations and announced the initiation of status reviews for each of the 24 species and 3 subpopulations (78 FR 63941, October 25, 2013; 78 FR 66675, November 6, 2013; 78 FR 69376, November 19, 2013; 79 FR 9880, February 21, 2014; and 79 FR 10104, February 24, 2014). On July 14, 2015, we published a proposed rule to list the sawback angelshark ( Squatina aculeata ), smoothback angelshark ( Squatina oculata ), and the common angelshark ( Squatina squatina ) as endangered species (80 FR 40969). We requested public comment on information in the draft status review and proposed rule, and the comment period was open through September 14, 2015. This final rule provides a discussion of the information we received during the public comment period and our final determination on the petition to list the sawback angelshark, smoothback angelshark, and common angelshark under the ESA. The status of the findings and relevant Federal Register notices for the other 21 species and 3 subpopulations can be found on our Web site at http://www.nmfs.noaa.gov/pr/species/petition81.htm.

We are responsible for determining whether species are threatened or endangered under the ESA (16 U.S.C. 1531 et seq. ). To make this determination, we first consider whether a group of organisms constitutes a “species” under the ESA, then whether the status of the species qualifies it for listing as either threatened or endangered. Section 3 of the ESA defines a “species” to include “any subspecies of fish or wildlife or plants, and any distinct population segment of any species of vertebrate fish or wildlife which interbreeds when mature.”

Section 3 of the ESA defines an endangered species as “any species which is in danger of extinction throughout all or a significant portion of its range” and a threatened species as one “which is likely to become an endangered species within the foreseeable future throughout all or a significant portion of its range.” We interpret an “endangered species” to be one that is presently in danger of extinction. A “threatened species,” on the other hand, is not presently in danger of extinction, but is likely to become so in the foreseeable future (that is, at a later time). In other words, the primary statutory difference between a threatened and endangered species is the timing of when a species may be in danger of extinction, either presently (endangered) or in the foreseeable future (threatened).

Section 4(a)(1) of the ESA requires us to determine whether any species is endangered or threatened due to any one or a combination of the following five threat factors: The present or threatened destruction, modification, or curtailment of its habitat or range; overutilization for commercial, recreational, scientific, or educational purposes; disease or predation; the inadequacy of existing regulatory mechanisms; or other natural or manmade factors affecting its continued existence. We are also required to make listing determinations based solely on the best scientific and commercial data available, after conducting a review of the species' status and after taking into account efforts being made by any State or foreign nation to protect the species.

In making a listing determination, we first determine whether a petitioned species meets the ESA definition of a “species.” Next, using the best available information gathered during the status review for the species, we complete a status and extinction risk assessment. In assessing extinction risk for these three angelshark species, we considered the demographic viability factors developed by McElhany et al. (2000). The approach of considering demographic risk factors to help frame the consideration of extinction risk has been used in many of our status reviews, including for Pacific salmonids, Pacific hake, walleye pollock, Pacific cod, Puget Sound rockfishes, Pacific herring, scalloped hammerhead sharks, and black abalone (see http://www.nmfs.noaa.gov/pr/species/ for links to these reviews). In this approach, the collective condition of individual populations is considered at the species level according to four viable population descriptors: Abundance, growth rate/productivity, spatial structure/connectivity, and diversity. These viable population descriptors reflect concepts that are well-founded in conservation biology and that individually and collectively provide strong indicators of extinction risk (NMFS 2015).

We then assess efforts being made to protect the species to determine if these conservation efforts are adequate to mitigate the existing threats. Section 4(b)(1)(A) of the ESA requires the Secretary, when making a listing determination for a species, to take into consideration those efforts, if any, being made by any State or foreign nation to protect the species.

In response to our request for comments on the proposed rule, we received information and/or comments from three parties. Two of the commenters presented general information on threats or provided data that were already cited, discussed, and considered in the draft status review report (Miller 2015) or the proposed rule (80 FR 40969; July 14, 2015). Summaries of the substantive public comments received, and our responses, are provided below, with references to our prior documents where relevant.

Comment 1: One commenter agreed with the listing determination, citing the evidence provided in the draft status review report (Miller 2015) that the three species are at high risk of extinction due to threats of overutilization and inadequacy of existing regulatory mechanisms.

Response: We agree with the commenter.

Comment 2: One commenter suggested that instead of a traditional recovery plan for the endangered Squatina sharks, the Secretary should contribute resources toward developing the Illegal, Unreported, and Unregulated (IUU) and Seafood Fraud Action Plan under the direction of the Presidential IUU Task Force. The commenter specifically mentioned that traceability regulations are integral for the recovery of these Squatina species, and while imports into U.S. markets are likely minimal (because catches are currently so low), limitations on seafood traceability preclude any enforcement of the ESA import provisions. As such, the IUU design principles around traceability are especially relevant to the recovery of these species and the strategy will advance the recovery of these, and other, internationally threatened species.

Response: Once a species is listed as threatened or endangered, section 4 of the ESA requires that we develop and implement recovery plans that must, in part, identify objective, measurable criteria which, when met, would result in a determination that the species may be removed from the list. However, we note that the action to develop recovery plans for these Squatina species is not part of the determination for listing, which is the subject of this action, and, thus, will not be considered further here. The Presidential Task Force on Combating IUU Fishing and Seafood Fraud and the Action Plan for Implementing the Task Force Recommendations are also beyond the scope of this rulemaking.

Comment 3: One commenter remarked on our consideration of the International Union for Conservation of Nature (IUCN) Red List species assessments. Using an example from over 30 years ago, the commenter asserted, noting the IUCN's “vulnerable” extinction risk determination for the Guadalupe fur seal, that we applied the corresponding ESA listing status of “threatened” to this species. Furthermore, the commenter suggested that in addition to our practice of evaluating the source of information the IUCN classification is based upon, in light of the standards on extinction risk and impacts or threats (as discussed in our previous ESA listing findings), we should ensure that we give adequate weight to the opinions of the reasonable scientists who make these threat determinations as well, especially given the fact that they are often preeminent experts on the species being assessed. The commenter stated that the IUCN species assessments, themselves, are each essentially scientific articles quantifying threats to species, should be treated as an additional, independent scientific source, and should be given weight beyond the mere citations that they include.

Response: As noted in many of our previous findings (see 81 FR 1376; January 12, 2016, and 81 FR 8874; February 23, 2016, for 2 recent examples), risk classifications by other organizations or made under other Federal or State statutes may be informative, but such classification alone does not provide the rationale for listing determinations (or even preliminary 90-day findings) under the ESA. As mentioned in the 90-day finding for these species (78 FR 69376; November 19, 2013), species classifications under IUCN and the ESA are not equivalent, and data standards, criteria used to evaluate species, and treatment of uncertainty are also not necessarily the same. As the commenter notes, our practice is to evaluate the source of information that the IUCN classification is based upon in light of the standards on extinction risk and impacts or threats discussed above. This was applicable even in the case of the Guadalupe fur seal, although the commenter misrepresents the listing determination basis, implying that we listed the Guadalupe fur seal as “threatened” based on the IUCN's “vulnerable” risk determination. In fact, as noted in the final determination for the Guadalupe fur seal (50 FR 51252; December 16, 1985), the IUCN submitted comments on the proposed Guadalupe fur seal listing rule, recommending an ESA “endangered” status for the species. However, based on the available information and our evaluation of the data in light of the standards on extinction risk, threats to the species, and ESA definitions, we determined that the status of the Guadalupe fur seal corresponded with the ESA definition of a “threatened” species. Thus, as we did with the Guadalupe fur seal listing determination, we will continue to evaluate all sources of available information, in light of the ESA standards on extinction risk and impacts or threats to the species, to inform our ESA listing determinations.

Comment 4: One commenter cited the new 2015 IUCN assessment of S. squatina (Ferretti et al. 2015) as evidence of the bleak status of the species.

Response: We reviewed the new IUCN assessment of S. squatina (Ferretti et al. 2015) and evaluated the sources of available information cited within the assessment in light of the ESA standards on extinction risk and impacts or threats to the species. We did not find any new species-specific information on the impacts of threats or the biological response of the species to these threats that was not already considered in the proposed rule and draft status review report. The latest assessment references many of the same studies and findings discussed in the status review and proposed rule. We did, however, update the status review based on information from a reference cited within Ferretti et al. (2015), specifically Maynou et al. (2011). Maynou et al. (2011) conducted interview surveys of 106 retired fishermen who used to fish (either in the small scale fisheries or trawl fishers) in the Catalan, Ligurian, Tyrrhenian, north Adriatic, and Hellenic Seas, to see if these fishermen perceived any trends in dolphin and shark abundances between 1940 and 1999. As it applies to the three Squatina species of this action, the results from these interviews suggest that angelsharks disappeared from the Catalan Sea probably before 1959, from waters off the western Italian coast by the early 1980s, and from waters off Sardinia by the mid-1980s. As we already assumed potential extirpations of these species in the Ligurian and Tyrrhenian Seas and off the Balearic Islands based on other available information, this new information does not change our conclusions regarding the extinction risk of the species, but does provide further support for our assumptions and findings.

Comment 5: One commenter disagreed with our assessment of the climate change threat to the three Squatina species. The commenter asserted that climate change is likely to harm all three Squatina species and provided the following reasons: (1) The climate change threat was only assessed for S. squatina in United Kingdom (UK) waters (based on the Jones et al. (2013) paper) and, therefore, our conclusion regarding climate change impacts are purely speculative for S. aculeata and S. oculata; (2) Our expected decrease in the angelshark species' overlap with commercially-targeted species is unlikely to occur; (3) Our projected increase in protected angelshark range is unlikely to occur; and (4) the three angelshark species are likely entirely unable to migrate to avoid the effects of climate change.

Response: Broad statements about generalized threats to the species, such as climate change, or identification of factors that could negatively impact a species, do not constitute substantial information that listing may be warranted. We look for information indicating that not only is the particular species exposed to a factor, but that the species may be responding in a negative fashion; then we assess the potential significance of that negative response.

Based on our comprehensive review of the literature, the Jones et al. (2013) paper was the only information we found that provided an analysis of the threat of climate change and potential response by a Squatina species ( S. squatina ). While the commenter disagreed with our reliance on the Jones et al. (2013) paper, the commenter did not provide any new species-specific information on the threat of climate change or evidence that the Squatina species are responding in a negative fashion to the threat. As such, and as stated in the proposed rule, the best available information does not indicate that climate change is contributing significantly to the extinction risk of these species. Below we provide further comments on each of the commenter's points mentioned above.

The commenter mentioned that the climate change threat was only assessed for S. squatina in UK waters and, therefore, our conclusion regarding climate change impacts are purely speculative for S. aculeata and S. oculata. We disagree that our conclusions are speculative. Rather, we state that our conclusions are based on the best available information. In the proposed rule, we note that besides the Jones et al. (2013) study (which examined the impacts from climate change for S. squatina in UK waters), “we found no other information regarding the response of Squatina species to the impacts of climate change.” Therefore, based on the best available information ( i.e., the Jones et al. (2013) paper) we did not find any evidence to suggest that climate change contributes significantly to the extinction risk of S. squatina, and, additionally, we have no information to suggest that climate change contributes significantly to the extinction risk of the other two Squatina species.

The commenter also asserts that our expected decrease in the angelshark species' overlap with commercially-targeted species, and the projected increase in protected angelshark range, are unlikely to occur, and speculates that the three angelshark species will be unable to migrate to avoid the effects of climate change. In the proposed rule, we cited findings from the Jones et al. (2013) paper, including that the impacts from a range shift due to climate change would likely be offset by an increase in availability of protected habitat areas for the common angelshark ( S. squatina ). We also noted that the predicted range shift would shrink the (common) angelshark's overlap with other commercially-targeted species. The commenter states that the proposed climate-induced shifts in range discussed in the Jones et al. (2013) paper predict only slight increases in habitat suitability in candidate marine protected areas, and because these are only candidate areas, the commenter notes that it is unclear whether these habitat areas will ever even be protected in the future. Additionally, according to the Jones et al. (2013) paper, and acknowledged by the commenter, S. squatina was predicted to have a small, but negative change of 2.7 percent in median overlap across all commercial species investigated. However, the commenter argues that this change is so miniscule when considering the effects that fishing of commercially-targeted species in areas currently overlapping with S. squatina has had over the last several decades. As such, bycatch pressure on S. squatina will likely remain high as the overlap will remain almost entirely the same. Finally, the commenter speculates that the three angelshark species may be unable to move to avoid climate change due to limited dispersal capabilities.

As already thoroughly discussed in the proposed rule and draft status review for these angelshark species, we agree that overutilization is a significant threat that has led to S. squatina being presently in danger of extinction. The purpose of the above information and discussion was to evaluate the specific impact of climate change and the corresponding likely response of the common angelshark in order to evaluate the significance of this particular threat on the species' risk of extinction. As the commenter has made clear, the impact of climate change on the extinction risk of S. squatina appears negligible as it will unlikely alter the threat of overutilization to the species. Although a very minor range shift may occur, there is no information to suggest the species' response to climate change impacts would significantly alter its extinction risk (either through a decrease or increase in risk). Additionally, the commenter provides no information on the actual threat that climate change poses to the species, such as the species' biological or physiological responses to climate change impacts and the actual need for the species to migrate elsewhere, and we could find no such information. As such, our conclusion remains the same: The best available information does not suggest that climate change contributes significantly to the extinction risk of the species.

Comment 6: One commenter provided new information on historical catch of Squatina species in the Adriatic Sea (based on fish market data; Raicevich and Fortibuoni 2013) and information on benthic shark exploitation in the Canary Islands (Couce-Montero et al. 2015).

Response: We have updated the status review report to include this information. In particular, the new information indicates the contemporary presence of S. squatina in the Adriatic Sea (which was previously thought to be potentially extirpated), but demonstrates the significant decline in both abundance and size that has occurred in the population since the early 20th century (Fortibuoni et al. 2016), providing additional evidence of the overutilization of the species in this part of its range. Similarly, the Couce-Montero et al. (2015), which was a broad-scale study of the impacts of artisanal, recreational and industrial fleets on the Gran Canaria (Canary Islands) marine ecosystem, found overall fishing pressure by these fleets to be high and benthic sharks, as a functional group, to be overexploited. This new information does not change our conclusions regarding the extinction risk of the Squatina species.

Comment 7: One commenter suggested we consider the global impacts of recreational fishing on S. squatina and S. aculeata, providing a general description of some of the aspects of recreational fishing and ways it differs from commercial fishing.

Response: In our evaluation of threats in both the draft status review report and proposed rule, we did consider impacts of recreational fishing on the Squatina species (see the Overutilization for Commercial, Recreational, Scientific, or Educational Purposes sections of both documents). As the commenter did not provide any new species-specific information on threats from recreational fishing effort that was not already considered in the proposed rule and draft status review report, we have no reason to change our evaluation of the threat at this time.

Comment 8: One commenter provided information on the ancient and contemporary use of S. oculata in Spain for therapeutic purposes (Vallejo and Gonzalez 2014) and suggested this use is an additional threat to the species.

Response: The paper cited by the petitioner, Vallejo and Gonzalez (2014), provides simply an inventory of the fish species that have been used for medicinal purposes from ancient times to recent times in Spain. While we have updated the status review to include this new information on the use of the species, neither the study, nor the commenter, provide information on the extent or frequency that this species is collected for traditional Spanish remedies. Also, the contemporary evidence identified in the paper corresponds to S. squatina in Gran Canaria (Canary Islands), as opposed to S. oculata, and is from a 2004 article (González Salgado 2004) that also provides no information on the extent or frequency of use of S. squatina in traditional medicines. Finally, current regulations in Spain prohibit these Squatina species from being captured, injured, traded, imported, or exported. Therefore, we do not find any indication that the use of these species in traditional Spanish remedies is an additional threat that significantly increases these species' risks of extinction.

Comment 9: One commenter provided suggested edits to the background portions of the draft status review report to reflect the research they and others have conducted on S. squatina in the Canary Islands, and included information on the conservation initiatives of their nonprofit organization (ElasmoCan). Specifically, the commenter provided new (or clarified previous) information on the reproduction, growth, and distribution of S. squatina, identified a micropredator of S. squatina in the Canary Islands, provided details on the trawling prohibition in the Canary Islands, and highlighted the research they have conducted on the common angelshark within the Canary Islands. They also provided links to petitions requesting that the Canary Islands become a shark and ray sanctuary, that S. squatina be added to the Canarian catalogue of protected species, and that recreational fishing in the Canary Islands be prohibited.

Response: We have updated the status review with the provided information where appropriate. None of the information provided by the commenter (which was primarily life history and distribution data for S. squatina within the Canary Islands) changed our analysis of the threats to the species. As stated in the proposed rule, current conservation efforts, including those by ElasmoCan, are helping to increase the scientific knowledge about S. squatina and promote public awareness of the species (as demonstrated by the petitions cited by the commenter); however, there is no indication that these efforts are currently effective in reducing the threats to the species, particularly those related to overutilization and the inadequacy of existing regulatory mechanisms. As such, our conclusion from the proposed rule regarding the overall extinction risk of S. squatina remains the same.

In addition to requesting public comment on our proposed rule, we also directly solicited comments from the foreign ambassadors of countries where the three Squatina species occur. We received responses from three embassies, and their comments, as well as our responses, are provided below.

Comment 10: The Libyan Embassy, through Dr. Ramadan, consultant of the International Cooperation Office of the General Corporation for Agriculture on fisheries and marine resources of Libya, commented that while the three Squatina sharks are found in Libyan waters, they are not targeted by fishermen, nor are they common in the catch. However, most of the fishing gear used in the traditional fisheries can catch the species (including trammel nets, gillnets, bottom trawls, longlines, and illegal explosive), and when caught as bycatch, Libyans will consume these sharks. Dr. Ramadan also provided names of the two marine protected areas in Libya that could afford the species some protection: Wadi Elkouf and Ain El Gazala, both located on the eastern Mediterranean coast.

Response: We thank Dr. Ramadan for the comments and have updated the status review accordingly. While the proposed rule and draft status review noted that the three Squatina species were “relatively common” in Libyan waters, with a caveat that there was no corresponding citation or more recent data to support the statement, this new information, particularly that the species is not common in the fisheries catch yet susceptible to the traditional fishing gear, indicates that the species has likely significantly declined in abundance in Libyan waters over the past 10 years. We find this information lends further support to our conclusion that these species are presently at a high risk of extinction throughout their respective ranges.

Comment 11: The Sierra Leone Embassy, through the Ministry of Fisheries and Marine Resources, commented that the three Squatina sharks are found throughout the entire coastal waters of Sierra Leone, and endemic in the southern tip, from the shoal of Saint Ann to the boundary of Liberia and potentially beyond. Their presence has been recorded in both industrial fisheries and research survey data collected from 2008-2010. Squatina oculata has also been recorded from artisanal landing sites in Bonthe, Sierra Leone. However, overall, in Sierra Leone waters, the Squatina species are sparsely distributed and seldom caught. The Ministry of Fisheries and Marine Resources expressed support for the listing of these species as endangered and provided a list of draft fisheries regulations pertaining to sharks, but noted that they will not close areas to fishing to protect these species.

Response: We thank the Sierra Leone Ministry of Fisheries and Marine Resources for the comments and have updated the status review accordingly. We note that while the survey data mentioned above indicate the recent presence of S. squatina in Sierra Leone waters, the range of the species in the Eastern Atlantic is thought to extend only as far south as Mauritania. It is unclear if these findings indicate a range expansion for the species, new migratory routes, a reflection of the true range of the species that was previously unknown due to poor sampling of the region, or perhaps, and more likely, misidentification of the species, as the species has yet to be identified from any other countries south of Mauritania, despite expansive historical sampling. Additionally, the draft nature of the regulations provided by the Ministry, and uncertainty regarding their implementation or effectiveness, coupled with the implication that the Ministry will not consider area closures where the species are found because they inhabit major fishing grounds in the territorial waters of Sierra Leone, we do not consider these efforts adequate to mitigate the existing threats to the point where extinction risk is significantly lowered for these three species.

Comment 12: The Embassy of Greece, through the Hellenic Ministry of Rural Development and Food, commented that Greece meets its obligations arising from international conventions, such as the Barcelona Convention, and is a party to the General Fisheries Commission of the Mediterranean (GFCM), the regional fisheries management organization whose convention area includes Mediterranean waters and the Black Sea. The measures adopted by the GFCM are incorporated into European Law. The Ministry specifically highlighted GFCM recommendation GFCM/36/3012/3, which prohibits those sharks on Annex II of the Specially Protected Areas and Biological Diversity (SPA/BD) Protocol to the Barcelona Convention (which include the three Squatina species) from being retained on board, transhipped, landed, transferred, stored, sold or displayed, or offered for sale. The Ministry noted that the species must be released, as far as possible, unharmed and alive, and that there is an obligation of owners of fishing vessels to record information related to fishing activities, including capture data, incidental catch, and releases and/or discards of species.

Response: We thank the Hellenic Ministry of Rural Development and Food for the comments and have updated the status review accordingly. We note that while these regulations and retention prohibitions may decrease, to some extent, fisheries-related mortality of the Squatina species in the Mediterranean, for the most part, it appears that these Squatina species are normally discarded due to their low commercial value. Given the species' assumed high mortality rates in fishing gear (around 60 percent in trawls and 25-67 percent in gillnets), vulnerability to exploitation, present demographic risks, population declines and potential local extirpations to the point where all three species are rarely observed throughout the Mediterranean, and the evidence of continued intensive demersal fisheries operating throughout the Mediterranean, we conclude that these regulatory mechanisms are unlikely to significantly decrease the Squatina species' risks of extinction.

We reviewed, and incorporate as appropriate, scientific data from references that were not previously included in the draft status review report (Miller 2015) and proposed rule (80 FR 40969; July 14, 2015). We also incorporate, as appropriate, relevant information received as communications during the public comment process. We include the following references and communications, which, together with previously cited references, represent the best available scientific and commercial data on S. aculeata, S. oculata, and S. squatina: El Dia Digital 2000; Lamboeuf et al. 2000; Maynou et al. 2011; Narváez 2012; Narváez et al. 2014; Couce-Montero et al. 2015; Gelbalder 2015; Osaer et al. 2015; Osaer and Narváez 2015; Dr. Ramadan personal communication (pers. comm.) 2016; ElasmoCan pers. comm. 2016; Fitzpatrick et al. 2016; Fortibuoni et al. 2016; Narváez and Osaer 2016; Sierra Leone Ministry of Fisheries and Marine Resources pers. comm. 2016. However, the information not previously included in the draft status review or proposed rule does not present significant new findings that change any of our proposed listing determinations.