This final rule, pursuant to 5 U.S.C. 553, amends regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This final rule is issued under Marketing Order No. 930, both as amended (7 CFR part 930), regulating the handling of tart cherries produced in the states of Michigan, New York, Pennsylvania, Oregon, Utah, Washington and Wisconsin. Part 930 (referred to as the “Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Board locally administers the Order and is comprised of producers and handlers of tart cherries operating within the production area, and a public member.

The Department of Agriculture (USDA) is issuing this final rule in conformance with Executive Orders 13563 and 13175. This action falls within a category of regulatory action that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled `Reducing Regulation and Controlling Regulatory Costs' ” (February 2, 2017).

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order provisions now in effect, free and restricted percentages may be established for tart cherries handled during the crop year. This final rule establishes free and restricted percentages for tart cherries for the 2017-18 crop year, beginning July 1, 2017, through June 30, 2018.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

This final rule establishes free and restricted percentages, or the proportion of 2017 tart cherries which may be handled in commercial outlets, for the 2017-18 crop year at 69 percent and 31 percent, respectively. This action should stabilize marketing conditions by adjusting supply to meet market demand and help improve grower returns. The final percentages were recommended by the Board at a meeting on September 14, 2017 and have been designated by the Secretary.

Section 930.51(a) provides the Secretary authority to regulate volume by designating free and restricted percentages for any tart cherries acquired by handlers in a given crop year. Section 930.50 prescribes procedures for computing an optimum supply based on sales history and for calculating the aforesaid percentages. Free percentage volume may be shipped to any market. Restricted percentage volume must be held by handlers in a primary or secondary reserve, or be diverted or used for exempt purposes as prescribed in §§ 930.159 and 930.162. Exempt purposes include, in part, the development of new products, sales into new markets, the development of export markets, and charitable contributions. Sections 930.55 through 930.57 prescribe procedures for inventory reserve including that handlers would be responsible for storage and would retain title of the tart cherries.

Under § 930.52, only districts with an annual average production over the prior three years of at least six million pounds are subject to regulation, and any district producing a crop that is less than 50 percent of its annual average of the previous five years is exempt. The regulated districts for the 2017-2018 crop year are: District 1—Northern Michigan; District 2—Central Michigan; District 3—Southern Michigan; District 4—New York; District 7—Utah; District 8—Washington; and District 9—Wisconsin. Districts 5 and 6 (Oregon and Pennsylvania, respectively) will not be regulated for the 2017-18 season.

Demand for tart cherries and tart cherry products tends to be relatively stable from year to year. Conversely, annual tart cherry production can vary greatly. In addition, tart cherries are processed and can be stored and carried over from crop year to crop year, further impacting supply. As a result, supply and demand for tart cherries are rarely in balance.

Because demand for tart cherries is inelastic, total sales volume is not very responsive to changes in price. However, prices are very sensitive to changes in supply. As such, an oversupply of cherries would have a sharp negative effect on prices, driving down grower returns. Aware of this economic relationship, the Board focuses on using the volume control provisions in the Order to balance supply and demand to stabilize industry returns.

Pursuant to § 930.50, the Board meets on or about July 1 to review sales data, inventory data, current crop forecasts, and market conditions for the upcoming season and, if necessary, to recommend preliminary free and restricted percentages if anticipated supply would exceed demand. After harvest is complete, but no later than September 15, the Board meets again to update its calculations using actual production data, consider any necessary adjustments to the preliminary percentages, and determine if final free and restricted percentages should be recommended to the Secretary of Agriculture.

The Board uses sales history, inventory, and production data to determine whether there is a surplus and, if so, how much volume should be restricted to maintain optimum supply. The optimum supply represents the desirable volume of tart cherries that should be available for sale in the coming crop year. Optimum supply is defined as the average free sales of the prior three years plus desirable carry-out inventory. Desirable carry-out is the amount of fruit needed by the industry to be carried into the succeeding crop year to meet market demand until the new crop is available. Desirable carry-out is set by the Board after considering market circumstances and needs. Section 930.151(b) specifies that desirable carry-out can range from zero to a maximum of 100 million pounds.

In addition, USDA's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” ( http://www.ams.usda.gov/publications/content/1982-guidelines-fruit-vegetable-marketing-orders ) specify that 110 percent of recent years' sales should be made available to primary markets each season before recommendations for volume regulation are approved. This requirement is codified in § 930.50(g), which specifies that in years when restricted percentages are established, the Board shall make available tonnage equivalent to an additional 10 percent of the average sales of the prior three years for market expansion (market growth factor).

After the Board determines optimum supply, desirable carry-out, and market growth factor, it must examine the current year's available volume to determine whether there is an oversupply situation. Available volume includes carry-in inventory (any inventory available at the beginning of the season) along with that season's production. If production is greater than the optimum supply minus carry-in, the difference is considered surplus. This surplus tonnage is divided by the sum of production in the regulated districts to reach a restricted percentage. This percentage must be held in reserve or used for approved diversion activities, such as exports.

The Board met on June 22, 2017 and computed an optimum supply of 282.4 million pounds for the 2017-18 crop year using the average of free sales for the three previous seasons. Regarding the carry-out value, the Board discussed and considered a range of alternatives. One member suggested a carry-out value of 20 million pounds, approximately one tenth of three years' average annual sales. Last year's carry-out was set at 57 million pounds to cover the three-month gap between calculation of carry-out at the end of one season and the availability of fruit for the next season. One member, advocating for 60 million pounds, noted that a carry-out to supply only three months' worth of cherries makes it difficult for processors to serve their customers. Some Board members stated that in the past two seasons, the recommended carry-out was equivalent to approximately three months' sales but the industry ended up with a higher carry-out than anticipated, which puts downward pressure on prices. After the consideration of the alternatives, the Board determined a carry-out of 45 million pounds would be slightly less than the three-month estimate of 60 million pounds and would supply the industry's needs at the beginning of the next season.

The Board subtracted the estimated carry-in of 110.5 million pounds from the optimum supply to calculate the production quantity needed from the 2017-18 crop to meet optimum supply. This number, 171.9 million pounds, was subtracted from the Board's estimated 2017-18 total production (from regulated and unregulated districts) of 259 million pounds to calculate a surplus of 87.1 million pounds of tart cherries. The Board also complied with the market growth factor requirement by removing 23.7 million pounds (average sales for prior three years of 237.4 million times 10 percent) from the surplus. The adjusted surplus of 63.1 million pounds was then divided by the expected production in the regulated districts (252 million pounds) minus anticipated orchard diversion (12 million pounds) to reach a preliminary restricted percentage of 26 percent for the 2017-18 crop year.

The Board then discussed whether this calculation would provide sufficient supply to grow sales and supply orders that are already scheduled but not yet shipped, including filling remaining orders from USDA purchases. A motion to make an economic adjustment of five million pounds to adjust for USDA sales failed to receive Board support. After the discussion, the Board's preliminary restricted percentage remained at 26 percent (63 million pounds divided by 240 million pounds).

The Board met again on September 14, 2017, to consider final volume regulation percentages for the 2017-18 season. The final percentages are based on the Board's reported production figures and the supply and demand information available in September. In September and going forward, the Board revised the formula for calculating free sales. When the three-year sales average was recalculated in September, the revision lowered the sales average to 205 million pounds, which resulted in a revised optimum supply of 250 million pounds.

The total production for the 2017-18 season was 270.4 million pounds, 11.4 million pounds above the Board's June estimate. In addition, growers diverted 11.7 million pounds in the orchard, leaving 258.7 million pounds available to market, 251.1 million pounds of which are in the restricted districts. Using the actual production numbers, and accounting for the recommended desirable carry-out and economic adjustment, as well as the market growth factor, the restricted percentage was recalculated.

The Board subtracted the carry-in figure used in June of 110.5 million pounds from the optimum supply of 250 million pounds to determine 139.5 million pounds of 2017-18 production would be necessary to reach optimum supply. The Board subtracted the 139.5 million pounds from the actual production of 270.4 million pounds, resulting in a surplus of 130.9 million pounds of tart cherries. The Board also recommended an economic adjustment to adjust the supply in anticipation of increased sales from market expansion, new markets, and growth from the short crop this season in Europe. The surplus was then reduced by subtracting the economic adjustment of 33 million pounds and the market growth factor of 20.5 million pounds, resulting in an adjusted surplus of 77.4 million pounds. The Board then divided this final surplus by the available production of 251.1 million pounds in the regulated districts (262.8 million pounds minus 11.7 million pounds of in-orchard diversion) to calculate a restricted percentage of 31 percent with a corresponding free percentage of 69 percent for the 2017-18 crop year, as outlined in the following table:

The primary purpose of setting restricted percentages is an attempt to bring supply and demand into balance. If the primary market is oversupplied with cherries, grower prices decline substantially. Restricted percentages have benefited grower returns and helped stabilize the market as compared to those seasons prior to the implementation of the Order. The Board believes the available information indicates that a restricted percentage should be established for the 2017-18 crop year to avoid oversupplying the market with tart cherries. Consequently, based on its discussion of this issue and the result of the above calculations, the Board recommended final percentages of 69 percent free and 31 percent restricted by a vote of 18 in favor and 1 opposed.

The initial restriction percentage of 26 percent was lower than the final restriction of 31 percent. One factor affecting this change was the final production numbers that came in above the Board's June estimate. Additionally, in September the Board revised the formula for calculating the three-year sales average, which will be used going forward. The revision in the calculation of the free sales average lowered the sales calculation from the preliminary 237.4 million pounds to the final average of 205 million pounds. The desired carry-out remained the same at 45 million pounds, resulting in a revised optimum supply of 250 million pounds, down from the June calculation of 282.4 million pounds.

At the Board meeting on September 14, an economic adjustment of 33 million pounds was recommended in the Optimum Supply Formula (OSF). Several members indicated the factors in the marketplace prompted the need to make this economic adjustment to maintain market growth. These factors include serving new and expanded markets, a year over year increase in sales, and the expectation of increased sales as a result of a smaller than normal tart cherry crop in Europe this season.

One member opposed to the proposed restriction expressed opposition to the definition of sales used in the OSF. In particular, the member expressed concern that the definition of sales is misrepresented by not including imported cherries in the sales average, thus not capturing overall supply and demand. Another member agreed with this concern but did not oppose the proposed OSF calculation.

A motion was made to re-open the discussion about the OSF and consider an adjustment for imports. However, the motion failed to gain enough support for further discussion. One member indicated that the issue of imports continues to be a top priority for discussion and will be revisited moving forward into the winter season.

After reviewing the available data and considering the concerns expressed, the Board determined that a 31 percent restriction would meet sales needs and establish some reserves without oversupplying the market. Thus, the Board recommended establishing final percentages of 69 percent free and 31 percent restricted. The Board could meet and recommend the release of additional volume during the crop year if conditions so warranted. The Secretary finds, from the recommendation and supporting information supplied by the Board, that designating final percentages of 69 percent free and 31 percent restricted will tend to effectuate the declared policy of the Act, and so designates these percentages.

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. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 600 producers of tart cherries in the regulated area and approximately 40 handlers of tart cherries who are subject to regulation under the Order. 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 have been defined as those whose annual receipts are less than $7,500,000 (13 CFR 121.201).

According to the National Agricultural Statistics Service (NASS) and Board data, the average annual grower price for tart cherries utilized for processing during the 2016-17 season was approximately $0.273 per pound. With total utilization at approximately 323.1 million pounds for the 2016-17 season, the total 2016-17 value of the crop utilized for processing is estimated at $88.2 million. Dividing the crop value by the estimated number of producers (600) yields an estimated average receipt per producer of $147,000. This is well below the SBA threshold for small producers. A free on board (f.o.b.) price of $0.83 per pound for frozen tart cherries, which make up the majority of processed tart cherries, is a good estimate to represent the range of prices reported by the Food Institute during the 2017-2018 season. Multiplying the f.o.b. price by total utilization of 323.1 million pounds results in an estimated handler-level tart cherry value of $268 million. Dividing this figure by the number of handlers (40) yields an estimated average annual handler receipts of $6.7 million, which is below the SBA threshold for small agricultural service firms. Assuming a normal distribution, the majority of producers and handlers of tart cherries may be classified as small entities.

The tart cherry industry in the United States is characterized by wide annual fluctuations in production. According to NASS, the pounds of tart cherry production utilized for processing for the years 2014 through 2016 were 304 million, 253 million, and 329 million, respectively. Because of these fluctuations, supply and demand for tart cherries are rarely equal.

Demand for tart cherries is inelastic, meaning changes in price have a minimal effect on total sales volume. However, prices are very sensitive to changes in supply, and grower prices vary widely in response to the large swings in annual supply. Grower prices per pound for processed utilization have ranged from a low of $0.073 in 1987 to a high of $0.549 per pound in 2012.

Because of this relationship between supply and price, oversupplying the market with tart cherries would have a sharp negative effect on prices, driving down grower returns. Aware of this economic relationship, the Board focuses on using the volume control authority in the Order to align supply with demand and stabilize industry returns. This authority allows the industry to set free and restricted percentages as a way to bring supply and demand into balance. Free percentage cherries can be marketed by handlers to any outlet, while restricted percentage volume must be held by handlers in reserve, diverted, or used for exempted purposes.

This rule controls the supply of tart cherries by establishing percentages of 69 percent free and 31 percent restricted for the 2017-18 crop year. These percentages should stabilize marketing conditions by adjusting supply to meet market demand and help improve grower returns. This action will regulate tart cherries handled in Michigan, New York, Utah, Washington, and Wisconsin. The authority for this action is provided in §§ 930.50, 930.51(a), and 930.52. The Board recommended this action at a meeting on September 14, 2017.

This rule will result in some fruit being diverted from the primary domestic markets. However, as mentioned earlier, the USDA's “Guidelines for Fruit, Vegetable, and Specialty Crop Marketing Orders” ( http://www.ams.usda.gov/publications/content/1982-guidelines-fruit-vegetable-marketing-orders ) specify that 110 percent of recent years' sales should be made available to primary markets each season before recommendations for volume regulation are approved. The quantity that will be available under this regulation is greater than 110 percent of the average quantity shipped in the prior three years.

In addition, there are secondary uses available for restricted fruit, including the development of new products, sales into new markets, the development of export markets, and being placed in reserve. While these alternatives may provide different levels of return than the sales to primary markets, they play an important role for the industry. The areas of new products, new markets, and the development of export markets utilize restricted fruit to develop and expand the markets for tart cherries. In 2016-17, these activities accounted for over 37 million pounds in sales, 15.6 million of which were exports.

Placing tart cherries into reserves is also a key part of balancing supply and demand. Although handlers bear the handling and storage costs for fruit in reserve, reserves stored in large crop years are used to supplement supplies in short crop years. The reserves allow the industry to mitigate the impact of oversupply in large crop years, while allowing the industry to maintain supply to markets in years when production falls below demand. Further, storage and handling costs are more than offset by the increase in price when moving from a large crop to a short crop year.

In addition, the Board recommended a carry-out of 45 million pounds and made a demand adjustment of 33 million pounds in order to make the regulation less restrictive. The domestic market will have an ample supply of tart cherries, even with this restriction. There are 110.5 million pounds of carry-in, 7.7 million pounds of production in the unregulated districts, and there will be 173.7 million pounds of free tonnage from the regulated districts, leaving 291.8 million pounds of fruit available to the domestic market. Consequently, it is not anticipated that this regulation will unduly burden growers or handlers.

While this action could result in some additional costs to the industry, these costs are more than outweighed by the benefits. The purpose of setting restricted percentages is to attempt to bring supply and demand into balance. If the primary market (domestic) is oversupplied with cherries, grower prices decline substantially. Without volume control, the primary market would likely be oversupplied, resulting in lower grower prices.

The three districts in Michigan, along with the districts in New York, Utah, Washington, and Wisconsin, are the restricted areas for this crop year, and have a combined total production of 262.8 million pounds. A 31 percent restriction, after removing the 11.7 million pounds for in-orchard diversion, means 173.3 million pounds will be available to be shipped to primary markets from these five states. The 173.3 million pounds from the restricted districts, 7.7 million pounds from the unrestricted districts (Oregon and Pennsylvania), and the 110.5-million-pound carry-in inventory will make a total of 291.5 million pounds available as free tonnage for the primary markets. This is less than the 306 million pounds of free tonnage made available last year. However, this will be enough to cover 260 million pounds of Board reported sales in 2016-2017, while providing substantial carry-out. Further, the Board could meet and recommend the release of additional volume during the crop year if conditions so warrant.

Prior to the implementation of the Order, grower prices often did not cover the cost of production. The most recent costs of production determined by representatives of Michigan State University are an estimated $0.33 per pound. To assess the impact that volume control has on the prices growers receive for their product, an econometric model has been developed. Based on the model, the use of volume control will have a positive impact on grower returns for this crop year. With volume control, grower prices are estimated to be approximately $0.05 per pound higher than without restrictions. In addition, absent volume control, the industry could start to build large amounts of unwanted inventories. These inventories would have a depressing effect on grower prices.

Retail demand is assumed to be highly inelastic, which indicates that changes in price do not result in significant changes in the quantity demanded. Consumer prices largely do not reflect fluctuations in cherry supplies. Therefore, this regulation should have little or no effect on consumer prices and should not result in a reduction in retail sales.

The free and restricted percentages established by this rule provide the market with optimum supply and apply uniformly to all regulated handlers in the industry, regardless of size. As the restriction represents a percentage of a handler's volume, the costs, when applicable, are proportionate and should not place an extra burden on small entities as compared to large entities.

The stabilizing effects of this action benefit all handlers by helping them maintain and expand markets, despite seasonal supply fluctuations. Likewise, price stability positively impacts all growers and handlers by allowing them to better anticipate the revenues their tart cherries will generate. Growers and handlers, regardless of size, benefit from the stabilizing effects of this restriction. In addition, the carry-out should provide processors enough supply to meet market needs going into the next season.

The Board considered alternatives in its preliminary restriction discussions that affected this action. The Board had extensive discussions on carry-out inventory alternatives. The alternatives included four motions that failed to pass, ranging from carry-out inventory of 20 million pounds to 55 million pounds. The Board determined that if the carry-out number was too large, it could have a negative impact on grower returns. Some members were concerned that processors would not have enough fruit to maintain sales before the new crop was available. After consideration of the alternatives, the Board recommended a carry-out of 45 million pounds.

Regarding demand, the Board began in June with a sales average of 237.4 million pounds. However, in September the Board revised the formula for calculating the sales average going forward. This modification will provide a more accurate calculation of free sales each year. This revision lowered the three-year sales average for the final calculation made at the September meeting to 205 million pounds.

Additionally, at the September meeting, Board members discussed an expectation of increased sales over the coming year. This anticipated increase is from serving new and expanded markets and to adjust for a smaller than normal tart cherry crop in Europe this season. In order to avoid undersupplying the market, the Board determined that the calculation of the optimum supply should include an additional adjustment to account for the growth in new markets, market expansion, and the crop shortage in Europe. The Board could accept the calculated surplus without any change. After discussion, an adjustment of an additional 33 million pounds was made to the 2017-18 available supply of tart cherries as it was determined that this amount would best meet the industry's sales needs. A motion to re-open the discussion and consider a further adjustment for imports was made, but the motion failed to receive support. Thus, the alternatives were rejected.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0177, Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin. No changes are necessary in those requirements as a result of this action. Should any changes become necessary, they would be submitted to OMB for approval.

This action will not impose any additional reporting or recordkeeping requirements on either small or large tart cherry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

As noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this final rule. One of the public comments received did reference the initial regulatory flexibility analysis. A review of that comment is included below as part of the review of all public comments received.

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.

In addition, the Board's meetings were widely publicized throughout the tart cherry industry, and all interested persons were invited to attend the meetings and participate in Board deliberations on all issues. Like all Board meetings, the June 22, 2017, and September 14, 2017, meetings were public meetings, and all entities, both large and small, were able to express views on this issue.

A proposed rule concerning this action was published in the Federal Register on May 11, 2018 (83 FR 21941). Copies of the rule were sent via email to all Board members and tart cherry handlers. Finally, the rule was made available through the internet by USDA and the Office of the Federal Register. A 30-day comment period ending June 11, 2018, was provided to allow interested persons to respond to the proposal. Two comments were received.

Both comments point to an increase in imports as a reason for opposing this action. One commenter referenced imports as being well over 200 million pounds of raw product equivalency, and the other commenter stated imports are over 250 million pounds a year. One commenter noted it was impossible to determine a equilibrium point without acknowledging the total market and the volume of imports and suggested imported cherries may be replacing domestic product pound for pound. The other commenter noted imports are growing faster than U.S. sales.

AMS's analysis of data from the Foreign Agricultural Service's Global Agricultural Trade System (GATS) indicates a raw product equivalent quantity of 260 million pounds of tart cherry products were imported into the U.S. in 2017. The imported volume has remained at 230 million pounds or higher since 2014. Tart cherry juice concentrate represents by far the largest segment of imports and has experienced tremendous growth since 2012.

Under the Order, when computing and determining final percentages for recommendation to the Secretary, the Board must give consideration to several factors, including supplies of competing commodities and economic factors having a bearing on cherry markets. The Board is aware of the volume of imported cherries products, and at the meetings on June 22, 2017, and September 14, 2017, the Board discussed the economic impact of imports. At the September meeting, an economic adjustment of 33 million pounds was recommended in the OSF. This adjustment was based, in part, on providing additional fruit for new and expanded markets, including those previously served by imported product, and the expectation of increased sales as a result of a smaller than normal tart cherry crop in Europe this season.

Further, given the rapid increase in the imported volume of tart cherry juice, the continued level of imported product, and the relatively stable level of domestic shipments, the vast majority of imported tart cherry products are going to new markets not previously served by the domestic industry. While there may be some common markets, these new markets serviced by imported product far exceed the estimated 78 million pounds of tart cherries restricted by this regulation.

Should domestic handlers decide to compete in these new markets, in most cases, restricted cherries could be used, and the handler could receive diversion credits under the diversion provisions of the Order. In addition, USDA is reviewing extending the maximum length of these activities from three years to five years, and expediting the approval process for some projects, thus creating even more opportunities to pursue new markets. These changes should benefit the industry by creating new markets for domestic production, but also by utilizing restricted fruit as a tool to build additional markets rather than additional reserves. Consequently, handlers have ample opportunity to compete for new markets using restricted cherries while continuing to service traditional markets with free cherries. Should industry efforts cause demand to exceed available volume, USDA could release an additional volume.

Steps have also been taken in this and previous seasons to put additional fruit on the market through increased carry-out and economic adjustments, and domestic sales have shown modest growth. The final percentages calculation for this season includes an economic adjustment of 33 million pounds and a market growth factor of 20.5 million pounds for an additional 53.5 million pounds beyond the average sales. Moreover, the industry reported a remaining free carry-in inventory of over 110.5 million pounds for the 2017-18 crop year, nearly 54 million pounds more than the recommend desired carry-out from 2016-17.

Further, carry-in for the following season has exceeded the recommended carry-out for the previous season for each of the previous three volume regulations. This suggests that even with established restrictions, unrestricted fruit is available to meet domestic demand.

Both commenters expressed concern that restricted reserve tart cherry product is being held in inventory beyond Order requirements. Under the Order, any product placed by the handler in the inventory reserve must have been produced in either the current or the preceding two crop years. Handlers can exchange such reserves with more current product as it ages or divert it to other approved outlets. These inventories are reviewed and monitored for compliance.

One of the commenters also questioned the statement in the RFA that the tart cherry market is inelastic, stating that it is not true for all products, particularly juice, and that markets should be looked at on a product by product basis. While pricing may vary in the sales of various processed products, the Order, and this regulation apply to the entire domestic tart cherry market. Grower prices remain very sensitive to changes in supply while demand remains relatively stable from year to year. This inelastic nature was demonstrated by the sharp jump in average grower price in 2012 to $0.549 per pound with the substantial decrease in domestic supply and a $0.07 per pound drop in the grower price from 2015 to 2016 when there was above-average supply.

Finally, both commenters mentioned the decision in Burnette Foods, Inc. v. USDA, 1 and the trial court's conclusion regarding the Board's composition in light of 7 CFR 930.20(g), both of which are being considered on appeal. One of the commenters stated that in light of the district court's decision, the recommendation of the Board should not stand. However, as stated in the proposed rule and in this action, the Secretary reached the decision contained in this final rule and has designated these free and restricted percentages based on his own independent evaluation of the recommendation and supporting information supplied by the Board. Therefore, this rulemaking is an action taken on behalf of the USDA. 2

Additional concerns raised in the comments pertained to issues not applicable to the proposed rule.

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

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions about the compliance guide should be sent to Richard Lower at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

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 930 is amended as follows:

Title III of the Energy Policy and Conservation Act of 1975 (42 U.S.C. 6291, et seq.; “EPCA” or “the Act”), among other things, authorizes DOE to regulate the energy efficiency of a number of consumer products and industrial equipment. 1 Title III, Part B  2 of EPCA established the Energy Conservation Program for Consumer Products Other Than Automobiles, which sets forth a variety of provisions designed to improve energy efficiency. These consumer products include integrated light-emitting diode (LED) lamps, the subject of this document.

Under EPCA, the energy conservation program consists essentially of four parts: (1) Testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. Relevant provisions of the Act include definitions (42 U.S.C. 6291), energy conservation standards (42 U.S.C. 6295), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), and the authority to require information and reports from manufacturers (42 U.S.C. 6296). The testing requirements consist of test procedures that manufacturers of covered products must use as the basis for (1) certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA (42 U.S.C. 6295(s)), and (2) making representations about the energy use or efficiency of those products (42 U.S.C. 6293(c)). Similarly, DOE must use these test procedures to determine whether the products comply with any relevant standards promulgated under EPCA. (42 U.S.C. 6295(s))

Federal energy efficiency requirements for covered products established under EPCA generally supersede State laws and regulations concerning energy conservation testing, labeling, and standards. (See 42 U.S.C. 6297) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions of EPCA. (42 U.S.C. 6297(d)

Under 42 U.S.C. 6293, EPCA sets forth the criteria and procedures DOE must follow when prescribing or amending test procedures for covered products. EPCA provides, in relevant part, that any test procedures prescribed or amended under this section shall be reasonably designed to produce test results which measure energy efficiency, energy use or estimated annual operating cost of a covered product during a representative average use cycle or period of use and shall not be unduly burdensome to conduct. (42 U.S.C. 6293(b)(3))

In addition, if DOE determines that a test procedure amendment is warranted, it must publish a proposed test procedure and offer the public an opportunity to present oral and written comments on it. (42 U.S.C. 6293(b)(2)) EPCA also requires that, at least once every 7 years, DOE review test procedures for each type of covered product, including integrated LED lamps, to determine whether amended test procedures would more accurately or fully comply with the requirements for the test procedures to not be unduly burdensome to conduct and be reasonably designed to produce test results that reflect energy efficiency, energy use, and estimated operating costs during a representative average use cycle or period of use. (42 U.S.C. 6293(b)(1)(A)) If the Secretary determines, on his own behalf or in response to a petition by any interested person, that a test procedure should be prescribed or amended, the Secretary shall promptly publish in the Federal Register proposed test procedures and afford interested persons an opportunity to present oral and written data, views, and arguments with respect to such procedures. The comment period on a proposed rule to amend a test procedure shall be at least 60 days and may not exceed 270 days. In prescribing or amending a test procedure, the Secretary shall take into account such information as the Secretary determines relevant to such procedure, including technological developments relating to energy use or energy efficiency of the type (or class) of covered products involved. (42 U.S.C. 6293(b)(2)) If DOE determines that test procedure revisions are not appropriate, DOE must publish notice in the Federal Register of its determination not to amend the test procedure. (42 U.S.C. 6293(b)(1)(A))

DOE published a final rule in the Federal Register on July 1, 2016 (hereafter the “July 2016 LED TP final rule”), which adopted test procedures for integrated LED lamps in appendix BB to subpart B of 10 CFR part 430 to support the implementation of labeling provisions by the Federal Trade Commission, as well as the general service lamps rulemaking, a category of lamps that includes LED lamps. 81 FR 43403. On November 4, 2016, DOE published a notice of proposed rulemaking (NOPR) (hereafter the “November 2016 LED TP NOPR”) in the Federal Register proposing an amendment to the integrated LED lamp test procedures to allow for time to failure measurements to be taken at elevated temperatures. 81 FR 76877. In this final rule, DOE adopts that amendment and responds to comments received on the November 2016 LED TP NOPR.

Based on stakeholder feedback since the publication of the July 2016 LED TP final rule, DOE proposed in the November 2016 LED TP NOPR to allow time to failure measurements collected for DOE's LED lamps test procedure to be taken at elevated temperatures. In this final rule, DOE amends the test procedure for integrated LED lamps as proposed in the NOPR without any further modification.

The effective date for the amended test procedures adopted in this final rule will be 30 days after publication of this document in the Federal Register . Representations of energy use or energy efficiency must be based on testing in accordance with the amended test procedures beginning 180 days after the publication of this final rule. DOE notes that the amended test procedure allows measurements to be taken at elevated temperatures but does not require it.

EPCA defines an LED as a p-n junction  3 solid-state device, the radiated output of which, either in the infrared region, visible region, or ultraviolet region, is a function of the physical construction, material used, and exciting current of the device. (42 U.S.C. 6291(30)(CC)) In the July 2016 LED TP final rule, DOE stated that the rulemaking applied to LED lamps that met DOE's adopted definition of an integrated LED lamp, which was based on the term as defined by ANSI/IES  4 RP-16-2010, “Nomenclature and Definitions for Illuminating Engineering,” and adopted as follows:

Integrated light-emitting diode lamp means an integrated LED lamp as defined in ANSI/IES RP-16.

The ANSI/IES standard defines an integrated LED lamp as an integrated assembly that comprises LED packages (components) or LED arrays (modules) (collectively referred to as an LED source), an LED driver, an ANSI standard base, and other optical, thermal, mechanical and electrical components (such as phosphor layers, insulating materials, fasteners to hold components within the lamp together, and electrical wiring). The LED lamp is intended to connect directly to a branch circuit through a corresponding ANSI standard socket. 81 FR 43405.

In the July 2016 LED TP final rule, DOE adopted test procedures, located in appendix BB to subpart B of 10 CFR part 430, for measuring and projecting time to failure of LED lamps based on lumen maintenance data. The adopted test procedures were largely based on the industry standards IES LM-84-14, “Approved Method: Measuring Luminous Flux and Color Maintenance of LED Lamps, Light Engines, and Luminaires,” and IES TM-28-14, “Projecting Long-Term Luminous Flux Maintenance of LED Lamps and Luminaires,” for the applicable lumen maintenance measurements and time to failure projection methods, with some modifications. 81 FR 43427-43428 (July 1, 2016). IES LM-84-14 provides a method for lumen maintenance measurement of integrated LED lamps and specifies the operational and environmental conditions during testing such as operating cycle, ambient temperature, airflow, and orientation. Lumen maintenance is the measure of lumen output after an elapsed operating time, expressed as a percentage of the initial lumen output. IES TM-28-14 provides methods for projecting the lumen maintenance of integrated LED lamps depending on the available data and test duration. The provided methods include projecting time to failure using multiple lumen maintenance measurements collected over a period of time, rather than a single measurement at the end of the test duration. 81 FR 43409 (July 1, 2016). DOE's test procedure adopted in the July 2016 LED TP final rule requires that the projection calculation be completed for each individual LED lamp and the projected time to failure values then be used to calculate the lifetime of the sample using the prescribed methods. 81 FR 43414. The lumen maintenance measurements used in the projection are specified to be taken at an ambient temperature of 25 °C ± 5 °C.

After the publication of the July 2016 LED TP final rule, the National Electrical Manufacturers Association (NEMA) requested that DOE approve the use of test results from the Elevated Temperature Life Test  5 contained in the ENERGY STAR Program Requirements Product Specification for Lamps (Light Bulbs) Eligibility Criteria Version 2.0 (hereafter “ENERGY STAR Lamps Specification V2.0”)  6 in place of the test method for measuring lumen maintenance and time to failure in DOE's LED lamps test procedure because it would reduce test burden. NEMA asserted that because the test conditions from the Elevated Temperature Life Test are more stringent, the test results, if different, would be more conservative than if the lamps were tested according to the current DOE LED lamps test procedure. 81 FR 76878-76879 (November 4, 2016). In response to this request, DOE proposed in the November 2016 LED TP NOPR to amend the integrated LED lamps test procedure to allow for time to failure testing to be conducted at elevated temperatures.

As noted in the November 2016 LED TP NOPR, DOE compared the current DOE LED lamps test procedure and the methods contained in the ENERGY STAR Elevated Temperature Life Test and determined that the operating temperature test conditions specified in the ENERGY STAR Elevated Temperature Life Test will more negatively affect performance values than those prescribed in DOE's LED lamps test procedure since the Elevated Temperature Life Test requires testing of LED lamps at higher ambient temperatures. Specifically, the Elevated Temperature Life Test requires directional lamps with rated wattages less than or equal to 20 W to be tested at 45 °C ± 5 °C; directional lamps with rated wattages greater than 20 W to be tested at 55 °C ± 5 °C; and all other omnidirectional and decorative lamps to be tested at 45 °C ± 5 °C. DOE's test procedure requires operating temperature to be maintained at 25 °C ± 5 °C. 81 FR at 76879 (November 4, 2016).

In addition to a difference in ambient temperature during lumen maintenance testing, DOE noted in the November 2016 LED TP NOPR that ENERGY STAR's and DOE's test procedures also differ in how to determine the value of lifetime. ENERGY STAR's test procedure provides a method to confirm a manufacturer-declared lifetime value. It requires manufacturers to meet or exceed minimum lumen maintenance values at a specific test duration to be able to claim a certain maximum lifetime. For example, for a lamp to be certified with a lifetime of 25,000 hours, that lamp must achieve a minimum lumen maintenance of 91.8 percent after 6,000 hours of operation. DOE's test procedure for determining lifetime depends on the time to failure of individual units, which is determined by taking lumen maintenance measurements at multiple intervals and then calculating the time to failure. For example, after 6,000 hours of testing, manufacturers can use the specified method to project a lamp's time to failure value to be up to 36,000 hours. Lifetime is then determined by calculating the median time to failure of the sample (calculated as the arithmetic mean of the time to failure of the two middle sample units when the numbers are sorted in value order). This is consistent with the statutory definition of lifetime, which is described as the length of operating time of a statistically large group of lamps between first use and failure of 50 percent of the group. 42 U.S.C. 6291(30)(P).

To maintain consistency with the statutory definition of lifetime, in the November 2016 LED TP NOPR, DOE did not propose to allow for an entire substitution of the ENERGY STAR lifetime test procedure in place of DOE's time to failure measurements. Instead, DOE proposed to amend section 4.4.4 of appendix BB to allow time to failure testing to be conducted at elevated temperatures above the current requirement, which stipulates to maintain ambient operating temperature at 25 °C ± 5 °C. Manufacturers would then have the flexibility to conduct the Elevated Temperature Life Test for ENERGY STAR, while also following the calculation method for DOE's LED lamps test procedure, and avoid test duplication. LED lamps are sensitive to changes in ambient temperature, generally performing less favorably at higher temperatures. DOE tentatively concluded that this proposed change would result in, if any difference, more conservative representations of lifetime. Id.

DOE received only one stakeholder comment pertaining to LED lamps and the proposed test procedure amendment. Intertek commented that they support the proposed amendment to the test procedure and added that testing at elevated temperature is more stringent than at normal ambient temperatures ( i.e., 25 °C). Intertek concluded that laboratory tests have confirmed this assessment and noted that elevated temperatures stress each of the lamp components in conditions that more accurately reflect the end-use environments of lamps intended for use in enclosed or recessed fixtures. (Intertek, No. 2 at p. 1) DOE appreciates the feedback confirming that testing at elevated temperatures results in more conservative estimates for lamp lifetime. DOE did not receive any other comments. Therefore, DOE is adopting the amendment to the integrated LED lamps test procedure as proposed in the November 2016 LED TP. Thus, DOE is amending section 4.4.4 of appendix BB to subpart B of 10 CFR part 430 to allow time to failure testing to be conducted at an ambient temperature of 25 °C ± 5 °C or at a manufacturer-selected temperature higher than 25 °C with the same ±5 °C tolerance.

EPCA requires that test procedures adopted by DOE not be unduly burdensome to conduct. In this document, DOE amends the existing test procedure for integrated LED lamps by allowing time to failure testing to be conducted at temperatures higher than ambient temperature. DOE has determined that this amendment would not be unduly burdensome for manufacturers to conduct and instead would decrease the test burden for many manufacturers that participate in the ENERGY STAR program.

The existing test procedure for integrated LED lamps, adopted in the July 2016 LED TP final rule, included a method to determine lifetime in support of Federal Trade Commission (FTC) labeling requirements. As such, any integrated LED lamp that makes representations of lifetime must use DOE's test procedure to determine lifetime. Many manufacturers also participate in the ENERGY STAR program and certify models of integrated LED lamps as compliant with those voluntary requirements. The ENERGY STAR specification for lamps requires that models be tested for lifetime at elevated temperatures unless they are labeled (1) “not for use in totally enclosed luminaires” (or equivalent statement), and (2) “not for use in recessed luminaires” (or equivalent statement) on the lamp and lamp packaging. 7 There are 8,051 distinct models of LED lamps certified through the ENERGY STAR program. Of these, there are 1,816 models of LED lamps certified as meeting the criteria to be tested at ambient temperature. That means the remaining 6,235 models of LED lamps that are certified in ENERGY STAR must be tested at elevated temperatures.

As described in section III.B, DOE is amending the test procedure for integrated LED lamps to allow time to failure testing to be conducted at either ambient temperature or at a manufacturer-selected temperature higher than ambient temperature. The amendment does not require any integrated LED lamp model to be retested. Currently under the DOE requirements, representations of lifetime require the use of test values obtained at ambient temperature, which will still be permitted under the amendment adopted in this final rule. However, this amendment can reduce burden for manufacturers who also certify models in the ENERGY STAR program in categories that require the testing of lifetime to be at elevated temperatures. Rather than conduct two separate tests for lifetime—one at ambient temperature per DOE's test procedure and one at elevated temperature per ENERGY STAR's test procedure—they can now conduct only one test at elevated temperature and use the test data to satisfy the requirements of both the mandatory Federal regulatory program and the voluntary ENERGY STAR program.

Because the market for integrated LED lamps is rapidly changing, DOE estimates, using information from lamp manufacturer interviews, that basic models of LED lamps are distributed in commerce for about two years before new models are introduced to take their place. While manufacturers must submit a report annually to certify a basic model's representation of lifetime, basic models do not need to be retested annually, unless required to support certification of a new, more efficient rating. 8 Because of the short time that basic models of LED lamps are distributed in commerce, DOE has determined that represented values for LED lamps are not revised during the two years they are distributed. Thus, DOE concludes that lifetime testing is conducted every two years for the number of basic models on the market, or every year for half the number of models on the market. In the July 2016 LED TP final rule, DOE estimated the cost of a lifetime test at a third-party lab to be $7,880 per basic model. 81 FR 43404, 43422 (July 1, 2016). If all of the 6,235 models of integrated LED lamps certified in ENERGY STAR that require testing at elevated temperatures were to conduct only one lifetime test instead of two, DOE estimates that the net present value (NPV) of savings would be up to $754 million at a 3 percent discount rate or up to $311 million at a 7 percent discount rate.

The effective date for the adopted test procedure amendment will be 30 days after publication of this final rule in the Federal Register . EPCA prescribes that all representations of energy efficiency and energy use, including those made on marketing materials and product labels, must be made in accordance with an amended test procedure, beginning 180 days after publication of the final rule in the Federal Register . (42 U.S.C. 6293(c)(2)) EPCA provides an allowance for individual manufacturers to petition DOE for an extension beyond the 180-day statutory period if the manufacturer may experience undue hardship in meeting the deadline. (42 U.S.C. 6293(c)(3)) To receive such an extension, petitions must be filed with DOE no later than 60 days before the end of the 180-day period and must detail how the manufacturer will experience undue hardship. ( Id. )

The Office of Management and Budget (OMB) has determined that this test procedure rulemaking is not a “significant regulatory action” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993). Accordingly, this action was not subject to review under the Executive Order by the Office of Information and Regulatory Affairs (OIRA) in the OMB.

On January 30, 2017, the President issued Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs.” The Executive Order stated the policy of the executive branch is to be prudent and financially responsible in the expenditure of funds, from both public and private sources. The Order stated that it is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations. Consistent with Executive Order 13771, this final rule is estimated to result in cost savings. Assuming a 7 percent discount rate, the final rule yields annualized cost savings of approximately $22.96 million (2016$). Therefore, this rule is an Executive Order 13771 deregulatory action.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of a final regulatory flexibility analysis (FRFA) for any final rule where the agency was first required by law to publish a proposed rule for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 2003 to ensure that the potential impacts of its rules on small entities are properly considered during the DOE rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel's website: http://energy.gov/gc/office-general-counsel. DOE certified in the November 2016 LED TP NOPR that the adopted test procedure amendment will not have a significant economic impact on a substantial number of small entities, and the preparation of a FRFA is not warranted. The factual basis for this certification is discussed in the following paragraphs.

The Small Business Administration (SBA) considers a business entity to be a small business, if, together with its affiliates, it employs less than a threshold number of workers specified in 13 CFR part 121. These size standards and codes are established by the North American Industry Classification System (NAICS). Manufacturing of LED lamps is classified under NAICS 335110, “Electric Lamp Bulb and Part Manufacturing.” The SBA sets a threshold of 1,250 employees or less for an entity to be considered as a small business for this category.

To estimate the number of companies that could be small businesses that sell LED lamps covered by this rulemaking, DOE conducted a market survey using publicly available information. DOE's research involved information from the Environmental Protection Agency's ENERGY STAR Certified Light Bulbs Database, 9 previous rulemakings, individual company websites, SBA's database, and market research tools ( e.g., Hoover's  10 reports). DOE screened out companies that did not meet the definition of a “small business” or are completely foreign owned and operated. DOE identified approximately seven small businesses that maintain domestic production facilities for the integrated LED lamps covered by this rulemaking.

DOE notes that this final rule merely amends the existing LED test procedure in a way that will reduce test burden on manufacturers by providing the option of testing at elevated temperatures. The adopted amendment will reduce the instances in which two tests for lifetime must be conducted for the same lamp. In addition, the amendment is supported by industry, including NEMA. Manufacturers that seek to test time to failure at elevated temperatures under the amendment are likely to have previously accounted for testing costs associated with the ENERGY STAR program as these measurements are required to be reported to ENERGY STAR if manufacturers certify the lamps as meeting the program requirements. For manufacturers who do not test products at elevated temperatures, this amendment presents no additional burden.

Based on the criteria outlined earlier and the reasons discussed in this section, DOE previously certified in the November 2016 LED TP NOPR that the amendment adopted in this final rule will not have a significant economic impact on a substantial number of small entities. The factual basis for this certification has not changed.

Manufacturers of LED lamps must certify to DOE that their products comply with any applicable energy conservation standards. To certify compliance, manufacturers must first obtain test data for their products according to the DOE test procedures, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including LED lamps. (See generally 10 CFR part 429.) The collection-of-information requirement for the certification and recordkeeping is subject to review and approval by OMB under the Paperwork Reduction Act (PRA). This requirement has been approved by OMB under OMB control number 1910-1400. Public reporting burden for the certification is estimated to average 35 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

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

In this final rule, DOE amends its test procedure for LED lamps. DOE has determined that this rule falls into a class of actions that are categorically excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and DOE's implementing regulations at 10 CFR part 1021. Specifically, this final rule amends the existing test procedure for integrated LED lamps without affecting the amount, quality or distribution of energy usage, and, therefore, will not result in any environmental impacts. Thus, this rulemaking is covered by Categorical Exclusion A5 under 10 CFR part 1021, subpart D, which applies to any rulemaking that interprets or amends an existing rule without changing the environmental effect of that rule. Accordingly, neither an environmental assessment nor an environmental impact statement is required.

Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE has examined this final rule and has determined that it will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the products that are the subject of this final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) No further action is required by Executive Order 13132.

Regarding the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (Feb. 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity, (2) write regulations to minimize litigation, (3) provide a clear legal standard for affected conduct rather than a general standard, and (4) promote simplification and burden reduction. Section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation (1) clearly specifies the preemptive effect, if any, (2) clearly specifies any effect on existing Federal law or regulation, (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction, (4) specifies the retroactive effect, if any, (5) adequately defines key terms, and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in sections 3(a) and 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. Public Law 104-4, sec. 201 (codified at 2 U.S.C. 1531). For a regulatory action resulting in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a proposed “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect small governments. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820; also available at http://energy.gov/gc/office-general-counsel. DOE examined this final rule according to UMRA and its statement of policy and determined that the rule contains neither an intergovernmental mandate, nor a mandate that may result in the expenditure of $100 million or more in any year, so these requirements do not apply.

Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This final rule would not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

DOE has determined, under Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights” 53 FR 8859 (March 18, 1988), that this regulation will not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.

Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OMB, a Statement of Energy Effects for any significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that (1) is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use if the regulation is implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.

This regulatory action to amend the test procedure for measuring the lumen maintenance and time to failure of LED lamps is not a significant regulatory action under Executive Order 12866. Moreover, it will not have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as a significant energy action by the Administrator of OIRA. Therefore, it is not a significant energy action, and, accordingly, DOE has not prepared a Statement of Energy Effects.

Under section 301 of the Department of Energy Organization Act (Pub. L. 95-91; 42 U.S.C. 7101), DOE must comply with section 32 of the Federal Energy Administration Act of 1974, as amended by the Federal Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA) Section 32 essentially provides in relevant part that, where a proposed rule authorizes or requires use of commercial standards, the notice of proposed rulemaking must inform the public of the use and background of such standards. In addition, section 32(c) requires DOE to consult with the Attorney General and the Chairman of the FTC concerning the impact of the commercial or industry standards on competition.

The amendment to the test procedures for LED lamps adopted in this final rule does not incorporate any new standards that would require compliance under section 32(b) of the FEAA.

As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule before its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).

The Secretary of Energy has approved publication of this final rule.

For the reasons stated in the preamble, DOE amends part 430 of Chapter II of Title 10, Code of Federal Regulations as set forth below:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Dassault Aviation Model MYSTERE-FALCON 900 airplanes. The NPRM published in the Federal Register on April 30, 2018 (83 FR 18753). The NPRM was prompted by a determination that more restrictive maintenance requirements and airworthiness limitations are necessary. The NPRM proposed to require revising the maintenance or inspection program, as applicable, to incorporate new and more restrictive maintenance requirements and airworthiness limitations. We are issuing this AD to prevent reduced structural integrity of the airplane.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2018-0027, dated January 30, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Dassault Aviation Model MYSTERE-FALCON 900 airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2018-0359.

We gave the public the opportunity to participate in developing this final rule. We received no comments on the NPRM or on the determination of the cost to the public.

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

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

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

Dassault Aviation has issued Chapter 5-40, Airworthiness Limitations, Revision 23, dated September 2017, of the Dassault Aviation Falcon 900 Maintenance Manual. This service information describes procedures, maintenance tasks, and airworthiness limitations specified in the Airworthiness Limitations Section (ALS) of the AMM. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 65 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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

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

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

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

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

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

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

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

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

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

On February 21, 2018, at 83 FR 7423, the Federal Register published our notice of proposed rulemaking (NPRM), which proposed to amend 14 CFR part 39 by adding an AD that would apply to AgustaWestland S.p.A (now Leonardo) Model AW189 helicopters with tail assembly part number (P/N) 8G5350A00131 installed. The NPRM proposed to require inspecting the TGB fitting for a crack. The proposed requirements were intended to detect a crack on a TGB fitting, which could reduce the tail assembly's ability to sustain loads from the TGB and the tail rotor and result in loss of helicopter control.

The NPRM was prompted by AD No. 2016-0177, dated September 8, 2016, issued by EASA, which is the Technical Agent for the Member States of the European Union, to correct an unsafe condition for Leonardo (formerly Finmeccanica S.p.A. and AgustaWestland S.p.A.) Model AW189 helicopters with a tail assembly P/N 8G5350A00131. EASA advises that a crack was detected on the TGB fitting P/N 4F5350A04152 during a scheduled inspection of an AW189 helicopter. EASA advises that this condition, if not detected and corrected, could lead to crack propagation up to a critical length. This condition could reduce the assembly's ability to sustain loads from the TGB and tail rotor, possibly resulting to reduced helicopter control. The EASA AD consequently requires repetitive inspections of the fitting and replacing the fitting, depending on the inspections' outcome. EASA considers these actions to be interim and that further AD action may follow.

After the NPRM was published, the FAA updated AgustaWestland S.p.A's (AgustaWestland) name to Finmeccanica S.p.A. and then to Leonardo on its FAA type certificate. This name change is reflected in this AD.

We gave the public the opportunity to participate in developing this AD. The following presents the comment received on the NPRM and the FAA's response.

One commenter requested that the AD also require an inspection of the tail rotor, tail boom, and rotor mast. The commenter does not provide any technical support for this request.

We disagree. The actions requested by the commenter are not necessary to correct the unsafe condition. We have made no changes to the rule portion of this AD.

These helicopters have been approved by the aviation authority of Italy and are approved for operation in the United States. Pursuant to our bilateral agreement with Italy, EASA, its technical representative, has notified us of the unsafe condition described in the EASA AD. We are issuing this AD because we evaluated all information provided by EASA and determined the unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed.

We consider this AD to be an interim action. The design approval holder is expected to develop a modification that will address the unsafe condition identified in this AD. Once this modification is developed, approved, and available, we might consider additional rulemaking.

The EASA AD requires you to provide a compliance record and return parts to Leonardo Helicopters if a crack is found on the fitting, and this AD does not.

Leonardo has issued Bollettino Tecnico No. 189-114, dated September 6, 2016 (BT), which specifies inspecting the TGB fitting within 30 flight hours or 1 month from the receipt of the BT, whichever comes first, and then at intervals not to exceed 150 flight hours. If a crack is found, the BT requires replacing the TGB fitting.

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

We estimate that this AD affects 4 helicopters of U.S. Registry and that labor costs average $85 per work-hour. Based on these estimates, we expect the following costs:

• Inspecting the TGB fitting requires 4 work-hours and no parts for a cost per helicopter of $340 and $1,360 for the U.S. fleet each inspection cycle.

• Replacing the TGB fitting requires 48 work-hours and parts cost $30,000 for a cost of $34,080 per helicopter.

According to Leonardo Helicopters' service information, some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage by Leonardo Helicopters. Accordingly, we have included all costs in our cost estimate.

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

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

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

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

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

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

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

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

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

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Zodiac Seats France, 537-Series Cabin Attendant Seats. The NPRM published in the Federal Register on December 11, 2017 (82 FR 58137). The NPRM was prompted by operator reports that safety belt wear was found at the attachment to the cabin attendant seat. The NPRM proposed to require inspecting the safety belt webbing, and modifying and re-marking each affected cabin attendant seat. We are issuing this AD to address the unsafe condition on these products.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2016-0163, dated August 10, 2016 (referred to after this as “the MCAI”), to address the unsafe condition on these products. The MCAI states:

You may obtain further information by examining the MCAI in the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2017-0688.

We gave the public the opportunity to participate in developing this final rule. We received no comments on the NPRM or on the determination of the cost to the public.

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

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

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

We reviewed Zodiac Seats France Service Bulletin (SB) No. 537-25-003, Revision 1, dated August 29, 2016. The SB describes procedures for installing an anti-rotation device on the seat pan shaft to limit the rotation of the safety belt. We also reviewed Zodiac Seats France Service Information Letter (SIL) 537-01, dated July 31, 2015. The SIL provides details to identify if the safety belt must be removed and replaced and provides instructions on safety belt storage to avoid this premature wear. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 55 seat assemblies installed on, but not limited to, Avions de transport regional (ATR) 42 and ATR 72 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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

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

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

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

For the reasons discussed above, I certify this AD:

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

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

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

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

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

This final rule implements regulatory amendments to authorize an RQE to participate in the Pacific Halibut and Sablefish Individual Fishing Quota Program (IFQ Program) in International Pacific Halibut Commission (IPHC) Regulatory Areas 2C and 3A in the Gulf of Alaska. NMFS published the proposed rule to authorize an RQE on October 3, 2017 (82 FR 46016). The comment period on the proposed rule ended on November 17, 2017. NMFS received 18 comment letters on the proposed rule. One of the comment letters was outside the scope of this action. Of the remaining 17 comment letters, NMFS identified and considered 19 unique, relevant comments. A summary of the comments and NMFS' responses is provided in the Comments and Responses section of this preamble.

A detailed review of this rule and the rationale for these regulations is provided in the preamble to the proposed rule (82 FR 46016, October 3, 2017). Electronic copies of the proposed rule and the Analysis may be obtained from www.regulations.gov or from the NMFS Alaska Region website at http://alaskafisheries.noaa.gov. All public comment letters submitted during the comment period may be obtained from www.regulations.gov.

The IPHC and NMFS manage fishing for Pacific halibut ( Hippoglossus stenolepis ) through regulations established under authority of the Northern Pacific Halibut Act of 1982 (Halibut Act). The IPHC adopts regulations governing the Pacific halibut (halibut) fishery under the Convention between the United States and Canada for the Preservation of the Halibut Fishery of the North Pacific Ocean and Bering Sea (Convention), signed at Ottawa, Ontario, on March 2, 1953, as amended by a Protocol Amending the Convention (signed at Washington, DC, on March 29, 1979). For the United States, regulations developed by the IPHC are subject to acceptance by the Secretary of State with concurrence from the Secretary of Commerce. After acceptance by the Secretary of State and the Secretary of Commerce, NMFS publishes the IPHC regulations in the Federal Register as annual management measures pursuant to 50 CFR 300.62. The interim final rule implementing IPHC regulations for the 2018 fishing season, including regulations affecting sport fishing for halibut and vessels in the charter fishery in IPHC Regulatory Areas 2C (Southeast Alaska) and 3A (Southcentral Alaska), was published March 20, 2018 (83 FR 12133).

The Halibut Act, at sections 773c(a) and (b), provides the Secretary of Commerce with general responsibility to carry out the Convention and the Halibut Act. In adopting regulations that may be necessary to carry out the purposes and objectives of the Convention and the Halibut Act, the Secretary of Commerce is directed to consult with the Secretary of the department in which the U.S. Coast Guard is operating, which is currently the Department of Homeland Security.

The Halibut Act, at section 773c(c), also provides the North Pacific Fishery Management Council (Council) with authority to develop regulations, including limited access regulations, that are in addition to, and not in conflict with, approved IPHC regulations. Regulations developed by the Council may be implemented by NMFS only after approval by the Secretary of Commerce. The Council has exercised this authority in the development of halibut fishery management measures, codified at 50 CFR 300.65, 300.66, and 300.67. The Council also developed the IFQ Program for the commercial halibut and sablefish fisheries, codified at 50 CFR part 679. Management of halibut in the IFQ Program is authorized under the Halibut Act.

A comprehensive history of management of the guided sport fishery for halibut (also referred to herein as the “charter fishery”) was presented in the proposed rule for this action published October 3, 2017 (82 FR 46016). The proposed rule also provides essential background of the commercial halibut and sablefish IFQ Program and how the IFQ Program intersects with management of the charter fishery, primarily through the Catch Sharing Plan (CSP) that establishes allocations of halibut harvests between the commercial halibut IFQ and charter sectors.

The proposed rule describes the history and development of annual management measures for the charter fishery. The proposed rule also provides a summary of the development of the Charter Halibut Limited Access Program (CHLAP) that established Charter Halibut Permits (CHPs), and provides details on the Guided Angler Fish (GAF) Program, which authorizes limited annual transfers of commercial halibut IFQ as GAF to qualified CHP holders. The proposed rule describes the Community Quota Entity Program (CQE) as well, where eligible communities can form non-profit corporations to purchase catcher vessel quota shares (QS). The IFQ resulting from the QS may then be leased to community residents annually.

As described in the proposed rule and in Section 2.3 of the Analysis, regulatory areas established by the IPHC are referred to as “IPHC Regulatory Areas.” This preamble uses the terms “Area 2C” and “Area 3A” to refer to IPHC Regulatory Areas 2C and 3A, respectively.

This final rule will change halibut fishery management in Areas 2C (Southeast Alaska) and 3A (Central Gulf of Alaska). It will implement a regulatory amendment to allow a non-profit RQE to represent the charter sector in Areas 2C and 3A. Sport fishing for Pacific halibut in Areas 2C and 3A is subject to distinct regulations, depending upon whether anglers are guided (charter) or unguided. To provide stability in the charter fishery and to help meet allocation objectives, the Council adopted and NMFS implemented the CHLAP in January 2010. The CHLAP limits the total number of charter vessel operators that may participate in the guided sport fishery in Areas 2C and 3A. To fish for halibut with charter anglers on board, an operator must have an original, valid CHP on board.

Since 2014, harvests of charter halibut in Alaska have been subject to a CSP that allocates harvests between the commercial halibut IFQ fishery and the charter fishery. To keep the harvests of the charter fishery within its allocation, regulations are developed annually in a cooperative effort between the Council, NMFS, and IPHC.

Regulations for charter anglers are generally more restrictive than regulations for unguided anglers, and have become more stringent as halibut abundance has dropped and charter catch limits have been reduced. Charter angling restrictions vary between Areas 2C and 3A. Typical restrictions include daily and annual limits on the number of fish retained, fish size limits, and closures on specific days of the week for charter halibut fishing.

This final rule will allow the RQE to purchase commercial halibut QS from the commercial halibut sector. The harvest pounds associated with the QS will yield annual Recreational Fishing Quota that will supplement the amount of halibut allocated to the charter sector under the existing CSP. If the RQE obtains enough QS, some or all of the halibut size and bag limits could be relaxed for charter anglers, up to a point where charter anglers could potentially retain up to two fish of any size as a daily bag limit, which is the current daily limit for unguided halibut anglers.

Quota share obtained by the RQE will be purchased on the open market, with prices and terms negotiated between the buyer (RQE) and sellers (commercial halibut QS holders). The regulations allow the RQE to hold QS indefinitely, and to transfer QS back to the commercial halibut sector. This preamble uses the term “RQE Program” to refer to the regulations that authorize the RQE and determine its activities and responsibilities. Additional detail on the specific provisions that apply to the RQE is provided in the section of this preamble titled “Provisions of Final Rule.”

The preamble to the proposed rule (82 FR 46016, October 3, 2017) provided a detailed description of the purpose and need for this final rule. A brief summary is provided here. As stated above, the charter fishery is limited to harvesting its percentage of the Area 2C or 3A combined catch limit allocated under the CSP. Charter catch limits increase or decrease as total halibut abundance increases or decreases. When halibut abundance is relatively low, as it has been in recent years compared to abundance in the 1990s and 2000s, the charter allocations under the CSP are lower, resulting in more restrictive annual management measures.

The only way that charter operators have been able to provide more opportunity to charter clients than the established management measures allow for in their area is through participation in the GAF Program by individual charter operators. Because of the current restrictions on charter harvests under the CSP and the limited flexibility for charter operators to provide additional harvest opportunities to their clients, charter operators have expressed their desire to find a market-based mechanism to increase their overall allocation of the halibut resource.

Based on these concerns, in 2015, the Council initiated the analytic process to develop a “market-based mechanism” to allow a non-profit entity to purchase and hold a limited amount of commercial halibut QS on behalf of charter anglers. The intent of the Council was to provide additional harvest opportunity and less restrictive annual harvest measures for charter anglers in times of low halibut abundance, while complying with total halibut removals under the catch limits established by the IPHC under the CSP. In initiating this effort, the Council sought to balance the objectives of participants in the charter fishery without undermining the goals of the IFQ Program or creating significant adverse impacts to other halibut sectors. A complete history of the development of this action is described in the proposed rule (82 FR 46016, October 3, 2017) and Section 2.2 of the Analysis.

This final rule allows an RQE to be established as an eligible entity to purchase halibut QS in Area 2C and Area 3A, with limitations, for use by the charter fishery as a whole. This final rule designates the RQE as an eligible participant in the IFQ Program that can purchase Area 2C and 3A halibut QS for use by all charter halibut anglers in the respective area. Any halibut QS purchased by the RQE will be held by this entity for the common use of charter halibut anglers.

Halibut QS held by the RQE will generate annual pounds of recreational fishing quota (RFQ), a type of annual harvest privilege similar to IFQ that has special requirements that pertain only to the RQE. RFQ will be calculated in the same manner as IFQ. Under this final rule, the specific amount of RFQ (in net pounds) is determined by the number of QS units held by the RQE as of October 1 of the preceding calendar year, the total number of halibut QS units issued in Area 2C or 3A as of January 15 of the year the IFQ or RFQ is issued, and the total amount of halibut allocated to the commercial IFQ fisheries in Areas 2C and 3A for that year.

Although the amount of RFQ is calculated in the same way as IFQ, it is subject to different requirements. The additional pounds of RFQ for each regulatory area are combined with the charter catch limit determined under the CSP to calculate an adjusted charter catch limit for the year for Area 2C or 3A. Annual charter management measures for Areas 2C and 3A will be analyzed, recommended to the IPHC, and adopted for implementation based on the estimated adjusted charter catch limits. RFQ held by the RQE will be available for harvest by all charter anglers aboard registered charter vessels of any size, regardless of the QS category from which that RFQ originated. Under this rule, RFQ may not be transferred as GAF. Unless specified, regulations that refer only to IFQ permit holders do not apply to the RQE. Likewise, unless specified in this rule, regulations that refer only to IFQ do not apply to RFQ.

This final rule does not change the underlying allocations to the commercial IFQ fishery and charter fishery specified in the CSP, and does not change the total QS pool. Therefore, the QS holders in the commercial IFQ fishery who do not transfer QS to the RQE will receive the same amount of IFQ pounds issued for their QS units, regardless of the amount of QS transferred to, and held by, the RQE.

The Council recommended and NMFS implements the requirement that an RQE must be established as a qualified non‐profit entity registered under the laws of the State of Alaska and recognized as exempt from Federal income tax by the Internal Revenue Service (IRS) to purchase and hold halibut QS for use by the charter fishery. The QS held by an RQE could yield RFQ annually. This final rule allows a single non-profit entity to form to represent and manage separate QS holdings for Areas 2C and 3A. More detailed information on the structure of the RQE is provided in the preamble to the proposed rule (82 FR 46016, October 3, 2017) and in Section 4.8.1.1 of the Analysis.

This final rule adds new definitions in § 679.2 for “recreational fishing quota (RFQ)” and “recreational quota entity (RQE).”

This final rule establishes requirements for the formation of a single RQE that would be eligible to purchase and hold commercial halibut QS for use by the guided halibut sector. The RQE must be a qualified non-profit entity registered under the laws of the State of Alaska and recognized as exempt from Federal income tax by the IRS. To qualify as exempt from Federal income tax, an organization must seek recognition of exemption from Federal income tax under section 501(a) of the Internal Revenue Code.

To be approved as the entity eligible to purchase and hold halibut QS, the applicant wishing to become the RQE is required to demonstrate it is a non-profit entity registered under the laws of the State of Alaska by submitting to NMFS the articles of incorporation and management organization information, including bylaws and a list of key personnel including, but not limited to, the board of directors, officers, representatives, and managers.

Articles of incorporation are public documents that must be filed with the state agency where the corporation becomes incorporated ( e.g., with Alaska's Division of Corporations, Business, and Professional Licensing). The RQE must be incorporated within the State of Alaska consistent with incorporation requirements applicable to CQEs.

In addition to demonstrating it is a non-profit corporation recognized by the State of Alaska, the applicant wishing to become the RQE is required to demonstrate it has been granted an exemption from Federal income tax by the IRS by submitting to NMFS the IRS acknowledgement of the entity's Federal tax exemption.

NMFS requires the approved RQE to maintain its non-profit and tax-exempt status, as described above. If the approved RQE entity does not meet this requirement, NMFS will not issue the RFQ that would otherwise be issued to the RQE based on its QS holdings. In addition, NMFS will provide the approved RQE entity with an opportunity to reinstate its non-profit and/or tax-exempt status. If the approved RQE entity does not demonstrate to NMFS that it is a qualified non‐profit entity registered under the laws of the State of Alaska and recognized as exempt from Federal income tax by the IRS by the established deadline, NMFS will issue an Initial Administrative Determination (IAD) to revoke the entity's status as the approved RQE and to require the entity to divest its QS holdings. The entity has the opportunity to appeal the IAD through the National Appeals Office under the provisions established at 15 CFR part 906. The applicant must complete the “Application for a Non-profit Corporation to be Designated as a Recreational Quota Entity (RQE)” and submit it to NMFS Alaska Region for review and approval. The application form will be available on the NMFS Alaska Region website at https://alaskafisheries.noaa.gov after the effective date of this rule. NMFS will approve the first complete RQE application it receives. All other RQE applications will be disapproved. NMFS will notify the RQE when its application has been approved. Once approved, NMFS will establish an account for QS and RFQ holdings when the RQE acquires QS. If NMFS disapproves an application, that determination may be appealed to the NMFS National Appeals Office under the provisions established at 15 CFR part 906. Detailed information on RQE eligibility is provided in the preamble to the proposed rule (82 FR 46016, October 3, 2017) and in Section 4.8 of the Analysis.

This rule adds a new paragraph to § 679.41(n) to describe the application process and eligibility requirements for a prospective RQE.

This final rule authorizes two-way transfers of QS. QS acquired by the RQE may be transferred to an otherwise eligible participant in the commercial IFQ fishery. Because QS and the resulting IFQ used in the commercial IFQ fishery is subject to vessel categories and block designations on initially-issued QS—unlike the QS and resulting RFQ used by the RQE, which is exempt from such categories and designations—NMFS will track QS units, IFQ pounds, and vessel category and block designations that apply to ensure that original categories and designations for the commercial IFQ fishery are maintained during the transfer process. Detailed information on transfers of QS between the commercial and charter fishery is provided in the preamble to the proposed rule (82 FR 46016, October 3, 2017) and in Section 4.8 of the Analysis.

NMFS modifies § 679.42 to describe the QS transfer process for RQEs.

This final rule establishes area-specific annual limits on the amount of halibut QS that can transfer to an RQE. Under this final rule, the RQE may transfer up to the equivalent of 1 percent of the commercial QS units in Area 2C based on the 2015 pool of all QS categories (59,477,396 units). An annual transfer limit was set equivalent to 1.2 percent of the commercial QS pool in Area 3A based on the 2015 pool of all QS categories (184,893,008 units). For a more detailed description of the rationale for this provision, please see the preamble of the proposed rule (82 FR 46016, October 3, 2017). Annual transfer limits are discussed in further detail in Section 4.8.1.2.2 of the Analysis.

NMFS adds a new paragraph at § 679.42(f)(8) to implement the annual transfer limits on QS for RQEs.

This final rule places limits on the total amount of halibut QS that may be held by the RQE. For Area 2C, the RQE can hold up to 10 percent of the 2015 commercial QS pool. This proportion is calculated based on the entire QS pool, including categories and blocks of QS units that the RQE is prohibited from purchasing (discussed in the next sections of this preamble). Ten percent of the 2015 commercial QS pool in Area 2C equates to 5,947,740 QS units.

This final rule limits QS holdings for Area 3A to 12 percent of the 2015 entire commercial QS pool, including categories and blocks of QS units that the RQE is prohibited from purchasing. Twelve percent of the 2015 commercial QS pool in Area 3A equates to 22,187,161 units.

As described in the proposed rule (82 FR 46016, October 3, 2017), this final rule specifies the limits on total QS holdings by the RQE in regulations so that they are clearly defined for fishery participants and will not fluctuate if there are future changes in the Area 2C or 3A QS pools. The limits on RQE holdings of QS are discussed in further detail in Section 4.8.1.2.3 of the Analysis.

NMFS adds a new paragraph at § 679.42(f)(8) to describe the QS holding limits for the RQE.

Part of this RQE Program limits the total amount of GAF that may be used annually by CHP holders. The GAF transfer restrictions are adopted so that in any year, the combined amount of RFQ and GAF transferred to CHP holders cannot exceed a poundage equal to the maximum amount of pounds that could be issued as RFQ in Area 2C or 3A. The limit on GAF transfers as RQE QS holdings increase is discussed in further detail in Section 4.8.1.2.4 of the Analysis.

To implement these restrictions on IFQ transfers to GAF, NMFS adds a new paragraph at § 300.65(c)(5)(ii)(D)( 1 )( iv ).

This rule also places limits on the amounts of QS the RQE could hold by vessel category. In Area 2C, the RQE is limited to holding an amount equal to 10 percent of D-category QS and an amount equal to 10 percent of B-category QS, based on the Area 2C 2015 QS pools. Translated to QS units, this rule prohibits the RQE from holding more than 889,548 units of D-category QS, and more than 265,524 units of B-category QS, in Area 2C (see Table 4-40 of the Analysis). In Area 3A, the RQE is prohibited from purchasing or holding D-category QS. The RQE may purchase any amount, up to the annual transfer and cumulative use limits of A-, B-, and C-category QS in Area 3A. The vessel category restrictions are discussed in more detail in Section 4.8.1.2.5 of the Analysis.

NMFS adds a new paragraph at § 679.42(f)(8) describing RQE use limits for specific vessel categories of QS.

In addition to vessel category restrictions for RQE purchases of QS, this final rule places limits on the size of QS blocks that the RQE may purchase. The RQE is prohibited from purchasing ( i.e., receiving by transfer) blocks of QS by category that equate to 1,500 pounds or less (based on 2015 pounds). For Area 2C, this means that the RQE cannot purchase blocked QS of 24,250 units or less. For Area 3A, the RQE is prohibited from purchasing blocked QS of 35,620 units or less. Block restrictions are discussed in more detail in Section 4.8.1.3 of the Analysis.

NMFS adds a new paragraph at § 679.42(g)(1)(iii) to establish restrictions on the type and amount of blocked QS that the RQE can hold and receive by transfer.

This final rule also modifies several regulations to facilitate the proper accounting of RFQ. This section describes the process that will be used annually to calculate the amount of RFQ and establish annual management measures.

On October 1 of each year, the RQE's QS holdings will be used as the basis for estimating the number of RFQ pounds to add to the charter allocation under the CSP for the following calendar year. This estimated combined allocation will be used to recommend the charter fishery management measures for the following year. The process and timeline for setting annual management measures remains unchanged. Once the IPHC annual management measures are approved, typically in late February or early March, NMFS will issue pounds of RFQ to the RQE based on the number of QS units held by the RQE on October 1 of the previous year. This RFQ will augment the charter catch limit established under the CSP. The regulations establish October 1 as the date for determining how many QS units will yield RFQ so that the Council's Charter Committee and the Council is able to estimate the pounds of RFQ that the RQE receives in the following year. The Charter Committee will then be able to factor that amount into its recommendations for the following year's charter management measures.

The RFQ will not be issued to the RQE in the upcoming fishing year for any QS that the RQE received by transfer after October 1. If the RQE transfers QS that it holds on October 1 to a recipient in the commercial IFQ fishery after that date, NMFS will not issue IFQ to the commercial recipient for that QS in the following calendar year. This approach is similar to the method used in the commercial fishery to allow the transfer of QS but not the IFQ once that IFQ has been used. In this case, NMFS considers that RFQ is effectively “used” if it is assigned to the charter allocation for the following calendar year. If the RQE receives QS by transfer after October 1, that QS will not result in the issuance of RFQ for the following calendar year. However, if the RQE subsequently transfers any QS received by transfer after October 1 that did not result in RFQ back to the commercial IFQ fishery, NMFS will issue IFQ to the commercial recipient for that QS.

In late November of each year, NMFS will estimate the pounds of RFQ that will be available to the RQE in the upcoming year, based on the QS units held by the RQE on October 1, the QS:IFQ ratio of the current year, and the IPHC's preliminary estimate of the possible combined catch limits in Areas 2C and 3A.

In December of each year, the Council will recommend a range of potential charter management measures for Areas 2C and 3A that are expected to limit charter harvests in an area to the estimated charter catch limit, plus the estimated supplemental pounds provided by the RFQ.

In this final rule, NMFS is revising § 679.40(c)(2) to clarify that NMFS will use the QS pool for the IFQ regulatory area, including Areas 2C and 3A, on record with the NMFS Alaska Region, on January 15 of that year for the purpose of calculating the amount of IFQ and RFQ for that regulatory area for that year. The revision to move the date of record from January 31 to January 15 of each year ensures that IPHC will be able to determine the amount of IFQ and RFQ and that the total allocations are assigned to the respective commercial IFQ and charter fisheries when it adopts annual management measures at its annual meeting in late January.

NMFS is also revising § 300.65(c) to authorize the use of RFQ in the charter fishery, and to describe how and when QS holdings by the RQE are calculated and added to the charter catch limit under the CSP.

This final rule establishes a temporary redistribution of RFQ from the RQE to the commercial IFQ fishery if the RQE holdings of QS provide a charter harvest opportunity greater than the unguided recreational management measures in either Area 2C or 3A. Under this final rule, NMFS will not issue annual RFQ in excess of the adjusted charter catch limit needed for charter anglers to obtain the unguided recreational management measures for that area. For more information on the charter catch limit, see the preamble of the proposed rule (82 FR 46016, October 3, 2017).

The Council and the Analysis use the term “reallocate” to describe the temporary (1-year) redistribution of excess RFQ to the commercial IFQ fishery. NMFS notes that the term reallocate is often used in other regulations to describe a permanent transfer of harvest privileges from one group of participants to another. NMFS uses the term “redistribute” in this rule to clarify for fishery participants and the public that the distribution of excess RFQ to commercial IFQ fishery participants is in effect for one year, and is not a permanent reallocation.

This rule implements the following process for the temporary redistribution of RFQ (as IFQ) to the commercial IFQ fishery, in the event that the RQE has QS holdings in excess of the amount needed to provide charter anglers with harvest opportunities equal to those for unguided recreational anglers. Each January, the IPHC will recommend charter fishery management measures for Areas 2C and 3A that are expected to limit charter harvest to the adjusted charter catch limit for each area (the sum of the annual guided sport catch limit under the CSP and the estimated amount of RFQ from the RQE's QS holdings on October 1 of the previous year).

After the IPHC recommends charter fishery management measures, NMFS will determine if a redistribution of excess RFQ is necessary. If the IPHC has adopted charter fishery management measures that are equivalent to the unguided recreational management measures in either Area 2C or 3A ( e.g., a daily bag limit of two halibut of any size), NMFS will determine the amount of RFQ that are needed to account for charter harvest in Area 2C and Area 3A under the recommended management measures and issue that amount as RFQ to supplement the charter fishery allocation under the CSP. The difference between the total amount of available RFQ and the amount needed for the charter fishery is excess RFQ. NMFS will redistribute the amount of excess RFQ using the process recommended by the Council.

Under this final rule, 50 percent of any RFQ in excess of the amount needed to achieve the unguided recreational management measures in either Area 2C or 3A is redistributed as IFQ to all catcher vessel QS holders in the applicable area (Area 2C or Area 3A) who held not more than 32,333 QS units in Area 2C, and 47,469 QS units in Area 3A ( i.e., the amount of QS that yielded 2,000 pounds of IFQ in 2015) in the year prior to the redistribution, and who also held that QS eligible for redistribution during the year that the redistribution occurs. This 50 percent is redistributed among qualified QS holders in proportion to their QS holdings.

The Council's recommendation stated that 50 percent of excess RFQ should be redistributed “equally” to all qualified QS holders. NMFS will implement this provision by dividing the amount of IFQ available for redistribution to qualified QS holders by the total amount of QS units held by all qualified QS holders. For example, if there were 50,000 pounds of excess RFQ to be redistributed as IFQ in Area 3A in calendar year 2025 among QS holders who held not more than 47,469 QS units in the year prior to the redistribution (2024), and in the year during which the redistribution occurs (2025), and the total sum of all QS held by those qualified QS holders is 500,000 units, then each of the qualified QS holders would receive an additional 1/10 of a pound of IFQ in 2025 for each QS unit they hold. NMFS does not issue IFQ in less than one pound increments; therefore, NMFS will round the amount of redistributed IFQ to the nearest pound for each qualified QS holder. Section 4.8.1.3 of the Analysis provides additional information on the method NMFS will use to redistribute excess RFQ.

This final rule requires the QS holder to hold the QS in the year prior to the redistribution to meet the clear intent of the Council, as well as in the year that the redistribution occurs in order to ensure the proper administration of this provision. This requirement ensures that IFQ is issued to persons who hold the underlying QS eligible to receive the redistribution.

Under this final rule, the remaining 50 percent of RFQ in excess of the amount needed to achieve the unguided sport management measures in either Area 2C or 3A will be redistributed equally among all CQEs that held halibut QS in the applicable area (Area 2C or Area 3A) in the year prior to the redistribution as well as in the year that the redistribution occurs. If no CQE holds QS in the applicable area (Area 2C or Area 3A) in the preceding year and in the year that the redistribution occurs, this 50 percent of the excess RFQ will not be redistributed in that area. In other words, the excess RFQ will be unfished or “left in the water” for conservation.

Section 4.8.1.3 of the Analysis describes the options considered by the Council and NMFS in developing this portion of this final rule.

NMFS adds regulations under § 679.40(c) to describe how excess RFQ will be redistributed.

The Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) at section 304(d)(2)(A) requires that cost recovery fees be collected for the costs directly related to the management, data collection, and enforcement of any limited access privilege programs. This includes programs such as the commercial halibut IFQ Program, under which a dedicated allocation is provided to IFQ permit holders. Fees owed are a percentage, not to exceed 3 percent, of the ex-vessel value of fish landed and debited from IFQ permits. Each year, NMFS sends fee statements to IFQ holders whose annual IFQ was landed; those holders must remit fees by January 31 of the following year. Under this rule, the RQE is responsible for all cost recovery fees on their annual RFQ.

In years when the RQE holds QS and the RFQ is issued to augment the charter fishery's catch limit, the charter fishery will be effectively using all of this RFQ; therefore, the RQE will be required to pay cost recovery fees on all of its RFQ. Since all annual RFQ issued to the RQE will be considered “used,” NMFS will levy the fee calculated for the RQE's annual RFQ pounds that are issued, rather than estimating RFQ harvest at each point of charter landings. The fee will be calculated using the standard price calculated for Area 2C or 3A and the RFQ held by the RQE. This is similar to the method used to apply an ex-vessel value for GAF. The IFQ cost recovery fee will be levied on the RQE each year the RQE holds QS, and the resulting RFQ is issued to augment the catch limit in the charter fishery. All holdings acquired by the RQE on October 1 of the prior year are subject to the IFQ cost recovery fee.

For purposes of cost recovery, the RQE is required to pay fees on all resulting pounds of RFQ, even if the charter fishery's harvest is under its catch limit in Area 2C or 3A for that year. In December of each year, NMFS will (1) determine the standard prices and the cost recovery fee percentage, (2) announce the standard prices and the cost recovery fee percentage in the Federal Register , and (3) issue the RQE a fee assessment. The RFQ fee assessment will be based on the number of RFQ pounds added to either the Area 2C or 3A charter catch limit based on QS holdings as of October 1 of the prior year multiplied by the standard price for Area 2C or Area 3A, and multiplied by the cost recovery fee percentage (approximately 3 percent in recent years). The cost recovery fee payment from the RQE to NMFS is due by January 31 of each year.

Additional information about assessing cost recovery fees for an RQE is provided in Section 4.8.1.4.1 of the Analysis.

NMFS is revising regulations throughout § 679.45 to incorporate the RQE into the IFQ Program cost recovery fee estimation and collection process.

Because all RFQ is considered landed or used by the RQE in the year for which it is issued and the standard prices are applied to pounds of RFQ, the RQE is not required to complete the recordkeeping and reporting requirements described for the IFQ Program at § 679.5(1). The RQE is exempt from submitting the IFQ Prior Notice of Landing, Product Transfer, IFQ Landing, IFQ Transshipment Authorization, and IFQ Departure reports.

This final rule requires the RQE to file an annual report with the Council by January 31 of each year that details the administrative activities and business operations of the RQE during the prior year for each year that it holds commercial QS. Although not specifically requested by the Council, the annual report also must be submitted to NMFS for reasons described below.

The RQE is required to include the following general information in its annual report: (1) Any changes to the bylaws, board of directors, or other key management personnel of the RQE during the preceding year; (2) amounts and descriptions of annual administrative expenses; (3) amounts and descriptions of funds spent on conservation, research, and promotion of the halibut resource and a summary of the results; and (4) amounts and descriptions of all other expenses. Additionally, the RQE is required to submit the following information by regulatory area: (1) The total amount of halibut QS by vessel category and block held by the RQE at the start of the calendar year, on October 1, and at the end of the calendar year; (2) a list of all transfers (purchases, sales, and any other transfers) of halibut QS, including transaction prices if applicable; and (3) the number of CHPs and associated angler endorsements purchased and held by the RQE.

Section 679.41(c)(10)(ii) requires a CQE to submit a timely and complete annual report to NMFS before a transfer of QS will be approved or IFQ will be issued. A similar requirement for the RQE annual report is added at new paragraph § 679.41(c)(11)(i). If the RQE held QS in the previous year and has not submitted a timely and complete annual report by the January 31 deadline, NMFS will not approve a transfer of QS or issue RFQ until the report is submitted. To confirm receipt of the report, this rule requires that the RQE submit the annual report to both the Council and NMFS.

NMFS is adding §§ 679.5(v) and 679.41(c)(11)(i) to include the RQE annual report requirements.

NMFS revises the IFQ regulations at 50 CFR part 679 that refer to “an IFQ permit holder” to also include the term “RQE” where applicable.

NMFS revises regulations at 50 CFR part 679 that refer to the IFQ permit that also pertain to the RQE to include the term “RFQ permit account.” NMFS revised this language because the RQE will not be issued an IFQ fishing permit. Instead, NMFS will establish an RFQ permit account for the RQE that will be used to administer RFQ as described in this rule.

NMFS revises regulations at 50 CFR part 679 that refer to IFQ to include the term “RFQ” when the regulations refer to IFQ and RFQ.

The locations of these minor changes are shown in the table in the regulatory text at the end of this rule.

This rule changes several references within §§ 679.41 and 679.45 that describe the former procedure for appealing an IAD to the NMFS Alaska Office of Administrative Appeals. Those procedures are described at § 679.43. NMFS has centralized the appeals process in the National Appeals Office, which operates out of NMFS' headquarters in Silver Spring, MD. The National Appeals Office is now charged with processing appeals that were filed with the Office of Administrative Appeals, Alaska Region. The procedure for appealing an IAD through the National Appeals Office is at 15 CFR part 906 (79 FR 7056, February 6, 2014). This rule updates the regulations referring to appeals procedures for the IFQ Program to refer to 15 CFR part 906 instead of to 50 CFR 679.43.

NMFS made the following changes to the final rule from the proposed rule:

• Section 679.7(f)(3)(i)(C) confirms that fixed gear may not be used to retain RFQ halibut. The regulatory language is changed to conform with wording used in similar regulations in this sub-section. The phrase “as defined in § 679.2” is removed as a reference to fixed gear, and to add clarity, “halibut RFQ” is replaced with “RFQ halibut”.

• The proposed regulatory text at § 679.41(g)(11)(ii), (iii), and (iv) is changed to clarify that the regulatory references for RQE eligibility in these three paragraphs refer to all the paragraphs and requirements that fall under (n)(1) of that section.

• The proposed regulatory text at § 679.42(g)(1)(iii) is changed to more clearly reflect the Council's intent that the RQE is prohibited from receiving halibut QS blocks of 1,500 pounds or less in Areas 2C and 3A, based on 2015 pounds. The phrase “is limited to receiving” was replaced with “may not receive;”

• Section 679.45(f)(4) is changed to clarify that the paragraph applies to IFQ permit holders and to the RQE. The phrase “the IFQ permit holder” is replaced with “the IFQ permit holder or RQE.”

NMFS received 18 comment letters on the proposed rule. One of the comment letters was outside the scope of this action. Of the remaining 17 comment letters, NMFS identified and considered 19 unique, relevant comments, which are summarized and responded to below. The commenters consisted of individuals, representatives of the charter sector, and representatives of the commercial fishing sector.

Comment 1: Several commenters expressed support for the RQE Program and noted it would bring stability to the charter fishery and create long-term efficiency by allowing transfers of QS between commercial QS holders and the charter fishery and will help lessen restrictive harvest measures for guided anglers whose fishing opportunities are closely linked to the economics of the charter fishery.

Response: NMFS acknowledges the comment.

Comment 2: We support restricting the maximum number of shares transferred annually. We support fixing October 1 QS holdings as the basis for estimating the number of IFQ pounds for the following fishing year. We support NMFS assessing cost recovery fees for RFQ holdings.

Response: NMFS acknowledges the comment, and notes that the provisions the commenter supports are contained in this final rule.

Comment 3: Charter fishing is a main source of income for some Alaskans. Allowing charter catch limits to increase would bring fishing back to the sport fishing industry.

Response: The principal objective of this final rule is to promote social and economic flexibility in the charter fishery by authorizing the development of an entity that is eligible to purchase and hold commercial halibut QS in Areas 2C and 3A, thereby providing additional harvest opportunities to charter anglers. This final rule is therefore intended to promote long-term efficiency in the use of the halibut resource by allowing transfers of QS between commercial QS holders and the charter fishery, through an RQE, under a “willing buyer and willing seller” approach.

Comment 4: The RQE should remain as a non-profit organization and as a single entity. As a single entity, it should not be limited on how much QS it should be able to obtain. The charter fishery should maintain the daily catch limit of two fish per day with no size restrictions. There should be a cap on the number of charter boats.

Response: This final rule establishes the RQE as a single, non-profit entity to represent and manage the separate QS holdings for Area 2C and Area 3A. The Council recommended, and NMFS has adopted, regulations that limit the amount of QS that the RQE can purchase and use. These regulations are adopted primarily to mitigate the potentially disruptive impacts on the QS market with the entry of the RQE, and to take into account the importance of commercial halibut IFQ on fishing communities.

The current CHLAP program caps the number of charter operations in Areas 2C and 3A. Upon implementation of this final rule, three primary factors will determine whether charter anglers will be able to retain two fish per day of any size: (1) The abundance of halibut and the resulting catch limits established by IPHC and allocated under the CSP; (2) the number of anglers and the size of halibut that are projected to be retained from charter boats; and (3) the amount of QS that the RQE purchases and holds on October 1 of each year, and is made available to augment the charter allocation.

Comment 5: The 11 vessels that NMFS considered large entities should give the RQE 2 percent of their quota.

Response: The Council did not recommend and this final rule does not implement regulations to reallocate QS from specific QS holders to the RQE. The commenter's recommendation is outside of the scope of this action. The commenter notes that some of the QS holders are considered to be large entities. We assume that the commenter is referring to information provided in the initial regulatory flexibility analysis prepared in the proposed rule (82 FR 46016, October 3, 2017). In that analysis, NMFS estimates that the owners of 11 vessels that harvest halibut IFQ would be considered large entities because they showed revenues that exceeded a specific threshold in the most recent year for which we have records (2014). Additional information on the revenues of vessels active in the halibut IFQ fishery is provided in Section 5.6 of the Analysis.

Comment 6: National Standard Guidelines that interpret specific provisions of the Magnuson-Stevens Act state that fishery management plans should prevent overfishing and consider the value of fishery resources to fishing communities.

Response: NMFS notes that the National Standard Guidelines cited by the commenter do not apply to the halibut fishery because it is managed under the authority of the Halibut Act as described in the section of this preamble titled “Authority for Action,” and not the Magnuson-Stevens Act. As described in the proposed rule (82 FR 46016, October 3, 2017), creation of an RQE Program does not change conservation or management of the halibut resource in Areas 2C and 3A. The Analysis at Section 4.8.2 describes how the Council and NMFS considered the value of fishery resources to fishing communities. This action does not change the current process for establishing annual catch limits or the management measures that have been established to meet specific social and economic goals for the halibut IFQ fishery or the RQE Program.

Comment 7: Halibut harvested by the commercial sector are weighed at the point of sale. It would be impossible to determine the pounds of halibut harvested by the charter fleet.

Response: NMFS disagrees. The pounds of halibut harvested by the charter fleet are accounted for by the Alaska Department of Fish and Game logbook program, which is a requirement for all guided angler operations in Alaska. All halibut caught and retained by charter anglers are required to be measured in a standardized fashion. From these measurements, IPHC length-weight conversion tables are used to establish the pounds of halibut harvested by the charter fleet. The logbook program provides the basis for determining the charter sector's harvests under the CSP and is used to develop annual management measures for guided anglers in IPHC Areas 2C and 3A. This method of catch accounting will not change when the RQE acquires halibut QS and the associated pounds of halibut from that QS is added to the charter sector allocation under the CSP.

Comment 8: The last twenty years have led to overfishing and halibut are small.

Response: According to the most recent stock assessment by IPHC, Pacific halibut are not considered to be subject to overfishing (see https://iphc.int ). The stock assessment prepared by the IPHC indicates that halibut stocks in Areas 2C and 3A have declined over the last decade, and that over that period the average size-at-age of adult halibut has become smaller. However, the extent of the decline varies by geographic area, and the reasons behind it cannot be fully explained solely by commercial or charter fishing removals. NMFS also notes that this rule does not increase the combined halibut commercial and charter catch limits adopted by IPHC and implemented by NMFS.

Comment 9: We oppose passage of the RQE Program. The charter sector does not share in the burden of conservation. In times of low abundance, all sectors should share in conserving resources. Stocks are beginning to rebuild after a long decline, and the RQE compromises years of rebuilding.

Response: NMFS disagrees. As described in the preamble to the proposed rule (82 FR 46016, October 3, 2017), under the CSP both the commercial and charter sectors share the burden of conservation by having reduced catch limits in times of low abundance. The RQE Program allows, but does not require, persons in the commercial sector to choose to transfer their QS to the RQE; however, irrespective of those transfers, each sector will continue to be constrained by the combined catch limits established by the IPHC. This final rule also implements regulations that allow the transfer of QS back to the commercial sector from the RQE.

Comment 10: Neither the Council nor NMFS have defined the “need” for an RQE. Demand for charter services has remained relatively constant in Areas 2C and 3A despite changes to guided angler bag limits.

Response: In December 2014, the Council developed a purpose and need statement that can be found in Section 2.1 of the Analysis. Restrictions have increased for the guided angler sport sector. Allowing an RQE to hold a limited amount of commercial halibut QS on behalf of guided recreational halibut anglers under a “willing seller and willing buyer” approach may result in less restrictive annual harvest measures for guided recreational anglers in times of low halibut abundance, while complying with total halibut removals under the guided halibut catch limits determined by the IPHC.

Comment 11: The RQE will further erode the owner-operated nature of the halibut fleet, undermining goals and principles of the halibut quota share program. The price of halibut quota is already a significant barrier to entry for young fishermen. The RQE creates an unbalanced advantage for the charter fleet to compete for halibut quota in an already fully-utilized fishery.

Response: The Council considered its goals of an owner-operated fleet in the halibut IFQ Program when it developed its recommendation to authorize the RQE. This information, combined with public testimony, factored into the Council's recommendation and NMFS' regulations that place constraints on QS purchases by the RQE. Specifically, the Council recommended and this final rule implements provisions that limit RQEs from purchasing more than a specific amount of QS on an annual basis and in total. This final rule also limits the RQE from purchasing specific categories of QS that are typically purchased by new entrants to the halibut IFQ fishery. The preamble to the proposed rule and Section 4.8.1.2 of the Analysis provides additional information on QS transfer provisions and restrictions implemented by this final rule and how these provisions balance the interests of owner-operators, new entrants, and the charter fishery.

Comment 12: Allowing additional halibut quota to be reallocated to the charter fleet exacerbates local depletion. The charter fleet competes directly with the non-charter resident sport anglers, and this proposal allows the charter sector to harvest most of the halibut near towns. It would be very difficult for a resident Alaskan angler fishing out of a small boat to catch halibut.

Response: This final rule will not result in an increase in the total amount of halibut that may be harvested, and NMFS does not have information to suggest that the transfer of QS from commercial operators to the RQE will necessarily change harvesting locations or patterns. The location of charter fishing and commercial harvests varies widely. In areas where there is a significant overlap in both charter and commercial fishing operations, the localized effects from this action are expected to be minimal as fishing pressure shifts from the commercial sector to the charter section in the same area. Local resource abundance may be a factor in harvest rates, but its influence is intertwined with other significant influences, such as stock abundance, angler demand, and other factors.

Comment 13: Scheduled Council actions to establish an annual CHP renewal process, to stop the transfer of non-transferable CHPs, and address latency capacity in the charter sector will address the charter sector's perceived need for an RQE.

Response: The commenter refers to several actions that are currently under consideration by the Council. The potential effects of these management measures have not been fully analyzed, and the Council has not recommended these actions for implementation. At this time, NMFS does not have the information available to conclusively determine whether these actions under consideration would provide benefits to the charter fishery consistent with this final rule.

Comment 14: Annual limits on RQE QS purchases are essential as are limits on RQE purchases of category D and (in Area 2C) B class quota, and the limit on the size of QS blocks the RQE may purchase. Unused QS should be returned to the commercial sector each season.

Response: This final rule implements all the measures noted in the comment, and described in the proposed rule, that constrain the quantity and type of QS purchases that can be made by the RQE. Although these restrictions may impact the efficacy of the RQE Program, they are implemented primarily to mitigate the effects of the RQE upon QS markets, to prevent an accumulation of excessive shares by the RQE, and to take into consideration the importance of the commercial halibut fishery on fishing-dependent communities. The preamble to the proposed rule described the limitations on the use of QS that apply to RQEs (82 FR 46016, October 3, 2017).

Comment 15: This RQE action does not identify a mechanism for funding the RQE, and an RQE CHP acquisition limit is omitted. We recommend that RQE CHP limits be at least 10 times higher than individual CHP limits.

Response: This final rule does not prescribe the means by which persons or entities finance their purchases of QS. The Council and NMFS did not identify a management need for the RQE to identify the methods that may be used to purchase QS prior to NMFS considering approving the transfer of QS to the RQE. This final rule does implement annual reporting requirements by the RQE to the Council and NMFS as described in the section of this preamble titled “Provisions of Final Rule.” Among other things, the report requires that each year the RQE detail all QS transactions, including the amount paid for QS, and also for the activities and expenses of the RQE.

The Council did not specify, and this final rule does not provide, limits on the acquisition of CHPs by the RQE; therefore, the RQE will be subject to regulations that apply to any other person, as defined at § 300.61, for purposes of purchasing and holding CHPs. Section 300.67(j) states that a person may not own, hold, or control more than five transferable CHPs in both regulatory areas combined, with limited exceptions. This provision applies to the RQE. Any purchases or sales of CHPs by the RQE are required to be reported in the RQE's annual report to the Council and NMFS.

Comment 16: There are insufficient regulations in the proposed rule to limit how the RQE may profit by buying and selling QS. The RQE undermines the owner-operator characteristics of the fleet and forces individual commercial fishermen to compete against a subsidized entity in the quota share market. The RQE must be prohibited from trading QS on the market for profit. Not limiting RQE acquisition will have an impact to current IFQ Category C shares. The proposed minimum QS block that the RQE may purchase in Area 2C is too low of a minimum. This will create an incentive for IFQ holders to sweep up and sell small blocks to the RQE, limiting blocks available to new IFQ entrants.

Response: This rule establishes that the RQE will be a non-profit entity, created for the purpose of adding social and economic flexibility to the charter fishery. To accomplish this, the RQE is authorized to purchase a limited amount of QS, which is to be used to provide additional harvest opportunity and less restrictive management measures in times of low abundance. This rule contains provisions for monitoring the RQE activities by requiring an annual report. Among other things, the RQE must document in the report all the buying, selling, and other transfers of QS during the relevant year, including the QS prices paid for or received by the RQE. The annual report must also contain descriptions and amounts of the RQE's expenses during the year. Although all QS transactions, whether between or among sectors, will occur under a “willing seller and willing buyer” scenario, NMFS has implemented several constraints on the amount and type of halibut QS that may be purchased by the RQE. This includes restrictions that prohibit purchases of QS blocks that equate to 1,500 pounds or less. These constraints will likely reduce the efficacy of the RQE Program by limiting the pool of QS that may be purchased by the RQE. However, the Council and NMFS have determined that these constraints are necessary to balance with other considerations, such as the RQE's effects on the availability of QS to commercial fishermen.

Comment 17: There has not been sufficient analysis of the GAF's impacts to justify discontinuing this model of compensated reallocation.

Response: NMFS is not discontinuing the GAF Program. The GAF Program has distinct advantages that are not available through the RQE. GAF are designed to work on an individual operator level by authorizing limited annual transfers of commercial halibut IFQ as GAF to qualified CHP holders. The GAF Program provides additional harvest opportunities for charter anglers by allowing them to retain halibut up to the limit for unguided anglers when charter management measures limit charter anglers to a more restrictive harvest limit. This program will remain in place for individual CHP holders to receive an IFQ transfer. In some cases, CHP holders also hold QS, and have the opportunity to use their QS either commercially or as a means to augment their charter fishing. The GAF Program is described in more detail in proposed rule for the CSP (78 FR 39122, June 28, 2013). Under this rule, RFQ could not be transferred as GAF.

Comment 18: The incidental bycatch limits for the trawl fleet should be included in the RQE calculation. There should be a mechanism in the RQE action where the RQE could purchase bycatch from the trawl fleet.

Response: The purpose of this final rule is to provide for the transfer of QS between commercial QS holders and the RQE, and not to establish alternative methods for establishing the amount of catch available for commercial and charter operators. The IPHC accounts for incidental bycatch by all vessels when determining total halibut removals and catch limits. This includes the halibut catch limits established for the commercial and charter sectors in Areas 2C and 3A.

Comment 19: The Analysis failed to adequately show the effect this program would have on the stability of the commercial fishermen, processors, and consumers of the product. The action kept touching on possible funding sources that the RQE may use to purchase QS, but ignored the implications of not addressing funding issues which is against National Environmental Policy Act (NEPA) requirements.

Response: The social and economic impacts of this action were analyzed in the regulatory impact review (RIR) (see ADDRESSES ). Because both commercial and charter fisheries will still be restricted by the total catch limits set for each regulatory area based on halibut abundance, the total removals of halibut and relative timing of the commercial and charter fisheries are expected to remain the same. Possible funding sources for the RQE's purchase of QS are also discussed in the RIR.

The environmental assessment (EA) provides a comprehensive discussion of this action to authorize an RQE to purchase and hold commercial halibut quota share for use by charter halibut anglers (see ADDRESSES ). The EA analyzes the impacts of QS holdings and use under a wide range alternative QS use limits. After considering this analysis, NMFS prepared a Finding of No Significant Impact based on the EA analysis. Regardless of the funding mechanism used by the RQE, the EA considered the environmental impact of the transfer of QS from the commercial to the charter fishery consistent with the requirements under NEPA. NMFS disagrees that this rule violates NEPA requirements by not limiting or otherwise determining which funding sources might be appropriate for the RQE.

Section 3507(c)(B)(i) of the Paperwork Reduction Act (PRA) requires that agencies inventory and display a current control number assigned by the Director of the Office of Management and Budget (OMB), for each agency's information collection. Section 902.1(b) identifies the location of NOAA regulations for which OMB approval numbers have been issued. Because this final rule revises and adds data elements within a collection-of-information for recordkeeping and reporting requirements, 15 CFR 902.1(b) is revised to reference correctly the sections resulting from this final rule.

Regulations governing the U.S. fisheries for Pacific halibut are developed by the IPHC, the Pacific Fishery Management Council, the Council, and the Secretary of Commerce. Section 5 of the Halibut Act (16 U.S.C. 773c) allows the regional fishery management council having authority for a particular geographical area to develop regulations governing fishing for halibut in U.S. Convention waters as long as those regulations do not conflict with IPHC regulations. The Halibut Act, at sections 773c(a) and (b), provides the Secretary of Commerce with the general responsibility to carry out the Convention with the authority to, in consultation with the Secretary of the department in which the U.S. Coast Guard is operating, adopt such regulations as may be necessary to carry out the purposes and objectives of the Convention and the Halibut Act. This rule is consistent with the Halibut Act and other applicable laws.

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

Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a final regulatory flexibility analysis, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The preambles to the proposed rule and this final rule serve as the small entity compliance guide. This action does not require any additional compliance from small entities that is not described in the preambles. Copies of the proposed rule and this final rule are available from the NMFS website at http://alaskafisheries.noaa.gov.

This FRFA incorporates the initial regulatory flexibility analysis (IRFA), a summary of the significant issues raised by the public comments, NMFS' responses to those comments, and a summary of the analyses completed to support this action. Section 604 of the Regulatory Flexibility Act (RFA) requires that, when an agency promulgates a final rule under section 553 of Title 5 of the U.S. Code, after being required by that section or any other law to publish a general notice of proposed rulemaking, the agency shall prepare a FRFA. Section 604 describes the required contents of a FRFA: (1) A statement of the need for, and objectives of, the rule; (2) a statement of the significant issues raised by the public comments in response to the initial regulatory flexibility analysis, a statement of the assessment of the agency of such issues, and a statement of any changes made in the proposed rule as a result of such comments; (3) the response of the agency to any comments filed by the Chief Counsel for Advocacy of the Small Business Administration (SBA) in response to the proposed rule, and a detailed statement of any change made to the proposed rule in the final rule as a result of the comments; (4) a description of and an estimate of the number of small entities to which the rule will apply or an explanation of why no such estimate is available; (5) a description of the projected reporting, recordkeeping and other compliance requirements of the rule, including an estimate of the classes of small entities which will be subject to the requirement and the type of professional skills necessary for preparation of the report or record; and (6) a description of the steps the agency has taken to minimize the significant economic impact on small entities consistent with the stated objectives of applicable statutes, including a statement of the factual, policy, and legal reasons for selecting the alternative adopted in the final rule and why each one of the other significant alternatives to the rule considered by the agency which affect the impact on small entities was rejected.

Descriptions of this action, its purpose, and the legal basis are contained in the preamble to the proposed rule (82 FR 46016, October 10, 2017) and are not repeated here.

NMFS published the proposed rule on October 10, 2017 (82 FR 46016). An IRFA was prepared and summarized in the “Classification” section of the preamble to the proposed rule. The comment period closed on November 17, 2017. NMFS received 18 letters of public comment on the proposed rule. None of the comments raised issues in response to the IRFA. One comment requested NMFS require the 11 large entities in the IFQ Program to redistribute 2 percent of their quota to the RQE. No changes were made to this final rule based on this comment. The Chief Counsel for Advocacy of the SBA did not file any comments on the proposed rule.

This final rule directly regulates three classes of small entities: QS holders, CQEs, and the newly implemented RQE. For RFA purposes only, NMFS established a small business size standard for businesses, including their affiliates, whose primary industry is commercial fishing (see 50 CFR 200.2). A business primarily engaged in commercial fishing (NAICS code 11411) is classified as a small business if it is independently owned and operated, is not dominant in its field of operation (including its affiliates), and has combined annual receipts not in excess of $11 million for all its affiliated operations worldwide.

For this action, the pool of small, directly regulated entities is limited to those entities that will be engaging in QS transfer ( i.e., QS holders, including CQEs, and a future RQE). CQEs and the future RQE are considered small entities, or more specifically, a small organization as defined by the RFA. A small organization is “any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” In addition, no CQE has more than $11 million in annual gross receipts. The RQE that is authorized under this action is not be expected to hold halibut QS that would yield $11 million in annual gross receipts. Commercial halibut QS holders are also considered to be directly regulated. Most of the QS holders in the halibut IFQ Program are small entities.

NMFS considers commercial halibut fishing vessels as proxies for small entities because IFQ from more than one QS holder is often fished from the same vessel. NMFS estimates that 812 vessels across all IPHC regulatory areas landed halibut in 2014, which in the Analysis is the most recent year of complete data on the value of halibut landings by vessel. Of those, 11 vessels are considered large entities because they showed revenues that exceeded the $11 million threshold. The remaining 801 vessels are considered directly regulated small entities for this rule. See Section 5.6 of the Analysis for more information.

The RFA requires a description of the projected reporting, recordkeeping, and other compliance requirements of this rule, including an estimate of the classes of small entities that will be subject to the requirement and the type of professional skills necessary for preparation of the report or record. This rule requires new information collections from an RQE. Under this rule, a non-profit entity that wants to become an RQE will need to complete an application and submit it to NMFS for approval. This application requires submission of the entity's articles of incorporation, the corporate by-laws, and a list of key personnel, including the Board of Directors, officers, representatives, and managers. NMFS will approve the first complete RQE application it receives.

If the RQE intends to receive or transfer halibut QS, it will use the “Application for Transfer QS To or From an RQE” available on the NMFS Alaska Region website at https://alaskafisheries.noaa.gov/. Additionally, the RQE is required to submit an annual report detailing its activities to NMFS and the Council. The RQE is also subject to cost recovery fees; therefore, it needs to comply with the existing cost recovery fee payment requirements for IFQ permit holders. These recordkeeping and reporting requirements are expected to be administrative in nature and not require additional professional expertise.

This rule minimizes the impact on small entities and still meets the objectives for this final rule. The impacts on small entities for this action are defined in the IRFA and are not repeated here. As noted in the IRFA, this final rule is expected to create a net benefit for the directly regulated small entities. The benefits of this action are expected to outweigh the reporting, recordkeeping, and other compliance costs described in the previous section. This action is not expected to have negative economic impacts on the small entities directly impacted by the action.

The Council considered a status quo alternative (Alternative 1) in addition to this final rule, which is Alternative 2, the Council's preferred alternative. Alternative 1 would not have provided more benefits to the directly regulated small entities or reduced reporting, recordkeeping, or compliance costs more than the preferred alternative that is implemented by this final rule.

This final rule contains collection-of-information requirements subject to the PRA, which have been approved by OMB under Control Number 0648-0758 and will be merged with OMB Control Numbers 0648-0272 and 0648-0711.

Public reporting burden is estimated to average per response: 200 hours for Application for a Non-profit Corporation to be Designated as a Recreational Quota Entity; 2 hours for Application for Transfer of QS To or From a Recreational Quota Entity; 40 hours for RQE Annual Report; 1 minute for electronic submission of IFQ Permit Holder Fee Submission Form. These estimates include the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

Send comments regarding these burden estimates or any other aspect of this data collection, including suggestions for reducing the burden, to NMFS (see ADDRESSES ) and by email to OIRA_Submission@omb.eop.gov, or fax to 202-395-5806. Notwithstanding any other provision of the law, no person is required to respond to, and no person shall be subject to penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number. All currently approved NOAA collections of information may be viewed at http://www.cio.noaa.gov/services_programs/prasubs.html.

For the reasons set out in the preamble, NMFS amends 15 CFR part 902 and 50 CFR parts 300 and 679 as follows:

We are adopting amendments to 17 CFR 227.202 (“Rule 202”) of Regulation Crowdfunding  1 under the Securities Act of 1933 (the “Securities Act”)  2 and 17 CFR 230.257 (“Rule 257”) of Regulation A  3 under the Securities Act as interim final temporary rules.

On September 14, 2018, Hurricane Florence made landfall near the North Carolina and South Carolina border. The storm and subsequent flooding have displaced individuals and businesses and disrupted communications and transportation across the affected region. We are adopting these interim final temporary rules to address the needs of companies directly or indirectly affected by Hurricane Florence or its aftermath that are subject to reporting obligations pursuant to Regulation Crowdfunding or Regulation A.

Section 28 of the Securities Act provides that the Commission may, by rule or regulation, “conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of this title or of any rule or regulation issued under this title, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.”  4

The lack of communications, transportation, electricity, facilities, and available staff and professional advisors as a result of Hurricane Florence could hamper the efforts of companies with reporting obligations to meet their filing deadlines pursuant to Regulation Crowdfunding or Regulation A. At the same time, investors have an interest in the timely availability of required information about these companies. While the Commission believes that the temporary relief from filing requirements provided by the amendments to Rule 202 of Regulation Crowdfunding  5 and Rule 257 of Regulation A  6 is both necessary in the public interest and consistent with the protection of investors, we remind companies that are the subject of the relief provided in these interim final temporary rules to continue to evaluate their obligations to make materially accurate and complete disclosures in accordance with the anti-fraud provisions of the federal securities laws.

Accordingly, pursuant to Section 28 of the Securities Act, we are adopting interim final temporary rules providing that an issuer subject to the reporting requirements of either Regulation Crowdfunding or Regulation A is exempt from any requirement to file specified reports or forms with the Commission where the conditions below are satisfied:

(a) The issuer is not able to meet a filing deadline due to Hurricane Florence or its aftermath;

(b) The issuer files with the Commission, on or before October 29, 2018, the report or form required to be filed pursuant to either Regulation Crowdfunding or Regulation A during the period from and including September 14, 2018 to and including October 26, 2018; and

(c) In any such report or form, the issuer discloses that it is relying on the interim final temporary rules and states the reasons why, in good faith, it could not file such report or form on a timely basis.

For Regulation Crowdfunding, the relief includes annual reports on Form C-AR, progress updates on Form C-U, and termination of reporting on Form C-TR. For Regulation A, the relief includes post-qualification amendments required at least every 12 months after the qualification date to include updated financial statements, annual reports on Form 1-K, semi-annual reports on Form 1-SA, special financial reports on Forms 1-K or 1-SA, current reports on Form 1-U, and exit reports on Form 1-Z.

Regulation Crowdfunding and Regulation A permit offers and sales of securities without registration under the Securities Act, subject to certain limitations and conditions, including compliance with ongoing reporting requirements. Based on staff analysis, between June 19, 2015 (the effective date of the most recent Regulation A amendments  7 ) and September 15, 2018, approximately 241 filers had Regulation A offering statements qualified by the Commission, excluding withdrawn offerings. Approximately 1,010 issuers initiated Regulation Crowdfunding offerings with Form C filings between May 16, 2016 and August 31, 2018, excluding issuers that have withdrawn offerings. 8 Approximately 40 registered intermediaries, including 31 registered funding portals and 9 registered broker-dealers, have participated in Regulation Crowdfunding offerings with Form C filings between May 16, 2016 and August 31, 2018, excluding withdrawn offerings.

We lack the data to estimate the number of investors in Regulation A or Regulation Crowdfunding offerings that could be affected if issuers rely on the relief provided by the interim final temporary rules, because information on the number of investors is generally not required to be disclosed in periodic or current reports required under Regulation A or in periodic reports or progress updates required under Regulation Crowdfunding. 9

We are mindful of the costs and benefits of the interim final temporary rules. 10 We believe the interim final temporary rules will benefit issuers that have an obligation to file specified reports with the Commission pursuant to either Regulation Crowdfunding or Regulation A and have been adversely affected by Hurricane Florence or its aftermath by permitting them to take additional time to meet their reporting obligations. We expect the relief provided by the interim final temporary rules will benefit issuers that, absent the relief, would not be able to avail themselves of the exemption from registration under Regulation Crowdfunding or Regulation A because the timely filing of required reports is a condition to the exemptions. In the absence of this relief, issuers could incur prohibitively high costs in an attempt to meet filing deadlines given the lack of communications, transportation, electricity, facilities, and available staff and professional advisors.

The requirement for an issuer to disclose that it is relying on Rule 202(c) of Regulation Crowdfunding or Rule 257(f) of Regulation A and to state the reasons why, in good faith, it could not file a report or form on a timely basis may impose minimal additional costs on issuers availing themselves of this relief. However, we believe that these minimal costs are justified in light of the significant negative implications of not being able to rely on the exemption and the prohibitively high costs an issuer may incur in attempting to file in a timely manner.

We also acknowledge that there may be costs imposed on investors, intermediaries, and other market participants due to delayed access to information about offerings conducted in reliance on Regulation A and Regulation Crowdfunding. Generally, reporting requirements strengthen investor protection and decrease the extent of information asymmetries between issuers and investors. Ongoing reporting provides investors with periodically updated information, allowing them to assess investment opportunities based on the information provided and their level of risk tolerance, resulting in better informed investment decisions and improved allocative efficiency. Given that the interim final temporary rules allow for delayed reporting for a limited time period and only under specified conditions, we do not believe such costs will be significant.

The interim final temporary rules will not substantially affect competition or capital formation. We acknowledge the possibility that the interim final temporary rules may have a minor impact on efficiency. On the one hand, as noted above, the delay in reporting could marginally affect allocative efficiency to the extent that it allows information asymmetries between investors and issuers to persist for the length of time of the delay. On the other hand, we expect efficiency gains to the extent that the interim final temporary rules allow issuers to continue to rely on either of the exemptions from registration that would not be available if one of the required reports that is a condition to the exemptions was not filed in a timely manner, or to the extent the issuers are able to avoid paying a premium to service providers in an attempt to file in a timely manner by delaying reporting during the specified relief period.

As an alternative to the relief specified in the interim final temporary rules, we could have considered a longer or shorter relief period. While a shorter period would have reduced the costs to investors of asymmetric information, it would also reduce the benefits of the interim final temporary rules to issuers. Similarly, a longer period would increase the costs to investors. We believe that the approximately nine-week delay in the interim final temporary rules is appropriate given the potential impact Hurricane Florence or its aftermath could have on the efforts of companies to meet filing deadlines pursuant to Regulation Crowdfunding and Regulation A.

The Administrative Procedure Act (“APA”) generally requires an agency to publish notice of a rulemaking in the Federal Register and provide an opportunity for public comment. This requirement does not apply, however, if the agency “for good cause finds . . . that notice and public procedure are impracticable, unnecessary, or contrary to the public interest.”  11 The APA also generally requires that an agency publish an adopted rule in the Federal Register at least 30 days before it becomes effective. This requirement does not apply, however, if the agency finds good cause for making the rule effective sooner. 12

Given the temporary nature of the relief contemplated by the interim final temporary rules and the significant and immediate impact of Hurricane Florence and its aftermath on issuers in affected areas, as discussed above, the Commission finds that good cause exists to dispense with notice and comment as impracticable and unnecessary, and to act immediately to amend Rule 202 of Regulation Crowdfunding and Rule 257 of Regulation A. 13 Further, the interim final temporary rules will not affect the burden or cost estimates associated with existing collections of information under Regulation Crowdfunding and Regulation A for purposes of the Paperwork Reduction Act of 1995. 14

We are adopting amendments to Rule 202 of Regulation Crowdfunding and Rule 257 of Regulation A under the authority set forth in the Securities Act (15 U.S.C. 77a et seq. ), particularly, Section 28 thereof.

In accordance with the foregoing, title 17, chapter II of the Code of Federal Regulations is amended as follows:

From 6 a.m. to 9 a.m. on September 23, 2018, the Coast Guard will enforce the special local regulation at 33 CFR 100.501, table to § 100.501, (a)12 for the regulated area located in the New Jersey ICW in Atlantic City, NJ. The published enforcement periods for this event include the second or third Saturday and Sunday in September. We are announcing a change of enforcement date for this year's event with this notice of enforcement because the event will take place on the fourth Sunday in September.

The Captain of the Port, Delaware Bay will be enforcing the Special Local Regulation as specified in § 100.501(c).

In addition to this notice of enforcement in the Federal Register , the Coast Guard plans to provide the maritime community with advanced notice of enforcement of regulation by Broadcast Notice to Mariners (BNM), Local Notice to Mariners and on-scene notice by designated representative.

The California Department of Transportation has requested a temporary change to the operation of the Tower Drawbridge, mile 59.0, over Sacramento River, at Sacramento, CA. The drawbridge navigation span provides a vertical clearance of 30 feet above Mean High Water in the closed-to-navigation position. The draw operates as required by 33 CFR 117.189(a). Navigation on the waterway is commercial and recreational.

The drawspan will be secured in the closed-to-navigation position from 9:30 a.m. to 11 a.m. on October 7, 2018, to allow the community to participate in the Juvenile Diabetes Research Foundation One Walk. This temporary deviation has been coordinated with the waterway users. No objections to the proposed temporary deviation were raised. Vessels able to pass through the bridge in the closed position may do so at anytime. In the event of an emergency the draw span can open on signal if at least one hour notice is given to the bridge operator. There are no immediate alternate routes for vessels to pass. The Coast Guard will also inform the users of the waterway through our Local and Broadcast Notices to Mariners of the change in the operating schedule for the bridge so that vessel operators 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 effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.

On February 24, 2017, President Trump signed Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” which established a Federal policy “to alleviate unnecessary regulatory burdens” on the American people. Section 3(a) of the Executive Order directed each Federal agency to establish a regulatory reform task force, the duty of which is to evaluate existing regulations and “make recommendations to the agency head regarding their repeal, replacement, or modification.” Accordingly, the Secretary removes 34 CFR parts 412, 415, 421, 425, 427, 428, and 429 published in the Perkins 1992 Regulations because they are outdated and have been superseded. The seven outdated and superseded programs published in the Perkins 1992 Regulations authorized under Perkins II were:

The Postal Service published a notice of proposed rulemaking on February 27, 2018 (83 FR 8399), to amend the DMM to update IMpb requirements relative to Compliance Quality Validations for Address Quality, Shipping Services File Manifest Quality, and Barcode Quality. These validations will allow the Postal Service to further improve service, tracking, and visibility, all of which will facilitate the identification of noncompliant mailpieces and customer experiences.

The Postal Service received two sets of comments in response to the proposed rule of February 27, 2018. The Postal Service appreciates all of the comments that were provided by the mailing industry. The mailers' comments and corresponding Postal Service responses are outlined as follows:

Mailer Comment: The Postal Service should clarify the requirements for eVS address quality information.

USPS Response: The Postal Service clarifies that a full and valid destination delivery address (capable of yielding an 11-digit ZIP Code that matches the delivery point in the Shipping Services file) includes the following components:

In addition, we have added a separate clarification for non-eVS mailers. An address quality noncompliance indicator will be assigned when the address information is not present at the time of mailing.

Mailer Comment: Clarification appears necessary regarding manifest quality specifications.

USPS Response: The manifest file provides essential information about the shipping product to provide package visibility. In addition to the Transaction ID (TID) that is already required, manifest files must pass the following four validation criteria:

• Entry Facility ZIP Code: The entry facility ZIP Code in the Shipping Services file must match a physical scan event at a location. A separate Shipping Services file is required for mail tendered to each different Postal Service entry facility. For eVS customers, in the Header Record of the Shipping Services file, the entry facility ZIP Code field must contain the ZIP Code for the Postal Service facility where the mail is tendered.

• Payment Account Number: The USPS account number from which the mailing will be paid must be valid. The Payment Account Number is a valid combination, is registered with eVS or PostalOne! as valid information, and is located within the Header Record of the Shipping Services file.

• Method of Payment: The approved payment method must be valid (permit imprint, postage meter, PC Postage, OMAS, franked mail, and stamps) for the mail being entered, and located in the Header Record of the Shipping Services file.

• Post Office of Account: The 5-digit ZIP Code of the Post Office issuing the permit number, meter license, or precancelled stamp must be valid, agree with the information on the postage statement, and be located in the Header Record of the Shipping Services file.

If any manifest validation field is missing or inaccurate, a Manifest Quality IMpb Compliance indicator will be assigned. Mailers can reference Publication 199, Intelligent Mail Package Barcode (IMpb) Implementation Guide for: Confirmation Services and Electronic Verification System (eVS) Mailers, for details on Shipping Services file types.

Mailer Comment: The FRN requires that IMpb's must pass Mailer ID and uniqueness validations without errors or warnings (emphasis added). The addition of warnings appears to be a substantive change, clarification needed.

USPS Response: The history of both errors and warnings is not a substantive change to IMpb Quality validation. The Postal Service recognizes the importance of providing customers with visibility, and provides mailers with the confirmation/error/warning file that identifies issues associated within the Shipping Services file record.

Each time a mailer submits a Shipping Services file, PTR processes and edits the file. When data elements do not meet USPS specifications, PTR generates an error or a warning. Single records or the entire file may be rejected or certain records may receive warnings. A message line that starts with an “E” indicates this is an Error message and the record will be rejected. A message line that starts with a “W” indicates this is a Warning Message and the record will be posted. The Postal Service converted many errors to warnings to update legacy business rules that negatively impacted piece-level visibility and prevented customers from receiving tracking information in extract files or USPS website. However, the data elements are still necessary and must be accurate, so we validate these elements. For example: Prior to changing an invalid MID to a warning it was an error that would have prevented all mail visibility. These warnings are intended to support timely postage payment and revenue assurance and be reflective of the work required to populate the files with a valid Mailer ID and IMpb uniqueness for validation.

Mailer Comment: Clarification needed: The requirement that Mailer IDs, (MIDs) be properly registered is unclear because the word “properly” is not adequately defined.

USPS Response: For the purposes of this final rule, a MID is properly registered when users request access to Program Registration via the Online Enrollment service, within the Business Customer Gateway (BCG), or when users request access to Online Enrollment from the Shipping Services page on the BCG, if they currently do not have access to the service. This service assists the user in signing up for a number of shipping programs, including USPS Tracking and eVS, and registering a six- or nine-digit MID, according to the product they are mailing, the type and volume of service they require, and the payment type.

Mailers may not use a MID in their tracking barcodes for the Shipping Services file or in an IMpb, until the MID completes certification and is registered.

Mailer Comment: It is important to remind the Postal Service that it made a commitment to work with mailers who are not making the current Address Quality (AQ) threshold, and provide awareness on how to avoid being non-compliant.

USPS Response: The Postal Service continued commitment is to educate mailers on mail preparation and improving the quality of mail. We are using various communication channels to assist mailers with falling below their Address Quality (AQ) threshold. We are committed to helping the industry through webinars, Industry Work Groups, Business Mail Entry (BME) Units, and Micro-Strategy reporting and will continue to build upon those tools to enhance the communication experience.

The Postal Service adopts the following changes to Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations. See 39 CFR 111.1. We will publish an appropriate amendment to 39 CFR part 111 to reflect these changes.

Accordingly, 39 CFR part 111 is amended as follows:

We will publish an appropriate amendment to 39 CFR part 111 to reflect these changes.

The site to be deleted from the NPL is: Union Chemical Co., Inc. Superfund Site, South Hope, Maine. A Notice of Intent to Delete for this Site was published in the Federal Register (83 FR 34508) on July 20, 2018.

The closing date for comments on the Notice of Intent to Delete was August 20, 2018. Two public comments were received. One commenter argued against deletion because they believe that groundwater contamination is being left behind inappropriately under EPA's 2013 technical impracticability determination and proposed Site deletion, and that the implementation of the Declaration of Environmental Covenant (deed restriction) on the Site properties was done without public oversight. The second commenter voiced the belief that the deletion was a political decision ultimately directed from the White House.

In response, EPA notes that the chain of events leading to the proposed deletion began several years ago, when after multiple remedial attempts from 1996 to 2005, EPA determined in 2013 that it was technically impracticable to restore groundwater at the Site to drinking water quality. In a 2013 Record of Decision Amendment (ROD Amendment), EPA waived the requirement to meet groundwater cleanup standards due to technical impracticability because (1) the original groundwater pump-and-treat remedy had reached the limits of its effectiveness, (2) three additional innovative in situ technologies had proven unsuccessful in attaining the groundwater cleanup standards, and (3) a technical evaluation of cleanup alternatives indicated that no technology was available for achieving groundwater cleanup standards in a reasonable timeframe (in this case, under 300 years) due to Site-specific hydrogeological and contaminant conditions. The 2013 ROD Amendment also adjusted the institutional control requirements of the remedy selected in the 1990 Record of Decision (ROD) with more specifics on the land use controls to be included in the deed restriction for the Site properties. Before the ROD Amendment was finalized, EPA presented about the revised site remedy in several meetings to the Town of Hope community. EPA received concurrence from the State and only positive comments from the public on the ROD Amendment. Consistent with the requirements of the ROD and ROD Amendment, MEDEP, working with the Maine Attorney General's Office and EPA, drafted and recorded the Declaration of Environmental Covenants. Upon the recording of the deed restriction, the Site became eligible for deletion, leading EPA to issue the Notice of Intent to Delete the Site.

A responsiveness summary was prepared and placed in the docket, EPA-HQ-SFUND-1989-0011, on www.regulations.gov, and in the Superfund Records Center listed above.

EPA maintains the NPL as the list of sites that appear to present a significant risk to public health, welfare, or the environment. Deletion from the NPL does not preclude further remedial action. Whenever there is a significant release from a site deleted from the NPL, the deleted site may be restored to the NPL without application of the hazard ranking system. Deletion of a site from the NPL does not affect responsible party liability in the unlikely event that future conditions warrant further actions.

For reasons set out in the preamble, 40 CFR part 300 is amended as follows:

NMFS published a final rule for Framework Adjustment 3 to the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan in the Federal Register on November 3, 2003 (68 FR 62250), implementing a process to roll over unused Winter I commercial scup quota (January 1 through April 30) to be added to the Winter II period quota (October 1 through December 31). 1 The framework also allows adjustment of the commercial possession limit for the Winter II period dependent on the amount of quota rolled over from the Winter I period.

For 2018, the initial Winter II quota is 3,822,816 lb (1,734 mt). The best available landings information indicates that 5,943,861 lb (2,696 mt) remain of the 10,820,000-lb (4,908-mt) Winter I quota. Consistent with Framework 3, the full amount of unused 2018 Winter I quota is being transferred to Winter II, resulting in a revised 2018 Winter II quota of 9,766,677 lb (4,430 mt). Because the amount transferred is between 5.5 and 6.0 million lb (2,495 to 2,722 mt), the Federal per trip possession limit will increase from 12,000 lb (5.4 mt) to 28,500 lb (13 mt), as outlined in the final rule that established the possession limit and quota rollover procedures for this year, published on December 22, 2017 (82 FR 60682).

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

The Assistant Administrator for Fisheries, NOAA, finds good cause under 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment on this in-season adjustment because it would be contrary to the public interest. This action transfers unused quota from Winter I Period to the remaining Winter II Period to make it accessible to the commercial scup fishery. If implementation of this in-season action is delayed to solicit prior public comment, the objective of the fishery management plan to achieve the optimum yield from the fishery could be compromised. Deteriorating weather conditions during the latter part of the fishing year may reduce fishing effort, and could also prevent the annual quota from being fully harvested. This would conflict with the agency's legal obligation under the Magnuson-Stevens Fishery Conservation and Management Act to achieve the optimum yield from a fishery on a continuing basis, resulting in a negative economic impact on vessels permitted to fish in this fishery. Moreover, the rollover process being applied here was the subject of notice and comment rulemaking, and the range of potential trip limit changes were outlined in the final 2018 scup specifications that were published December 22, 2017; which were developed through public notice and comment. Based on these considerations, NMFS further finds, pursuant to 5 U.S.C. 553(d)(3), good cause to waive the 30-day delayed effectiveness period for the reasons stated above.

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

The 2018 northern rockfish ITAC specified for the BSAI is 5,185 metric tons as established by the final 2018 and 2019 harvest specifications for groundfish in the BSAI (83 FR 8365, February 27, 2018).

In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS, (Regional Administrator) has determined that the 2018 northern rockfish ITAC in the BSAI will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 5,000 mt, and is setting aside the remaining 185 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for northern rockfish in the BSAI.

While this closure is in effect the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the directed fishery closure of northern rockfish in the BSAI. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of September 14, 2018.