A. Background

To determine eligibility for Federal small business assistance programs, SBA establishes small business definitions (commonly referred to as size standards) for all private industries in the United States. SBA's existing size standards use two primary measures of business size: Average annual receipts and number of employees. Financial assets and refining capacity are used as size measures for a few specialized industries. In addition, SBA's Small Business Investment Company (SBIC), 7(a), and Certified Development Company (CDC/504) Programs determine small business eligibility using either the industry based size standards or net worth and net income based alternative size standards. Presently, there are 27 different industry based size standards, covering 1,023 North American Industry Classification System (NAICS) industries and 13 “exceptions.” Of these, 526 are based on average annual receipts, 505 on number of employees (one of which also includes barrels per day total refining capacity), and five on average assets.

In 2010, Congress passed the Small Business Jobs Act (Jobs Act) (Sec. 1344, Pub. L. 111-240, 124 Stat. 2504, Sept. 27, 2010) requiring SBA to review, every five years, all size standards and make necessary adjustments to reflect market conditions. In 2016, SBA completed the first 5-year review of size standards under the Jobs Act and is now conducting the second 5-year review of size standards. SBA also reviews and adjusts, as necessary, all monetary based size standards for inflation every five years. SBA's latest inflation adjustment to size standards became effective on July 14, 2014 (79 FR 33647 (June 12, 2014)). SBA also updates its size standards, also every five years, to adopt the Office of Management and Budget's (OMB) 5-year NAICS revisions to its table of small business size standards. SBA adopted OMB's 2017 NAICS revisions for its size standards, effective October 1, 2017 (82 FR 44886 (September 27, 2017)).

As part of the previous comprehensive size standards review, in 2009 SBA established a detailed size standards methodology (2009 Methodology) explaining how SBA establishes, reviews, or adjusts size standards based on the evaluation of industry and Federal contracting factors. SBA has now revised the 2009 Methodology to incorporate the recent amendments to the Small Business Act (Act) relating to the establishment of size standards, to address public comments the Agency received on the 2009 Methodology, and to make certain analytical improvements to its size standards analysis based on its own review of the methodology.

On April 27, 2018, SBA published a notification in the Federal Register advising the public that the Agency had revised its size standards methodology (Revised Methodology) and made it available on SBA's website at http://www.sba.gov/size-standards-methodology and on the Federal rulemaking portal at http://www.regulations.gov for review and comments (83 FR 18468). SBA proposed a number of changes to its size standards methodology, including moving from an “anchor” approach to a “percentile” approach for evaluating industry characteristics, assigning a separate size standard for each NAICS industry instead of selecting a size standard from a limited number of fixed size standards as in the 2009 Methodology, lowering the threshold for selecting industries for the evaluation of the Federal contracting factor to $20 million in annual Federal contracting dollars from the $100 million threshold as in the 2009 Methodology, and applying the 4-firm concentration ratio to all industries, as opposed to using it only when the ratio is 40% or more as in the 2009 Methodology.

SBA sought comments on these changes as well as on a number of policy issues/questions that the Agency faces when developing a methodology for establishing, evaluating, or revising its small business size standards, such as: Whether SBA's size standards should be higher than entry level business size; whether SBA should vary size standards from program to program or geographically; whether SBA should establish a ceiling or cap beyond which a business concern cannot be considered small; whether SBA should apply a single measure of business size for all industries ( i.e., employees or annual receipts); and whether SBA should adjust employee based size standards to account for labor productivity, similar to the adjustment of monetary based size standards for inflation. The comment period for the Revised Methodology was from April 27, 2018 to June 26, 2018.

SBA received a total of 14 comments on the proposed Revised Methodology, two of which were not pertinent and were not considered. The 12 valid comments and SBA's responses thereto are discussed below.

Five commenters suggested that SBA should revise its method for calculating the average annual receipts for size standards purposes by allowing firms to use the three lowest annual receipts over the preceding five years or, at least, to calculate the average annual receipts over the preceding five years, as opposed to the three preceding years. The commenters argued that the increased use of large contract vehicles (such as governmentwide acquisition vehicles or indefinite-delivery, indefinite-quantity contracts) to award Federal contracts to small businesses can cause very rapid growth in firms' size, thereby resulting in the loss of their small business status. The commenters asserted that small businesses need time to develop infrastructure to be able to compete for unrestricted procurements with large firms after graduating to other-than-small status. Commenters also mentioned that some industries are subject to fluctuating market conditions that may skew average annual receipts calculated over the 3-year period.

Three commenters suggested that SBA should only consider Federal contractor size when determining average firm size within any NAICS industry. They noted that including firms which do not do business with the Federal Government could skew the true size of businesses participating in Federal contracting, resulting in size standards that are not reflective of government buying practices.

One commenter asserted that firms should be allowed to deduct subcontractor costs from annual receipts calculations. The commenter argued that subcontracting services can be very expensive and take up a substantial portion of the total contract value, at least for Advertising Agencies (NAICS 541810).

Any consideration to change the rule on how SBA calculates average annual receipts for size standards or any other part of SBA's small business regulations would require formal rulemaking in accordance with the Administrative Procedure Act. The purpose of the size standards methodology white paper is to explain what data sources and factors SBA considers when establishing and revising size standards, but not to change SBA's small business regulations.

The Small Business Runway Extension Act of 2018 (Runway Extension Act) (Pub. L. 115-324 (Dec. 17, 2018)) amended section 3(a)(2)(C)(ii)(II) of the Small Business Act by changing the period for calculation of annual average receipts of businesses providing services from three (3) years to five (5) years. This change to the calculation of annual average receipts requires the issuance of a proposed rule and approval by the SBA Administrator. Accordingly, SBA will be initiating a rulemaking to implement the new law into SBA's regulations. Businesses must continue to report their annual receipts based on a 3-year average until SBA amends its regulations.

SBA would not consider the average size of government contractors only as a measure of average firm size in establishing size standards for several reasons. First, SBA's size standards are used not only for Federal procurement purposes, but also for various non-procurement purposes, including establishing eligibility for SBA's loan programs, conducting flexibility regulatory analyses for Federal rulemaking under the Regulatory Flexibility Act, and determining eligibility for small business exemptions from certain Federal reporting and compliance requirements. Second, firms that are government contractors in an industry do not provide an adequate representation of all firms that are interested, willing, or able to perform Federal work in that industry. For example, of about 5.5 million employer firms in the U.S., only about 400,000 firms (or about 7.2 percent) are registered in the System for Award Management (SAM) for Federal contracting purposes, of which about 38 percent have received any Federal contracts during fiscal years 2014-2017. Third, for size standards purposes, SBA considers receipts from all sources ( e.g., commercial, Federal, etc.) and the receipts data on government contractors in SAM and the Federal Procurement Data System—Next Generation (FPDS-NG) also include receipts from all sources, not just from Federal work. Fourth, as current size standards are, on average, several times higher than the average size of all firms in the industry, SBA's size standards already reflect that firms that receive Federal contracts are typically larger than all firms in the overall industry. Finally, in accordance with the Jobs Act, every five years, SBA reviews, and adjusts, where necessary, all size standards to ensure that they reflect current market conditions, including government buying trends.

SBA's regulation in 13 CFR 121.104(a) provides several exclusions from the calculation of receipts for size standards purposes, but subcontracting costs is not one of them, meaning that subcontracting costs are part of receipts and cannot be excluded from the calculation. However, as stated in Footnote 10 to the SBA table of size standards, for certain industries, including Advertising Agencies (NAICS 541810), funds received in trust for an unaffiliated third party, such as bookings or sales subject to commissions, are excluded from receipts. Subcontracting occurs in most industries (although at varying degrees) and may even vary from firm to firm within the same industry. For example, while some small businesses may want to perform all or most of their Federal work themselves, others may elect to subcontract a large part or most of their work out to others. Allowing businesses to exclude subcontractor costs from receipts would put firms performing most of their work in-house in serious competitive disadvantage relative to those who subcontract a significant portion of their work out to others. This may also encourage businesses to subcontract more of their set-aside contract work to others to maintain their small business status, which would defeat the very intent of the set-aside program, especially if the work is subcontracted out to large businesses. As stated elsewhere in this notification, any consideration to amend the rule on how SBA defines and calculates receipts for size purposes would require formal rulemaking. Additionally, the methodology white paper is not meant to address issues concerning size standards for specific industries. SBA will consider such issues in future rulemakings as part of the ongoing second 5-year review of size standards under the Jobs Act.

One commenter argued that SBA should not use the 2012 Economic Census data for evaluating industry characteristics. The commenter argued that the 2012 Economic Census only reflects industry conditions before 2012 and is, therefore, outdated. The commenter suggested that SBA should look at industry-specific publications that provide richer and more current industry data. To support its argument that the Advertising Agencies size standard should be higher than the current $15 million, the commenter submitted reports from the two industry associations.

While the methodology states that the 2012 Economic Census data is the latest available principal source of industry data that SBA uses for size standards analysis, SBA will consider the 2017 Economic Census data as it becomes available, as well as any other newer data available from other sources, including industry specific publications, provided that such data provides an accurate and comprehensive representation of all firms within the industry. However, many industry publications do not provide a comprehensive picture of the industry they represent. For example, the two industry associations referred to by one of the commenters included about 600-700 advertising agencies, whereas there are more than 12,000 advertising firms in the United States. SBA believes that, for consistency, all industries sharing the same measure of size standards (such as receipts based or employee based) should be evaluated using the single set of industry data. Moreover, the data from industry publications does not usually provide information on all industry factors that SBA examines when establishing size standards. Not all industries have industry publications and, where they do, the information is likely to be incomplete and inconsistent with the Economic Census data SBA uses for size standards analysis. However, SBA will consider any industry specific data submitted as part of the public comments to proposed rulemakings. Despite a time lag for the availability of the Economic Census data, SBA believes that the Economic Census is still the most consistent and comprehensive data available out there for evaluating industry structure to comply with the statutory requirement that the size standards vary from industry to industry in order to reflect differences in characteristics among the various industries.

One commenter suggested using the median instead of the mean for average firm size calculations. The same commenter also did not see the usefulness of using the “percentile” approach in the Revised Methodology and asked where the “anchor” size standard values came from. Another commenter, however, agreed with SBA's proposal to replace the “anchor” approach in the 2009 Methodology with the “percentile” approach in the Revised Methodology. The commenter stated that the new approach provides a reasonable methodology for incorporating the economic characteristics of individual industries into SBA's size standards analysis and suggested that, for transparency, SBA should provide the primary factor values and associated size standards supported by each factor for each industry and sub-industry reviewed. This commenter disagreed with the idea to use the median instead of the mean as a measure of the average firm size.

In response to these opposing comments ( i.e., one supporting the median and another supporting the mean), SBA conducted analyses using both the mean (simple average) and the median firm size. In terms of numbers of industries for which size standards would change or remain the same, the results from the two approaches were very similar for a large majority of industries. For most industries where the levels of calculated size standards differed between the two approaches, such differences were generally small. SBA has provided a detailed justification in the Revised Methodology white paper for replacing the old “anchor” approach with the new “percentile” approach. SBA has determined that the “percentile” approach provides a better approach to evaluating differences among industries and varying size standards accordingly. In addition, as stated in the Revised Methodology, the “anchor” approach that entails grouping all industries under a common (so-called “anchor”) size standard ( i.e., the size standard shared by most industries) is inconsistent with the statute that such groupings should be limited to the 4-digit NAICS level. For these reasons, SBA will continue to use the simple average (mean) as one of the two measures of firm size (other being the weighted average) and is adopting the “percentile” approach to evaluate industry characteristics, as proposed.

SBA does not provide in the methodology white paper the primary factor values and associated size standards supported for each industry and sub-industry in the methodology as the results are likely to change with the availability of new data. The methodology is intended to explain SBA's approach to establishing, reviewing, or adjusting size standards. SBA will provide such results for the public review and comment on individual proposed rulemakings on reviews of size standards for various NAICS sectors.

One commenter agreed with SBA's approach to rounding size standards to the nearest $500,000 for receipts based size standards and to the nearest 50 employees for employee based size standards (or to the nearest 25 employees for employee based size standards in Wholesale Trade and Retail Trade). This commenter believed that the increased number of and reduced increments between size standards would limit the effect of errors, counteract the limitations of the data used by SBA in calculating size standards, and ensure that similar industries are treated in an equitable fashion, and more accurately reflect each industry's economic characteristics. The same commenter disagreed with SBA's policy of capping calculated size standards at some predetermined maximum levels instead of allowing the data to determine what the maximum size standard levels should be. If the agency decides to continue with this policy, the commenter suggested that capping should be applied for the calculation of the aggregated size standard, not for size standard for each factor individually. Another commenter questioned where do the minimum and maximum size standards levels come from, although they were fully explained in the proposed Revised Methodology.

The National Defense Authorization Act of Fiscal Year 2013 (NDAA 2013) (Pub. L. 112-239, Section 1661, Jan. 2, 2013) amended the Small Business Act requiring SBA not to impose the limitation on the number of size standards and to establish specific size standards for each NAICS industry. In absence of any adverse comments to this approach, SBA is adopting the number of size standards and the rounding procedure, as proposed.

Allowing the data alone to determine a maximum size standard would lead to very high size standards for some industries, thereby allowing very successful businesses with hundreds of millions in receipts or tens of thousands of employees to qualify as small and be eligible for Federal assistance intended for small businesses. For example, under receipts based size standards, if not capped, about 20 industries (excluding Retail Trade) would end up with a size standard of $100 million or more (with some being as high as more than $1 billion) and another 30 industries would have a size standard between $50 million and $100 million, as compared to the proposed receipts based cap of $40 million and the current maximum of $38.5 million. Similarly, for employee based size standards, about a dozen industries would end up with having a size standard of 5,000 employees or more (some being as large as 20,000 employees) and another 25 would have a size standard between 2,000 employees and 5,000 employees, as compared to the proposed and current maximum of 1,500 employees. From a policy standpoint, it would be almost impossible for SBA to justify such large businesses as small for Federal small business programs. Additionally, in the absence of caps, the calculated size standards will be very small (in some cases even negative) for some industries such that businesses qualifying as small would not only lack capabilities to meet the Federal Government small business procurement requirements, but also businesses graduating out of such small size standards would not have yet developed enough size to be competitive in the market and would still need Federal support to grow and be competitive on their own. SBA believes that such very high or very low size standards would not enable the Agency to effectively fulfill its critical mission to serve and protect the interests of American small businesses. Accordingly, SBA is adopting its policy of capping calculated size standards, both at the factor level and the aggregate level, at maximum or minimum values, as proposed.

One commenter noted the asymmetry in using the Federal contracting factor to increase size standards when small business Federal contract shares are lower than for their overall market shares while not decreasing them when those shares are higher than the overall market share. Another commenter agreed with the increased utilization of the Federal contracting factor for industries with at least $20 million in Federal contracting dollars (as opposed to a $100 million level in the previous methodology). This commenter felt that the adoption of a lower threshold allows for a more detailed analysis of competitive and economic characteristics of relevant industries. However, the commenter disagreed with SBA's use of “maximum size caps” as it would not allow, the commenter argued, the size standard to increase according to the Federal contracting factor.

The objective of the Federal contracting factor is to assess how successful small businesses have been in receiving Federal contracts under the current size standards and to adjust them if small businesses are not faring well in the Federal marketplace relative to the overall market, but not to penalize small businesses by lowering size standards where they are doing well. Generally, SBA adjusts size standards upwards for industries where the small business shares in the Federal market are substantially lower ( i.e., 10 percent or more) than their shares in the overall market and maintains them at their current levels (instead of lowering them) for industries where those differences are less than 10 percent or where small business shares in the Federal market are higher than the small business shares in the overall market. Lowering size standards, simply because the shares of small businesses in the Federal contracts are higher than their shares in the industry's overall market, would not serve the interests of small businesses or contribute to SBA's mission to ensure that small businesses receive a fair proportion of Federal government contracts. Accordingly, for the Federal contracting factor, SBA will maintain size standards at their current levels where the small business shares of the Federal market are higher than the small business shares in the overall market. Additionally, to be consistent, SBA will apply the same capping procedure for all factors, including the Federal contracting factor.

One commenter stated that he did not feel the “industry competition” or “size distribution of firms” were necessary factors for analyzing industry structure. This commenter suggested examining a correlation matrix of all factors, which may result in the need of using only one or two factors to determine size standards. The commenter also insisted that the Herfindahl index is a more generally accepted measure of industry competitive structure and that this is preferable to the four- or eight-firm concentration ratio. A different commenter agreed with the use of a four-firm concentration ratio for all industries in the Revised Methodology, as opposed to using it only for those industries where that ratio was 40 percent or higher in the 2009 Methodology.

The statute requires that small business definitions vary from industry to industry to reflect differences among the various industries. For that, in accordance with its regulations in 13 CFR 121.102, SBA evaluates four industry factors, namely average firm size, average assets as a proxy for start-up costs and entry barriers, industry competition, and size distribution of firms. SBA examined correlations among all industry factors and found that using just one or two factors alone would not adequately account for differences among the various industries. To account for industry competition, SBA also tried using the Herfindahl index instead of the four-firm concentration ratio and the results were found to be very similar between the two measures. Because it is simpler and easier to explain to the public and it has long been used for SBA's size standards analyses, in the Revised Methodology, SBA is adopting the four-firm concentration ratio as a measure of industry competition.

Several commenters expressed various viewpoints concerning size standards for various industries as well as how NAICS codes should be defined for contracting purposes. One commenter suggested creating a new NAICS code to accommodate firms supplying finished products to the government as “nonmanufacturers” while also performing supply chain management and distribution services. Another commenter argued that the size standards for sale and rental of heavy equipment should be harmonized by changing the receipt based size standard for the equipment rental companies to the one that is employee based. A further commenter proposed adding additional sub-industry categories (or “exceptions”) to NAICS codes 541330, 541513, and 236220 to more adequately describe the scope of Federal work in these industries. This commenter also felt that the size standards for some industries in NAICS Sector 54 and Subsector 236 should be raised. Yet another commenter argued that the size standard for NAICS code 561440 should be higher than the current $15 million level. A final commenter disagreed with SBA's approach in a 2016 final rule to excluding the largest firms in its calculation of the employee based size standard for the Environmental Remediation Services (ERS) exception to NAICS 562910 (Remediation Services). It further argued that no firms at the proposed 1,250-employee size standard would have been dominant in the ERS industry. The same commenter also suggested that SBA should provide a full description of SBA's approach to evaluating industries with size standards exceptions.

SBA neither defines nor modifies NAICS industry definitions. It simply adopts the NAICS industry definitions and their updates, as published by OMB. Any suggestions for the creation of new NAICS industry categories should be submitted during OMB's notice and comment process of its reviews and revisions of the NAICS definitions. Every five years, OMB (in coordination with government statistical agencies in the U.S., Canada and Mexico) reviews and modifies existing NAICS definitions or creates new ones to ensure that industry definitions reflect changes in the economy.

Some firms may elect to both sell and rent the equipment. However, because firms that are primarily engaged in the equipment rental activity are very different from those primarily engaged in selling equipment (as a manufacturer or a distributor), the industry data does not support the same size standard for the two groups. Accordingly, whereas SBA's size standards for equipment rental industries are based on receipts, those for equipment manufacturers and distributors are based on employees. A firm that sells the equipment that it did not manufacture itself is considered a nonmanufacturer and can qualify as small under the 500-employee nonmanufacturer size standard.

The size standards methodology does not revise any size standards as such. It only explains the methodology on how SBA establishes and reviews size standards. Therefore, with the release of the final Revised Methodology, SBA is not making any changes to any size standards that are currently in effect. However, as part of the ongoing second 5-year comprehensive review of size standards under the Jobs Act, SBA will review all size standards and make necessary adjustments in the coming years to ensure that they reflect current industry and Federal market conditions. The Agency plans to issue proposed rules on all receipts based size standards, including those in NAICS Sector 54 and Subsector 236, in the near future. Depending upon the results from the analysis of the latest data available, some industries may see their size standards adjusted, while others may see no changes. Interested parties will have opportunity to comment on SBA's proposed size standards and suggest alternatives, along with supporting data and analysis, if they believe that the proposed standards are not appropriate.

As the industry data from the Economic Census are limited to the 6-digit NAICS levels, SBA does not have the necessary data to be able to create new sub-industry categories below the 6-digit levels and establish size standards thereto. SBA is already faced with difficulty in reviewing size standards for the existing sub-industry categories (“exceptions”) particularly because the industry data from SAM and FPDS-NG used to evaluate these “exceptions” are not consistent with the industry data from the Economic Census that SBA uses to evaluate industry characteristics.

When evaluating the SAM and FPDS-NG data for reviews of size standards under “exceptions,” SBA trims the data on firms on both ends of the size distribution to prevent extreme observations ( i.e., observations with questionable receipts values given the number employees or vice versa) from distorting the results. Additionally, to make the SAM and FPDS-NG data more consistent with the Economic Census tabulations where an industry's data only includes firms that are primarily engaged in that industry, SBA also removes very large firms for which the contribution of Federal contracts under that “exception” is quite small relative to their overall enterprise revenues. Accordingly, SBA removed from the evaluation of the ERS size standard a few of the largest firms for which Federal contracts received under that “exception” accounted for less than 25 percent of their overall receipts. Additionally, several commenters opposing the proposed size standard also argued that the large, diversified environmental firms for which the Federal environmental remediation work is not their major activity should be excluded in evaluating the ERS size standard. While the law states that a firm qualifying as small should not be dominant in its industry, it does not, however, mean that all non-dominant firms can or should be classified as small. In response to the comment, in the final Revised Methodology, SBA is including a new section describing its general approach to evaluating the size standard for “exceptions.”

Several commenters addressed various policy issues concerning the size standards methodology for which SBA sought comments and suggestions from interested parties. These comments are discussed below.

One commenter stated that it made sense for size standards to be higher than the industry entry-level size since firms larger than entry-level size could still experience disadvantages in the industry. However, the commenter suggested imposing time limits for participation in SBA programs to disincentivize firms to remain at an inefficient size.

Except for businesses participating in the 8(a) business development program, SBA does not impose time limits for eligibility for small business programs. Doing so would be too complicated as the time to reach an efficient size is likely to vary from industry to industry and firm to firm within an industry, not to mention the complexity time limits would add to determining eligibility for such programs.

Two commenters agreed with SBA that varying size standards by program or geography would create confusion and be difficult to administer.

SBA's methodology provides for establishing a single set of industry specific size standards for both SBA's financial programs and Federal procurement programs. Similarly, as size standards are applied at the national level and market dominance is evaluated nationally, SBA does not vary size standards geographically.

One commenter who addressed this issue asserted that receipts are the best measure for determining size, not gross profits. Using gross profits would require, the commenter maintained, SBA to review a concern's balance sheet, possibly with risks of disclosure of the concern's financial records to its competitors.

SBA does not use profits as a measure of business size for any industry nor does it review a concern's balance sheet or financial records for size standards analysis, except for size determination of a company whose small business size status is protested. SBA mostly uses either receipts or number of employees. As explained in the methodology, SBA uses receipts for most services, retail trade, construction and agricultural enterprises and employees for all manufacturing, most mining and utilities, and a few other industries.

One commenter thought a maximum ceiling was a good idea but acknowledged it might be somewhat arbitrary. Another commenter strongly disagreed with placing “caps” on size standards and reasoned that SBA should follow the results from its analysis when establishing size standards and allow natural maximums to develop based on the data. The commenter felt that imposing caps on size standards before conducting the economic data analysis would be arbitrary and non-transparent.

SBA has addressed this issue elsewhere in this notice, that capping calculated size standards at certain minimum and maximum levels is crucial for fulfilling its mission to serve and protect the interests of American small businesses and ensuring that Federal small business assistance goes to small businesses in need of such assistance the most.

Two commenters agreed with using “bands” of size standards across related industries. One of them further recommended putting groups of related industries under the same size standards. The use of size standard “bands,” the commenters noted, prevents confusion and could also discourage size protests.

While SBA agrees that using “bands” or limited number of fixed size standard levels (as under the previous methodology) would simplify size standards, it would run counter to the statute that there shall not be any limitation on the number of size standards and that each NAICS industry be assigned the appropriate size standard. SBA has, in the past, used common size standards for industries within certain NAICS Industry Groups, even if the data suggested different standards for individual industries in the group. However, a 2013 amendment to the statute limits the use of common size standards, except where a justification would exist for establishing a single size standard for industries within the 4-digit NAICS Industry Group, provided that such size standard is appropriate for each individual industry in the group. Thus, in view of these statutory limitations on the number of size standards and use of common size standards, SBA is adopting the size standards structure, as proposed.

Three commenters disagreed with the idea of adjusting employee-based size standards for productivity and/or automation. While one commenter thought that this would be arbitrary, another stated that the effects of productivity changes are already captured in the Economic Census data that SBA uses for industry analysis. The third commenter asserted that labor productivity changes are too small to warrant meaningful size standard adjustments and would already be captured in each 5-year comprehensive industry review. This commenter also believed that productivity growth would have to be accounted for on an industry-by-industry basis which would result in a very complicated adjustment process.

SBA does not quite agree that adjusting employee based size standards for productivity would be arbitrary as there is available data on measures of productivity, both by industry (by NAICS subsector or industry group) and for the overall economy. However, SBA agrees that accounting for productivity changes on an industry-by-industry basis would entail a complicated methodology. SBA concurs with the commenters that the effects of productivity changes are already captured by the Economic Census data and would be reflected in the 5-year size standards reviews. Accordingly, the Revised Methodology does not provide for adjustments to employee based size standards for productivity changes.

One commenter stated that SBA should perhaps consider lowering size standards depending on the goals of its programs. Another commenter opposed lowering size standards in view of the government procurement trend of using larger and longer-term procurements.

As stated in the Revised Methodology, while the results from SBA's analysis of the relevant data would serve as a principal basis for proposing revisions to size standards, other factors (such as public comments, administration's policies and priorities, the current market conditions, and impacts on small businesses) would also be important when proposing or finalizing size standards revisions. When SBA decides to deviate from the results of its analysis, it would provide in the rule a detailed justification for such decisions.

The Revised Methodology, entitled “SBA's Size Standards Methodology (April 2019)”, is available for review and download on the SBA's website at http://www.sba.gov/size-standards-methodology as well as on the Federal rulemaking portal at http://www.regulations.gov. It describes in detail how SBA establishes, evaluates, or adjusts its small business size standards pursuant to the Act and related legislative guidelines. Specifically, the document provides a brief review of the legal authority and early legislative and regulatory history of small business size standards, followed by a detailed description of the size standards analysis.

Section 3(a) of the Act (15 U.S.C. 632(a); Pub. L. 85-536, 67 Stat. 232, as amended) provides SBA's Administrator (Administrator) with authority to establish small business size standards for Federal government programs. The Administrator has discretion to determine precisely how small business size standards should be established. The Act and its legislative history highlight three important considerations for establishing size standards. First, size standards should vary from industry to industry according to differences among industries. 15 U.S.C. 632(a)(3). Second, a firm that qualifies as small shall not be dominant in its field of operation. 15 U.S.C. 632(a)(1). Third, pursuant to 15 U.S.C. 631(a), the policies of the Agency should be to assist small businesses as a means of encouraging and strengthening their competitiveness in the economy. These three considerations continue to form the basis for SBA's methodology for establishing, reviewing, or revising small business size standards.

SBA examines the structural characteristics of an industry as a basis to assess differences among the various industries and the overall degree of competitiveness of the industry and of firms therein. As described more fully in the Revised Methodology document, SBA generally evaluates industry structure by analyzing four primary factors—average firm size (both the simple and weighted average), degree of competition within an industry (the 4-firm concentration ratio), start-up costs and entry barriers (average assets as a proxy), and distribution of firms by size (the Gini coefficient). This approach to assessing industry characteristics that SBA has applied historically remains very much intact in the Revised Methodology. As the fifth primary factor, SBA assesses the ability of small businesses to compete for Federal contracting opportunities under the current size standards. For this, SBA examines the small business share of total Federal contract dollars relative to the small business share of total industry's receipts for each industry. SBA also considers other secondary factors as they relate to specific industries and interests of small businesses, including technological change, competition among industries, industry growth trends, and impacts of the size standards on SBA programs.

While the factors SBA uses to examine industry structure remain intact, its approach to assessing the differences among industries and translating the results to specific size standards has changed in the Revised Methodology. Specifically, in response to the public comments against the “anchor” size standards approach applied in the previous review of size standards, a recent amendment to the Act limiting the use of common size standards ( see section 3(a)(7) of the Act under NDAA 2013), and SBA's own review of the methodology, in the Revised Methodology, SBA replaces the “anchor” approach with a “percentile” approach as an analytical framework for assessing industry differences and deriving a size standard supported by each factor for each industry.

Under the “anchor” approach, SBA generally compared the characteristics of each industry with the average characteristics of a group of industries associated with the “anchor” size standard. For the recent review of size standards, the $7 million was the “anchor” for receipts based size standards and 500 employees was the “anchor” for employee based size standards (except for Wholesale Trade and Retail Trade). If the characteristics of a specific industry under review were similar to the average characteristics of industries in the anchor group, SBA generally adopted the anchor standard as the appropriate size standard for that industry. If the specific industry's characteristics were significantly higher or lower than those for the anchor group, SBA assigned a size standard that was higher or lower than the anchor.

In the past, including the recent review of size standards, the anchor size standards applied to a large number of industries, making them a good reference point for evaluating size standards for individual industries. For example, at the start of the recent review of size standards, the $7 million (now $7.5 million due to the adjustment for inflation in 2014) anchor standard was the size standard for more than 70 percent of industries that had receipts based size standards. A similar proportion of industries with employee based size standards had the 500-employee anchor standard. However, when the characteristics of those industries were evaluated individually, for a large majority of them the results yielded a size standard different from the applicable anchor. Consequently, now just 24 percent of industries with receipts based size standards and 22 percent of those with employee based size standards have the anchor size standards. Additionally, section 3(a)(7) of the Act limits the SBA's ability to create common size standards by grouping industries below the 4-digit NAICS level. The “anchor” approach would entail grouping industries from different NAICS sectors, thereby making it inconsistent with the statute.

Under the “percentile” approach in the Revised Methodology, SBA ranks each industry within a group of industries with the same measure of size standards using each of the four industry factors. As stated earlier, these four industry factors are average firm size, average assets size as proxy for startup costs and entry barriers, industry competition (the 4-firm concentration ratio), and distribution of firms by size (the Gini coefficient). As detailed in the Revised Methodology, the size standard for an industry for a specific factor is derived based on where the factor of that industry falls relative to other industries sharing the same measure of size standards. If an industry ranks high for a specific factor relative to most other industries, all else remaining the same, a size standard assigned to that industry for that factor is higher than those for most industries. Conversely, if an industry ranks low for a specific factor relative to most industries in the group, a lower size standard is assigned to that industry. Specifically, for each industry factor, an industry is ranked and compared with the 20th percentile and 80th percentile values of that factor among the industries sharing the same measure of size standards ( i.e., receipts or employees). Combining that result with the 20th percentile and 80th percentile values of size standards among the industries with the same measure of size standards, SBA computes a size standard supported by each industry factor for each industry. The Revised Methodology provides detailed illustration of the statistical analyses involved in this approach.

SBA applied a limited number of fixed size standards in the 2009 Methodology used in the first 5-year review of size standards: Eight revenue based size standards and eight employee based size standards. In response to comments against the fixed size standards approach and section 3(a)(8) of the Act requiring SBA to not limit the number of size standards, in the Revised Methodology, SBA has relaxed the limitation on the number of small business size standards. Specifically, SBA will calculate a separate size standard for each NAICS industry, with a calculated receipts based size standard rounded to the nearest $500,000, except for industries in NAICS Subsectors 111 (Crop Production) and 112 (Animal Production and Aquaculture) for which the calculated standard is rounded to the nearest $250,000. Similarly, a calculated employee based size standard is rounded to the nearest 50 employees for the manufacturing and other industries with employee based standards, except those in Wholesale Trade and Retail Trade for which the calculated standard is rounded to the nearest 25 employees.

However, as a policy decision, SBA will continue to maintain the minimum and maximum size standard levels. Accordingly, SBA will not generally propose or adopt a size standard that is either below the minimum or above the maximum level, even though the calculations might yield values below the minimum or above the maximum level. The minimum size standard generally reflects the size a small business should be to have adequate capabilities and resources to be able to compete for and perform Federal contracts. On the other hand, the maximum size standard represents the level above which businesses, if qualified as small, would cause significant competitive disadvantage to smaller businesses when accessing Federal assistance. SBA's minimum and maximum size standards are shown in Table 1, “Minimum and Maximum Receipts and Employee Based Size Standards,” below.

With respect to receipts based size standards, SBA is establishing $5 million and $40 million, respectively, as the minimum and maximum size standard levels (except for most agricultural industries in Subsectors 111 and 112). These levels reflect the current minimum receipts-based size standard of $5.5 million and the current maximum of $38.5 million, rounded for simplicity. Section 1831 of the National Defense Authorization Act for Fiscal Year 2017 (NDAA 2017) (Pub. L. 114-328, 130 Stat. 2000, December 23, 2016) amended the Act directing SBA to establish and review size standards for agricultural enterprises in the same manner it establishes and reviews size standards for all other industries. The evaluation of the industry data from the 2012 Census of Agriculture (the latest available) seems to suggest that $5 million minimum and $40 million maximum size standards would be too high for agricultural industries in Subsectors 111 and 112. Accordingly, SBA is establishing $1 million as the minimum size standard and $5 million as the maximum size standard for industries in NAICS Subsector 111 (Crop Production) and Subsector 112 (Animal Production and Aquaculture). Regarding employee based size standards, SBA's minimum and maximum levels for manufacturing and other industries (excluding Wholesale and Retail Trade) reflect the current minimum and maximum size standards among those industries. For employee based size standards for wholesale and retail trade industries, the proposed minimum and maximum values are the same as what SBA used in its 2009 Methodology.

For industries where Federal contracting is significant, SBA considers Federal contracting as one of the primary factors when establishing, reviewing, or revising size standards. Under the 2009 Methodology that was applied in the previous comprehensive size standards review, SBA evaluated the Federal contracting factor for industries with $100 million or more in Federal contract dollars annually for the latest three fiscal years. However, the analysis of the FPDS-NG data suggests that the $100 million threshold is too high, thereby rendering the Federal contracting factor irrelevant for about 73 percent of industries (excluding wholesale trade and retail trade industries that are not used for Federal contracting purposes), including those for which the Federal contracting factor is significant ( i.e., the small business share of industry's total receipts exceeding the small business share of industry's total contract dollars by 10 percentage points or more). Thus, SBA determined that the threshold should be lowered. In the Revised Methodology, SBA evaluates the Federal contracting factor for industries with $20 million or more in Federal contract dollars annually for the latest three fiscal years. Under the $20 million threshold, excluding wholesale trade and retail trade industries, nearly 50 percent of all industries would be evaluated for the Federal contracting factor as compared to just about 27 percent under the $100 million threshold. Because NAICS codes in Wholesale Trade and Retail Trade do not apply to Federal procurement, SBA does not consider the Federal contracting factor for evaluating size standards industries in those sectors.

For each industry averaging $20 million or more in Federal contract dollars annually, SBA compares the small business share of total Federal contract dollars to the share of total industrywide receipts attributed to small businesses. In general, if the share of Federal contract dollars awarded to small businesses in an industry is 10 percentage points or more lower than the small business share of total industry's receipts, keeping everything else the same, a justification would exist for considering a size standard higher than the current size standard. In cases where that difference is less than 10 percent or the small business share of the Federal market is already higher than the small business share of the overall market, it would generally support the current size standards.

For the reasons provided in the Revised Methodology and discussed above with respect to the public comments, SBA continues to use the 4-firm concentration ratio as a measure of industry competition. In the past, SBA did not consider the 4-firm concentration ratio as an important factor in size standards analysis when its value was below 40 percent. If an industry's 4-firm concentration ratio was 40 percent or higher, SBA used the average size of the four largest firms as a primary factor in determining a size standard for that industry. In response to public comments as well as based on its own evaluation of industry factors, in the Revised Methodology SBA apples all values of the 4-firm concentration ratios directly in the analysis, as opposed to using the 40 percent rule. Based on the 2012 Economic Census data, the 40 percent rule applies only to about one-third of industries for which 4-firm ratios are available. For the same reason, SBA is also dropping the average firm size of the four largest firms as an additional factor of industry competition. Moreover, the four-firm average size is found to be highly correlated with the weighted average firm size, which is used as one of the two measures of average firm size.

Table 2, “Summary of and Reasons for Changes,” below, summarizes what has changed in the Revised Methodology as compared to the 2009 Methodology and the impetus for such changes, specifically whether the changes are based on statute or discretionary.

To determine how the above changes in the methodology would generally affect size standards across various industries and sectors, SBA estimated new size standards using both the 2009 Methodology ( i.e., “anchor” approach) and the Revised Methodology ( i.e., “percentile” approach) for each industry (except those in Sectors 42 and 44-45, and Subsectors 111 and 112).

For receipts based size standards, the anchor group consisted of industries with the $7.5 million size standard, and the higher size standard group included industries with the size standard of $25 million or higher, with the weighted average size standard of $33.2 million for the group. Similarly, for employee based size standards the anchor group comprised industries with the 500-employee size standard, and higher size standard group comprised industries with size standard of 1,000 employees or above, with the weighted average size standard of 1,180 employees. These and 20th percentile and 80th percentile values for receipts-based and employee-based size standards are shown, below, in Table 3, “Reference Size Standards under Anchor and Percentile Approaches.”

Under the anchor approach, SBA derived the average value of each industry factor for industries in the anchor industry groups as well as those in the higher size standard groups. In the percentile approach, the 20th percentile and 80th percentile values were computed for each industry factor. These results are presented, below, in Table 4, “Industry Factors under Anchor and Percentile Approaches.” As shown in the table, generally, the anchor values are comparable with the 20th percentile values and higher level values are comparable with the 80th percentile values.

Under the anchor approach, using the anchor size standard and average size standard for the higher size standard group, SBA computed a size standard for an industry's characteristic (factor) based on that industry's position for that factor relative to the average values of the same factor for industries in the anchor and higher size standard groups. Similarly, for the percentile approach, combining the factor value for an industry with the 20th percentile and 80th percentile values of size standards and industry factors among the industries with the same measure of size standards, SBA computed a size standard supported by each industry factor for each industry. Under both approaches, a calculated receipts based size standard was rounded to the nearest $500,000 and a calculated employee based size standard was rounded to the nearest 50 employees.

With respect to the Federal contracting factor, for each industry averaging $20 million or more in Federal contracts annually, SBA considered under both approaches the difference between the small business share of total industry receipts and that of Federal contract dollars under the current size standards. Specifically, under the Revised Methodology, the existing size standards would increase by certain percentages when the small business share of total industry receipts exceeds the small business share of total Federal contract dollars by 10 percentage points or more. Those percentage increases, detailed in the Revised Methodology, to existing size standards generally reflect receipts and employee levels needed to bring the small business share of Federal contracts at par with the small business share of industry receipts.

The results were generally similar between the two approaches in terms of changes to the existing size standards, with size standards increasing for some industries and decreasing for others under both approaches. The sector that was most impacted was NAICS Sector 23 (Construction), with a majority of industries experiencing decreases to the current size standard affecting about 1 percent of all firms in that sector under both approaches. Other negatively impacted sectors under both approaches were Sector 31-33 (Manufacturing), Sector 48-49 (Transportation and Warehousing), and Sector 51 (Information), affecting, respectively, 0.1 percent, 0.6 percent, and less than 0.1 percent of total firms in those sectors, with slightly higher impacts under the percentile approach. All other sectors would see moderate positive impacts under both approaches, impacting 0.1-0.2 percent of all firms in most of those sectors. Overall, the changes to size standards as the result of the changes in the methodology, if adopted, would have a minimal impact on number businesses that qualify as small under the existing size standards. Excluding NAICS Sectors 42 and 44-45 and Subsectors 111 and 112, 97.75 percent of businesses would qualify as small under the new calculated size standards using the “anchor” approach vs. 97.70 percent qualifying under the “percentile” approach in the Revised Methodology. Under the current size standards, 97.73 percent of businesses are classified as small.

After considerations of all relevant comments, SBA is adopting the Revised Methodology, as proposed for comments, except that the Agency has now included a new section on the evaluation of size standards at sub-industry levels (usually referred to as “exceptions”) in response to comment. The Revised Methodology, entitled “SBA's Size Standards Methodology (April 2019),” is available for review/download on the SBA website at http://www.sba.gov/size-standards-methodology as well as on the Federal rulemaking portal at http://www.regulations.gov. SBA will apply the Revised Methodology in the ongoing, second five-year review of size standards as required by the Jobs Act.

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Zodiac Seats France 536-Series Cabin Attendant Seats. The NPRM published in the Federal Register on September 14, 2018 (83 FR 46679). The NPRM was prompted by potential risk of premature corrosion on the seat structure and clamps. The NPRM proposed to require inspection and modification of all Zodiac Seats France 536-Series Cabin Attendant Seats. We are issuing this AD to address the unsafe condition on these products.

The European Union Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA AD 2016-0167R1, dated February 2, 2018 (corrected March 1, 2018), 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-2017-0839.

Since EASA issued its AD No. 2016-0167, dated August 17, 2016, Zodiac Seats France developed a solution preventing the type of corrosion and cracks identified in that EASA AD and published SB No. 536-25-004, Rev. 0, dated October 19, 2017, which provides instructions for modification and re-identification of the affected seats. EASA subsequently revised its AD 2016-0167 with the publication of AD No. 2016-0167R1, dated February 2, 2018 (corrected March 1, 2018). In the NPRM, we had referenced EASA AD 2016-0167, dated August 17, 2016, but are now updating this reference in our final rule AD to EASA AD No. 2016-0167R1. We are also revising our AD to include the optional terminating action identified in EASA AD 2016-0167R1.

We revised the Costs of Compliance section by removing the estimated costs for replacement of parts (seat structures) and adding On-condition costs for replacement of parts (seat structures). We have no way of estimating how many parts would require replacement.

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

An individual commenter noted that in an attempt to address and correct the issue of premature corrosion and cracks on Zodiac Seats France 536 series cabin attendant seats, this NPRM would require that these seats be inspected and modified regularly to detect corrosion. The commenter disagreed with this proposal because it fails to eliminate completely the known safety hazard. The commenter reasoned that regular inspection would increase the chances of detecting the corrosion, but would not fix the issues with the seats.

The commenter also argued that the cost of inspecting all 55 [cabin attendant] seats aboard the two aircraft models that use these seats outweighs the cost of seat replacement. The commenter indicated this airworthiness directive should require operators to replace all seats that possibly have this known safety risk of corrosion and cracks. The commenter reasoned that this will not only save the operator time, not having to down an aircraft every three months for the [cabin attendant] seats inspections, but also eliminate the risks of seat failure from corrosion and cracks.

We disagree with requiring replacement of the affected cabin attendant seats. The unsafe condition referenced in this AD is represented by the possible failure of the seat occupied by the cabin attendant, which could result in injury to the cabin attendant. The requirements of this AD adequately address this unsafe condition. We have, however, added an optional terminating action section to this AD to be consistent with EASA AD 2016-0167R1, dated February 2, 2018 (corrected March 1, 2018). This optional terminating action section allows operators to replace the seat's structure instead of continuing inspections.

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

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

We reviewed Zodiac Seats France SB No. 536-25-002, Revision 3, dated November 2, 2016. This SB describes procedures for inspection, repair, or replacement of the seat structure and clamps known to be installed on the main structure. We also reviewed Zodiac Seats France SB No. 536-25-004, Rev. 0, dated October 19, 2017. This SB allows operators to replace the seat structure instead of continuing inspections. 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 structures installed on, but not limited to, ATR 42 and ATR 72 model airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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:

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2018-0228, dated October 22, 2018 (“EASA AD 2018-0228”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus SAS Model A330-201, -202, and -203; and Model A330-301, -302, and -303 airplanes. The MCAI states:

EASA AD 2018-0228 describes procedures for repetitive detailed inspections of the engine air inlet cowls, and corrective actions. Corrective actions include an inspection of the inlet anti-ice seal installation, modification of affected parts, and replacement of damaged inlet anti-ice seals. This material 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 and it is publicly available through the EASA website.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI referenced above. We are issuing this AD because we evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

This AD requires accomplishing the actions specified in EASA AD 2018-0228 described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. As a result, EASA AD 2018-0228 is incorporated by reference in the FAA final rule. This AD, therefore, requires compliance with the provisions specified in EASA AD 2018-0228, except for any differences identified as exceptions in the regulatory text of this AD. Service information specified in EASA AD 2018-0228 that is required for compliance with EASA AD 2018-0228 is available on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2019-0191.

Since there are currently no domestic operators of this product, notice and opportunity for public comment before issuing this AD are unnecessary. In addition, for the reasons stated above, we find that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2019-0191; Product Identifier 2018-NM-161-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD based on those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD.

Currently, there are no affected U.S.-registered airplanes. If an affected airplane is imported and placed on the U.S. Register in the future, we provide the following cost estimates to comply with this AD:

We estimate the following costs to do any necessary on-condition actions that would be required based on the results of any required actions. We have no way of determining the number of aircraft that might need these on-condition actions:

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.

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

Discussion

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2018-0271, dated December 12, 2018 (“EASA AD 2018-0271”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A350-941 airplanes. The MCAI states:

EASA AD 2018-0271 describes procedures for repetitive tightness checks of baby bassinets inserts installed on stowages and partitions and corrective actions. This material 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, and it is publicly available through the EASA website.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are issuing this AD because we evaluated all pertinent information and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

This AD requires accomplishing the actions specified in EASA AD 2018-0271 described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. As a result, EASA AD 2018-0271 is incorporated by reference in the FAA final rule. This AD, therefore, requires compliance with the provisions specified in EASA AD 2018-0271, except for any differences identified as exceptions in the regulatory text of this AD. Service information specified in EASA AD 2018-0271 that is required for compliance with EASA AD 2018-0271 is available on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2019-0190.

Since there are currently no domestic operators of this product, notice and opportunity for public comment before issuing this AD are unnecessary. In addition, for the reasons stated above, we find that good cause exists for making this amendment effective in less than 30 days.

This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2019-0190; Product Identifier 2018-NM-177-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD based on those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD.

Currently, there are no affected U.S.-registered airplanes. If an affected airplane is imported and placed on the U.S. Register in the future, we provide the following cost estimates to comply with this AD:

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

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.

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus SAS Model A330-223, A330-223F, A330-321, A330-322, and A330-323 airplanes. The NPRM published in the Federal Register on December 28, 2018 (83 FR 67158). The NPRM was prompted by a report of fatigue cracking in the latch beam gussets on a certain T/R. The NPRM proposed to require a one-time special detailed inspection of certain latch beam gussets of certain T/Rs for cracks, and modifying the latch beam gussets of the T/Rs, if necessary, as specified in, and in accordance with, EASA AD 2018-0227, dated October 22, 2018 (“EASA AD 2018-0227”).

We are issuing this AD to address fatigue cracking in the latch beam gussets on a certain T/R, which, if not detected and corrected, could lead to crack propagation until part failure and potential departure of the T/R cascade during T/R operation, which could result in damage to the airplane and hazards to persons or property on the ground.

The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2018-0227 (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus SAS Model A330-223, A330-223F, A330-321, A330-322, and A330-323 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-2018-1063.

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.

EASA AD 2018-0227 describes procedures for a one-time special detailed inspection of the latch beam gussets between the forward and middle latches of the affected T/R for cracks and modifying the latch beam gussets. This material 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 and it is publicly available through the EASA website.

We estimate that this AD affects 9 airplanes of U.S. registry. We estimate the following costs to comply with this AD:

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

According to the manufacturer, some or all 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 known 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 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:

Section 336 of the FAA Modernization and Reform Act of 2012 (FMRA) established the special rule for model aircraft (Pub. L. 112-95, Feb. 14, 2012). On June 25, 2014, the FAA published an interpretation of that special rule with a request for comments (79 FR 36172). The interpretation clarified, among other things, that: (1) Model aircraft must satisfy all criteria of section 336(a) to qualify as model aircraft and be exempt from future FAA rulemaking; and (2) the FAA retains enforcement authority against operators who endanger the safety of the national airspace system. The FAA received more than 18,000 comments from organizations and individuals to the interpretation.

Section 349 of the FAA Reauthorization Act of 2018 repealed section 336 of FMRA and replaced it with a new exception to conduct limited recreational operations of unmanned aircraft without FAA certification or operating authority (Pub. L. 115-254, Oct. 5, 2018).

As a result of the repeal of the special rule for model aircraft, the FAA's June 25, 2014, interpretation is no longer valid or necessary. Accordingly, the FAA is withdrawing the interpretation. Because that interpretation is withdrawn, the FAA will take no further action to respond to any comments to the interpretation.

The Unverified List, found in Supplement No. 6 to Part 744 to the EAR, contains the names and addresses of foreign persons who are or have been parties to a transaction, as that such parties are described in § 748.5 of the EAR, involving the export, reexport, or transfer (in-country) of items subject to the EAR, and whose bona fides ( i.e., legitimacy and reliability relating to the end use and end user of items subject to the EAR) BIS has been unable to verify through an end-use check. BIS may add persons to the UVL when BIS or federal officials acting on BIS's behalf have been unable to verify a foreign person's bona fides because an end-use check, such as a pre-license check (PLC) or a post-shipment verification (PSV), cannot be completed satisfactorily for such purposes for reasons outside the U.S. Government's control.

There are occasions where, for a number of reasons, end-use checks cannot be completed. These include reasons unrelated to the cooperation of the foreign party subject to the end-use check. For example, BIS sometimes initiates end-use checks and cannot find a foreign party at the address indicated on export documents and cannot locate the party by telephone or email. Additionally, BIS sometimes is unable to conduct end-use checks when host government agencies do not respond to requests to conduct end-use checks, are prevented from scheduling such checks by a party to the transaction other than the foreign party that is the proposed subject of the end-use check, or refuse to schedule them in a timely manner. Under these circumstances, although BIS has an interest in informing the public of its inability to verify the foreign party's bona fides, there may not be sufficient information to add the foreign person at issue to the Entity List under § 744.11 of the EAR (Criteria for revising the Entity List). In such circumstances, BIS may add the foreign person to the UVL.

Furthermore, BIS sometimes conducts end-use checks but cannot verify the bona fides of a foreign party. For example, BIS may be unable to verify bona fides if during the conduct of an end-use check a recipient of items subject to the EAR is unable to produce those items for visual inspection or provide sufficient documentation or other evidence to confirm the disposition of those items. The inability of foreign persons subject to end-use checks to demonstrate their bona fides raises concerns about the suitability of such persons as participants in future exports, reexports, or transfers (in- country) of items subject to the EAR and indicates a risk that such items may be diverted to prohibited end uses and/or end users. However, BIS may not have sufficient information to establish that such persons are involved in activities described in parts 744 or 746 of the EAR, preventing the placement of the persons on the Entity List. In such circumstances, the foreign persons may be added to the Unverified List.

As provided in § 740.2(a)(17) of the EAR, the use of license exceptions for exports, reexports, and transfers (in-country) involving a party or parties to the transaction who are listed on the UVL is suspended. Additionally, under § 744.15(b) of the EAR, there is a requirement for exporters, reexporters, and transferors to obtain (and keep a record of) a UVL statement from a party or parties to the transaction who are listed on the UVL before proceeding with exports, reexports, and transfers (in-country) to such persons, when the exports, reexports and transfers (in-country) are not subject to a license requirement.

Requests for removal of a UVL entry must be made in accordance with § 744.15(d) of the EAR. Decisions regarding the removal or modification of UVL listings will be made by the Deputy Assistant Secretary for Export Enforcement, based on a demonstration by the listed person of its bona fides.

This rule adds fifty (50) persons to the UVL by amending Supplement No. 6 to Part 744 of the EAR to include their names and addresses. BIS adds these persons in accordance with the criteria for revising the UVL set forth in § 744.15(c) of the EAR. The new entries consist of thirty-seven persons located in China, six in Hong Kong, four in the United Arab Emirates, two in Malaysia, and one in Indonesia. Each listing is grouped within the UVL by country with each party's name(s) listed in alphabetical order under the country; each entry includes available alias(es) and address(es), as well as the Federal Register citation and the date the person was added to the UVL. The UVL is included in the Consolidated Screening List, available at www.export.gov.

This rule also adds one additional address for one person currently listed on the UVL, Ling Ao Electronic Technology Co. Ltd, a.k.a. Voyage Technology (HK) Co., Ltd., a.k.a. Xuan Qi Technology Co. Ltd., as BIS has determined that this person is receiving exports from the United States at an additional address. Further, this rule fixes minor typographical errors in two of the existing addresses for the same company.

Finally, this rule removes ten persons from the UVL. BIS is removing these persons pursuant to information received by BIS pursuant to § 744.15(d) of the EAR and further review conducted by BIS. This final rule implements the decision to remove the following three persons located in China, one person located in Finland, five persons located in Russia, and one person located in the United Arab Emirates from the UVL:

(1) Jiujiang Jinxin Nonferrous Metals Co., Ltd., Xunyang Chem. Bldg., Materials Factory, Xunyang District, Jiujiang City, China,

(2) Liupanshui Normal University, 19 Minhu Road, Zhongshan District, Liupanshui, Guizhou, 553004, China, and

(3) Yantai Salvage Bureau, No. 100 Zhifudao East Road, Zhifu District, Yantai, Shandong, 264012, China

(1) Net Logistics JVM OY, a.k.a. Net Logistic JVM OY, Eskolantie 1, Helsinki, Finland, 00720 and Merituulentie 486, Port Mussalo, Kotka, Finland 48310

(1) Eltech Ltd., 3A, pl. Konstitutsii, Saint Petersburg 196247, Russia,

(2) MT Systems, Kalinina Street 13, Saint Petersburg 198099, Russia,

(3) Romona Inc., Prospekt Mira 426, Yuzhno-Sakhalinsk 693004, Russia,

(4) Sakhalin Energy Investment Company Ltd., Dzerzhinskogo Street 35, Yuzhno-Sakhalinsk 693020, Russia, and

(5) SIC Dipaul, Bolshaya Monetnaya Street 16, Saint Petersburg 197101, Russia, and 5B, Rentgena ul., Saint Petersburg 197101, Russia

(1) GenX Middle East FZE, a.k.a. GenX Systems LLC, #510-511 Le Solarium Building, Dubai Silicon Oasis, Dubai, UAE, and P.O. Box 121225, Office M07, Al Zahra, Khaleed Bin Al Waleed Road, Bur Dubai, Dubai, UAE.

Shipments (1) removed from license exception eligibility or that are now subject to requirements in § 744.15 of the EAR as a result of this regulatory action; (2) eligible for export, reexport, or transfer (in-country) without a license before this regulatory action; and (3) on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on April 11, 2019, pursuant to actual orders, may proceed to that UVL listed person under the previous license exception eligibility or without a license so long as the items have been exported from the United States, reexported or transferred (in-country) before May 13, 2019. Any such items not actually exported, reexported or transferred (in-country) before midnight on May 13, 2019 are subject to the requirements in § 744.15 of the EAR in accordance with this regulation.

On August 13, 2018, the President signed into law the John S. McCain National Defense Authorization Act for Fiscal Year 2019, which included the Export Control Reform Act of 2018 (ECRA) (Title XVII, Subtitle B of Pub. L. 115-232) that provides the legal basis for BIS's principal authorities and serves as the authority under which BIS issues this rule. As set forth in Section 1768 of ECRA, all delegations, rules, regulations, orders, determinations, licenses, or other forms of administrative action that have been made, issued, conducted, or allowed to become effective under the Export Administration Act of 1979 (50 U.S.C. 4601 et seq. ) (as in effect prior to August 13, 2018, and as continued in effect pursuant to the International Emergency Economic Powers Act (50 U.S.C. 1701 et seq. ) and Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013), and as extended by the Notice of August 8, 2018, 83 FR 39871 (August 13, 2018)), or the Export Administration Regulations, and are in effect as of August 13, 2018, shall continue in effect according to their terms until modified, superseded, set aside, or revoked under the authority of ECRA.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under section 3(f) of Executive Order 12866. This rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.

2. Pursuant to Section 1762 of the Export Control Reform Act of 2018 (Title XVII, Subtitle B of Pub. L. 115-232), which was included in the John S. McCain National Defense Authorization Act for Fiscal Year 2019, this action is exempt from the Administrative Procedure Act (5 U.S.C. 553) requirements for notice of proposed rulemaking, opportunity for public participation and delay in effective date. The analytical requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et. seq. ) are not applicable because no general notice of proposed rulemaking was required for this action. Accordingly, no regulatory flexibility analysis is required, and none has been prepared.

3. Notwithstanding any other provision of law, no person is required to respond to, nor is subject to a penalty for failure to comply with, a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves collections previously approved by OMB under the following control numbers: 0694-0088, 0694-0122, 0694-0134, and 0694-0137.

This rule slightly increases public burden in a collection of information approved by OMB under control number 0694-0088, which authorizes, among other things, export license applications. The removal of license exceptions for listed persons on the Unverified List will result in increased license applications being submitted to BIS by exporters. Total burden hours associated with the Paperwork Reduction Act and OMB control number 0694-0088 are expected to increase minimally, as the suspension of license exceptions will only affect transactions involving persons listed on the Unverified List and not all export transactions. Because license exceptions are restricted from use, this rule decreases public burden in a collection of information approved by OMB under control number 0694-0137 minimally, as this will only affect specific individual listed persons. The increased burden under 0694-0088 is reciprocal to the decrease of burden under 0694-0137, and results in no change of burden to the public. This rule also increases public burden in a collection of information under OMB control number 0694-0122, as a result of the exchange of UVL statements between private parties, and under OMB control number 0694-0134, as a result of appeals from persons listed on the UVL for removal of their listing. The total increase in burden hours associated with both of these collections is expected to be minimal, as they involve a limited number of persons listed on the UVL.

4. This rule does not contain policies with Federalism implications as that term is defined in Executive Order 13132.

Accordingly, part 744 of the Export Administration Regulations (15 CFR parts 730 through 774) is amended as follows:

On March 27, 2008 (73 FR 16436), EPA promulgated an ozone NAAQS that revised the levels of the primary and secondary 8-hour ozone standards from 0.08 parts per million (ppm) to 0.075 ppm. Pursuant to CAA section 110(a)(1), within three years after promulgation of a new or revised NAAQS (or shorter, if EPA prescribes), states must submit SIPs that meet the applicable requirements of section 110(a)(2). EPA has historically referred to these SIP submissions made for the purpose of satisfying the requirements of sections 110(a)(1) and 110(a)(2) as “infrastructure SIP” submissions. One of the structural requirements of section 110(a)(2) is section 110(a)(2)(D)(i), which generally requires SIPs to contain adequate provisions to prohibit in-state emissions activities from having certain adverse air quality effects on neighboring states due to interstate transport of air pollution. There are four sub-elements, or “prongs,” within section 110(a)(2)(D)(i) of the CAA. CAA section 110(a)(2)(D)(i)(I), also known as the “good neighbor” provision, requires SIPs to include provisions prohibiting any source or other type of emissions activity in one state from emitting any air pollutant in amounts that will contribute significantly to nonattainment, or interfere with maintenance, of the NAAQS in another state. The two provisions of this section are referred to as prong 1 (significant contribution to nonattainment) and prong 2 (interference with maintenance). Section 110(a)(2)(D)(i)(II) requires SIPs to contain adequate provisions to prohibit emissions that will interfere with measures required to be included in the applicable implementation plan for any other state under part C to prevent significant deterioration of air quality (prong 3) or to protect visibility (prong 4).

On October 3, 2017, Florida submitted a SIP submittal containing a certification that the State's SIP meets the requirements of CAA section 110(a)(2)(D)(i)(I) for the 2008 8-hour ozone NAAQS. Florida's certification is based on available emissions data, air quality monitoring and modeling data, and SIP-approved and state provisions regulating emissions of ozone precursors within the State. In a notice of proposed rulemaking (NPRM) published on February 15, 2019 (84 FR 4403), EPA proposed to approve Florida's SIP as meeting the requirements of prongs 1 and 2 for the 2008 8-hour ozone NAAQS. 1 In that notice, EPA discussed the final determination made in the update to the Cross-State Air Pollution Rule ozone season program that addresses good neighbor obligations for the 2008 8-hour ozone NAAQS (known at the “CSAPR Update”)  2 that emissions activities within Florida will not significantly contribute to nonattainment or interfere with maintenance of that NAAQS in any other state. The NPRM provides additional detail regarding the background and rationale for EPA's action. Comments on the NPRM were due on or before March 18, 2019. EPA received no comments on the proposed action.

EPA is taking final action to approve Florida's October 3, 2017, SIP submission addressing the good neighbor infrastructure SIP requirements, section 110(a)(2)(D)(i)(I) (prongs 1 and 2), for the 2008 8-hour ozone NAAQS. EPA is taking final action to approve the SIP submission because it is consistent with section 110 of the CAA.

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

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

• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;

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

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

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

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

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

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

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

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

The SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 10, 2019. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. See section 307(b)(2).

40 CFR part 52 is amended as follows:

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2017-0673 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before June 10, 2019. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2017-0673, by one of the following methods:

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

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

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

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

In the Federal Register of March 6, 2018 (83 FR 9471) (FRL-9973-27), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 7F8618) by Gowan Company, LLC, P.O. Box 556, Yuma, AZ 85364. The petition requested that 40 CFR 180.632 be amended by establishing tolerances for residues of the miticide/insecticide fenazaquin, 4-[2-[4-(1,1-dimethylethyl)phenyl]ethoxy]quinazoline, in or on alfalfa, forage at 4.0 parts per million (ppm); alfalfa, hay at 15 ppm; avocado at 0.15 ppm; bushberry, subgroup 13-07B at 0.8 ppm; caneberry, subgroup 13-07A at 0.7 ppm; fruit, citrus, group 10-10 at 0.4 ppm; fruit, low growing berry, subgroup 13-07G at 2.0 ppm; corn, field, grain at 0.09 ppm; corn, field, forage at 7.0 ppm; corn, field, stover at 40 ppm; corn, field, aspirated grain fractions at 3.0 ppm; corn, field, refined oil at 0.2 ppm; corn, sweet, forage at 9.0 ppm; corn, sweet, grain at 0.03 ppm; cotton, gin byproducts at 15.0 ppm; cotton, undelinted seed at 0.4 ppm; fruit, pome, group 11-10 at 0.4 ppm; fruit, small fruit vine climbing, except fuzzy kiwifruit, subgroup 13-07F at 0.7 ppm; fruit, stone, group 12-12 at 1.5 ppm; grape, raisins at 0.8 ppm; mint at 10.0 ppm; vegetable, cucurbit, group 9 at 0.3 ppm; vegetable, fruiting, group 8-10 at 0.3 ppm; vegetable, legume, edible podded, subgroup 6A at 0.4 ppm; vegetables, legumes, dried shelled pea and bean (except soybean) subgroup 6C at 0.3 ppm; vegetables, legumes, succulent shelled pea and bean subgroup 6B at 0.02 ppm; beef, fat at 0.05 ppm; pork, fat at 0.05 ppm; sheep, fat at 0.05 ppm; milk at 0.01 ppm; liver at 0.02 p.m.; and kidney at 0.01 ppm. That document referenced a summary of the petition prepared by Gowan Company, LLC, the registrant, which is available in the docket, http://www.regulations.gov. EPA received one favorable comment in response to the Notice of Filing from the Northwest Horticultural Council in support of establishing tolerances for fruit, pome, group 11-10 and fruit, stone, group 12-12.

Based upon review of the data supporting the petition, EPA has modified the commodity definitions and the tolerance levels for many of the proposed uses. Additionally, EPA is increasing the current tolerance level for citrus, oil and is not establishing tolerances on alfalfa, cotton, corn, and livestock commodities. The reasons for the changes and modifications are further explained in Unit IV.C.

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

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

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

The most consistently observed effects of fenazaquin exposure across species, sexes, and treatment durations were decreases in body weight, food consumption, and food efficiency. The effects on body weight and food consumption were consistent with the commonly observed effects for compounds that disrupt mitochondrial respiration. Other effects noted were mild dehydration and certain clinical signs seen at relatively high dose levels in the acute activity, sluggish arousal, unusual posture, abnormal gait, and altered response to auditory stimuli were seen in the absence of any neuropathological changes and were not considered to be related to neurotoxicity. In a 90-day study in hamsters, treated animals had an increased incidence of testicular hypospermatogenesis and reduced testicular and prostate weight; however, these findings were not replicated in the hamster carcinogenicity study which suggest the effects were transient or reversible.

Fenazaquin did not cause any developmental or reproductive toxicity at the doses tested in rats and rabbits. In the rat study, developmental toxicity was not observed in the presence of maternal toxicity ( i.e. decreases in body weight gain, food consumption, and food efficiency). In the rabbit study, no developmental or maternal toxicity was seen. In the reproduction study, systemic toxicity manifested in parental animals as excessive salivation and decreased body weight and food intake; and in offspring as decreased body weight gain; and there was no observed reproductive toxicity. Therefore, there is no developmental toxicity or reproductive susceptibility with respect to fetal and developing young animals with in utero and postnatal exposures.

Carcinogenicity was evaluated in the hamster instead of the mouse because the hamster was found to be more sensitive to the effects of fenazaquin than mice due to slower elimination kinetics for hamster. In a three-month feeding study in the mouse, it was found that 6-22x higher dose levels were required to elicit a comparable effect in mice than in the hamster. The results of the rat and hamster carcinogenicity studies demonstrated no increase in treatment-related tumor incidence. Therefore, fenazaquin was classified as “ not likely to be carcinogenic to humans.”

Fenazaquin did not cause mutagenicity, genotoxicity, neurotoxicity, or immunotoxicity. Fenazaquin did not demonstrate any systemic toxicity in a 21-day dermal toxicity study in rabbits up to the limit dose (1,000 milligram/kilogram/day (mg/kg/day)).

Specific information on the studies received and the nature of the adverse effects caused by fenazaquin as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document “Fenazaquin: Human Health Risk Assessment in Support of Proposed Uses on Avocado, Bushberry Subgroup 13-07B, Caneberry Subgroup 13-07A, Citrus Fruit Group 10-10, Cucurbit Vegetables Group 9, Fruiting Vegetables Group 8-10, Edible-Podded Legume Vegetable Subgroup 6A, Succulent Pea And Bean Subgroup 6B, Dried Shelled Pea And Bean (Except Soybean) Subgroup 6C, Low Growing Berry Subgroup 13-07G, Mint, Pome Fruit Group 11-10, Small Fruit Vine Climbing Subgroup, Except Fuzzy Kiwifruit 13-07F, and Stone Fruit Group 12-12” in pages 11-17 in docket ID number EPA-HQ-OPP-2017-0673.

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

A summary of the toxicological endpoints for fenazaquin used for human risk assessment is discussed in Unit III.B. of the final rule published in the Federal Register of May 6, 2015 (80 FR 25953) (FRL-9925-97).

1. Dietary exposure from food and feed uses. In evaluating dietary exposure to fenazaquin, EPA considered exposure under the petitioned-for tolerances as well as all existing fenazaquin tolerances in 40 CFR 180.632. EPA assessed dietary exposures from fenazaquin in food as follows:

i. Acute exposure. Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure. Such effects were identified for fenazaquin. In estimating acute dietary exposure, EPA used the Dietary Exposure Evaluation Model software with the Food Commodity Intake Database (DEEM-FCID) Version 3.16. This software uses 2003-2008 food consumption data from the U.S. Department of Agriculture's (USDA's) National Health and Nutrition Examination Survey, What We Eat in America, (NHANES/WWEIA). As to residue levels in food, EPA assumed tolerance-level residues, DEEM default processing factors for tomato (paste and juice), dried apple, dried pear, dried apricot, cherry juice, plum/prune juice, and dried coconut, and 100 percent crop treated (PCT) for all proposed and registered uses.

ii. Chronic exposure. In conducting the chronic dietary exposure assessment EPA used the DEEM-FCID Version 3.16. This software uses USDA's NHANES/WWEIA. As to residue levels in food, EPA assumed tolerance-level residues, DEEM default processing factors for tomato (paste and juice), dried apple, dried pear, dried apricot, cherry juice, plum/prune juice, and dried coconut, and 100 percent crop treated (PCT) for all proposed and registered uses.

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

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

2. Dietary exposure from drinking water. In drinking water, the residues of concern are fenazaquin (parent) and two metabolites: Metabolite M29 or 2-(4-{2-[(2-hydroxyquinazolin-4-yl)oxy]ethyl}phenyl)-2-methylpropanoic acid and its tautomer 2-methyl-2-(4-{2-[(2-oxo-1,2-dihydroquinazolin-4-yl)oxy]ethyl}phenyl)propanoic acid; and Metabolite 1 or 4-[2-(4-tert-butyl-phenyl)-ethoxy]-quinazolin-2-ol and its tautomer 4-[2-(4-tert-butylphenyl)ethoxy]quinazolin-2(1H)-one..

Although a screening level drinking water assessment (DWA) was conducted, EPA used the solubility limit of fenazaquin at 20 °C, 102 parts per billion (ppb), in place of EDWCs from the modeling that are well below the solubility limit of fenazaquin, for the proposed new uses and rate increases in the human health risk assessment. This concentration is not representative of anticipated exposures in drinking water, but is used as an upper bound limit to represent the potential exposure to fenazaquin and the two additional residues of concern.

The solubility limit of fenazaquin at 20 °C, 102 ppb, was directly entered into the dietary exposure model. For acute dietary risk assessment, the water concentration value of 102 ppb was used to assess the contribution to drinking water. For chronic dietary risk assessment, the water concentration of value 102 ppb was used to assess the contribution to drinking water.

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

Fenazaquin is currently registered for the following uses that could result in residential exposures: Ornamental plants. There is a potential for exposure associated with handling ( i.e., mixing, loading and applying), as well as post-application exposure from the use of fenazaquin on ornamental plants. However, for residential exposure associated with handlers, all registered fenazaquin product labels with residential use sites ( e.g., ornamental plants) require that handlers wear specific clothing ( e.g., long-sleeve shirt/long pants/chemical resistant gloves) and/or use personal protective equipment (PPE). Therefore, the Agency has made the assumption that these products are not for homeowner use, and has not conducted a quantitative residential handler assessment. With respect to the potential residential post-application exposure from the use of fenazaquin on ornamental plants, since there is (1) no adverse systemic hazard via the dermal route of exposure; (2) inhalation exposures are typically negligible in outdoor settings; and (3) there is no incidental oral exposure expected from fenazaquin use on ornamental plants, a residential post-application assessment is unnecessary. Furthermore, since the extent to which young children engage in activities associated with these areas or utilize these areas for prolonged periods of play is low, significant non-dietary ingestion exposure is not expected. Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/standard-operating-procedures-residential-pesticide.

4. Cumulative effects from substances with a common mechanism of toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.” EPA has not found fenazaquin to share a common mechanism of toxicity with any other substances, and fenazaquin does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that fenazaquin does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's website at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/cumulative-assessment-risk-pesticides.

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

2. Prenatal and postnatal sensitivity. Susceptibility/sensitivity in the developing animals was evaluated in developmental toxicity studies in rats and rabbits as well as a reproduction and fertility study in rats. The data showed no evidence of increased sensitivity/susceptibility in the developing or young animal. Clear NOAELs and LOAELs are available for all the parental and offspring effects.

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

i. The toxicity database for fenazaquin is complete.

ii. There is no indication that fenazaquin is a neurotoxic chemical and there is no need for a developmental neurotoxicity study or additional Uncertainty Factors (UFs) to account for neurotoxicity.

iii. There is no concern for susceptibility in infants and young children.

iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were based on 100% CT and tolerance level residues for both the acute and chronic dietary exposure. EPA made conservative (protective) assumptions when using the solubility limit of fenazaquin to account for exposure to fenazaquin in drinking water. These assessments will not underestimate the exposure and risks posed by fenazaquin.

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

1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to fenazaquin will occupy 31% of the aPAD for children 1-2 years old, the population group receiving the greatest exposure.

2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to fenazaquin from food and water will utilize 37% of the cPAD for children 1-2 years old, the population group receiving the greatest exposure. There are no residential uses for fenazaquin which contribute to the aggregate exposure.

3. Short-term and intermediate-term risk. Short-term and intermediate-term aggregate exposure takes into account short-term and intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Because there is no toxicological hazard via the dermal route of exposure for fenazaquin, short-term and intermediate-term aggregate exposure consists solely of chronic exposure to food and water, which is below the Agency's level of concern.

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

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

Adequate analytical methods are available for enforcing fenazaquin tolerances on plant commodities. The high-performance liquid chromatography (HPLC) method with tandem mass spectrometry detection (HPLC/MS-MS) method is the same as that used for data collection and has been shown to be acceptable over a range of commodities. The method has undergone successful independent laboratory confirmation and radio validation. The ion transitions monitored for fenazaquin are m/z 307.0 → 161.2 for (quantitation) and m/z 307.0 → 147.2 (confirmation). The LOQ of the method was determined to be 0.01 ppm for fenazaquin. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: residuemethods@epa.gov.

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

The Codex has not established MRLs for fenazaquin.

Based upon review of the data supporting the petition, EPA is establishing tolerances for the following commodities requested using the Agency's preferred commodity terminology: Instead of establishing a tolerance for grape, raisins as requested, the Agency is establishing a tolerance for grape, raisin; revising fruit, low growing berry, subgroup 13-07G to berry, low growing, subgroup 13-07G; revising the requested mint to peppermint, fresh leaves and spearmint, fresh leaves; revising the requested vegetables, legumes, succulent shelled pea and bean subgroup 6B to pea and bean, succulent shelled, subgroup 6B; revising vegetables, legumes, dried shelled pea and bean (except soybean) subgroup 6C to pea and bean, dried shelled, except soybean, subgroup 6C. In addition, based on supporting data, the Agency is establishing tolerance levels higher than requested for fruit, stone, group 12-12 at 2 ppm and for fruit, pome, group 11-10 at 0.6 ppm. In addition, because the current residue data supporting fruit, citrus, group 10-10 indicates that residues concentrate in citrus, oil, EPA is establishing a tolerance for fruit, citrus, group 10-10, oil consistent with the requirements in 40 CFR 180.40(f)(1). This tolerance supersedes the existing tolerance for citrus, oil, so EPA is removing that tolerance. The Agency is also establishing tolerances and revising current tolerance levels consistent the Organization for Economic Cooperation and Development (OECD) maximum residue limits calculator. Finally, due to a lack of supporting data, EPA is not establishing any tolerances for alfalfa, forage; alfalfa, hay; corn, field, forage; corn, field, aspirated grain fractions; corn, field, grain; corn, field, refined oil; corn, field, stover; corn, sweet, forage; corn, sweet, grain; cotton, gin byproducts; cotton, undelinted seed; beef, fat; pork, fat; sheep, fat; liver; kidney; and milk.

In this rule, EPA is revising the commodity definition of and reducing the existing tolerance for citrus commodities as follows: Fruit, citrus, group 10 except grapefruit will become fruit, citrus, group 10-10 and the tolerance will be revised from 0.5 ppm to 0.4 ppm. The Agency is reducing this tolerance based on review of available data. This reduction in tolerance level is not discriminatory; the same food safety standard contained in the FFDCA applies equally to domestically produced and imported foods.

In accordance with the World Trade Organization's (WTO) Sanitary and Phytosanitary Measures (SPS) Agreement, EPA will notify the WTO of its tolerance revision. In addition, the SPS Agreement requires that Members provide a “reasonable interval” between the publication of a regulation subject to the Agreement and its entry into force in order to allow time for producers in exporting Member countries to adapt to the new requirement. At this time, EPA is establishing an expiration date for the existing tolerances to allow those tolerances remain in effect for a period of six months after the effective date of this final rule, in order to address this requirement. Prior to the expiration date, residues of fenazaquin up to the existing tolerance level will be permitted; after the expiration date, residues will need to be compliant with the reduced tolerance level.

Therefore, tolerances are established for residues of fenazaquin, 4-[2-[4-(1,1-dimethylethyl)phenyl]ethoxy]quinazoline, in or on avocado at 0.15 ppm; berry, low growing, subgroup 13-07G at 2 ppm; bushberry, subgroup 13-07B at 0.8 ppm; caneberry, subgroup 13-07A at 0.7 ppm; fruit, citrus, group 10-10, oil at 20 ppm; fruit, citrus, group 10-10 at 0.4 ppm; fruit, pome, group 11-10 at 0.6 ppm; fruit, small fruit vine climbing, except fuzzy kiwifruit, subgroup 13-07F at 0.7 ppm; fruit, stone, group 12-12 at 2 ppm; grape, raisin at 0.8 ppm; pea and bean, dried shelled, except soybean, subgroup 6C at 0.3 ppm; pea and bean, succulent shelled, subgroup 6B at 0.03 ppm; peppermint, fresh leaves at 10 ppm; spearmint, fresh leaves at 10 ppm; vegetable, cucurbit, group 9 at 0.3 ppm; vegetable, fruiting, group 8-10 at 0.3 ppm; and vegetable, legume, edible podded, subgroup 6A at 0.4 ppm. In addition, EPA is removing the following tolerances: (1) Individual tolerances for apple, pear, and cherry because they are superseded by the new tolerances for pome fruit group 11-10 and stone fruit group 12-12; (2) the group tolerance for fruit, citrus, group 10, except grapefruit because it is superseded by a new group tolerance for fruit, citrus, group 10-10; and (3) the tolerance for citrus, oil because it is superseded by the new group tolerance for fruit, citrus, group 10-10, oil. The Agency is setting a 6-month expiration date on the current group tolerance for fruit, citrus, group 10, except grapefruit to provide a reasonable interval for exporting countries to adjust to the lower fruit, citrus, group 10-10 tolerance.

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

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

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

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

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

Therefore, 40 CFR chapter I is amended as follows:

In accordance with 5 U.S.C. 552a (Privacy Act or Act), the exemptions were described in a Notice of Proposed Rulemaking (NPRM) published for public notice and comment at 83 FR 42627 (Aug. 23, 2018). The new system of records is described in a System of Records Notice (SORN) which was published for public notice and comment the same day, at 83 FR 42667 (Aug 23, 2018). Only law enforcement investigatory material and classified intelligence information were proposed to be exempted, based on subsections (k)(1) and (k)(2) of the Act, from the requirements contained in subsections (c)(3), (d)(1)-(4), (e)(1), (e)(4)(G), (H), and (I), and (f) of the Act, which require the agency to provide an accounting of disclosures; provide notification, access, and amendment rights, rules, and procedures; maintain only relevant and necessary information; and identify categories of record sources. The NPRM also explained that if the HHS Insider Threat Program obtains law enforcement investigatory material from another Privacy Act system of records that has been exempted from Privacy Act requirements based on subsection (j)(2) of the Act, that material will be exempt in System No. 09-90-1701 to the same extent it is exempt in the source system, so it may be exempt from requirements in any of these subsections of the Act: (c)(3)-(4); (d)(1)-(4); (e)(1)-(3), (e)(4)(G)-(I), (e)(5), (e)(8), (e)(12); (f); (g); and (h).

The comment period for the SORN and NPRM was open through September 24, 2018. No comments were received on the NPRM and no comments were received on the SORN. No changes to the proposed exemptions or to the SORN were made following the public comment period.

The specific rationales that support the exemptions as to each affected Privacy Act provision, remain as stated in the NPRM; the exemptions from the particular subsections are necessary and appropriate, and justified for the following reasons:

• 5 U.S.C. 552a(c)(3) (the requirement to provide accountings of disclosures) and 5 U.S.C. 552a(d)(1)-(4) (requirements addressing notification, access, and amendment rights, collectively referred to herein as access requirements). Providing individual record subjects with accountings of disclosures and with notification, access, and amendment rights with respect to Insider Threat Program records could reveal the existence of an investigation, investigative interest, investigative techniques, details about an investigation, security-sensitive information such as information about security measures and security vulnerabilities, information that must remain non-public to protect national security or personal privacy-identities of law enforcement personnel, or other sensitive or classified information. Revealing such information to record subjects would thwart or impede pending and future law enforcement investigations and efforts to protect national security, and would violate personal privacy. Revealing the information would enable record subjects or other persons to evade detection and apprehension by security and law enforcement personnel; destroy, conceal, or tamper with evidence or fabricate testimony; or harass, intimidate, harm, coerce, or retaliate against witnesses, complainants, investigators, security personnel, law enforcement personnel, or their family members, their employees, or other individuals. With respect to investigatory material compiled for law enforcement purposes, the exemption pursuant to 5 U.S.C. 552a(k)(2) from access requirements in subsection (d) of the Act is statutorily limited. If any individual is denied a right, privilege, or benefit to which the individual would otherwise be entitled by federal law or for which the individual would otherwise be eligible, access will be granted, except to the extent that the disclosure would reveal the identity of a source who furnished information to the Government under an express promise of confidentiality.

• 5 U.S.C. 552a(e)(1) (the requirement to maintain only relevant and necessary information authorized by statute or Executive Order). It will not always be possible to determine at the time information is received or compiled in this system of records whether the information is or will be relevant and necessary to a law enforcement investigation or to protecting national security. For example, a tip or lead that does not appear relevant or necessary to uncovering an insider threat by itself or at the time the tip or lead is received may prove to be relevant and necessary when combined with other information that reveals a pattern or that comes to light later.

• 5 U.S.C. 552a(e)(4)(G) and (H) (the requirements to describe procedures by which subjects may be notified of whether the system of records contains records about them and seek access or amendment of a record). These requirements concern individual access to records, and the records are exempt under (c) and (d), as described above. To the extent that (e)(4)(G) and (H) are interpreted to require more detailed procedures regarding record notification, access, or amendment than have been published in the Federal Register , exemption from those provisions is necessary for the same rationale as applies to (c) and (d).

• 5 U.S.C. 552a(e)(4)(I) (the requirement to describe the categories of record sources). To the extent that this subsection is interpreted to require a more detailed description regarding the record sources in this system than has been published in the Federal Register , exemption from this provision is necessary to protect the sources of law enforcement and intelligence information and to protect the privacy and safety of witnesses and informants and others who provide information to HHS. Further, greater specificity of sources of properly classified records could compromise national security. Moreover, because records used in the Insider Threat Program could come from any source, it is not possible to know every category in advance in order to list them all in the SORN. Some record source categories may not be appropriate to make public in the SORN if, for example, revealing them could enable record subjects or other individuals to discover investigative techniques and devise ways to bypass them to evade detection and apprehension.

• 5 U.S.C. 552a(f) (the requirement to promulgate rules to implement provisions of the Privacy Act). To the extent that this subsection is interpreted to require agency rules addressing the above exempted requirements, exemption from this provision is also necessary to protect the sources of law enforcement and intelligence information and to protect the privacy and safety of witnesses and informants and others who provide information to HHS. Greater specificity in rulemaking regarding properly classified records could compromise national security.

Accordingly, based on 5 U.S.C. 552a(k)(1) and (k)(2) and the specific rationales indicated above, HHS is now exempting law enforcement investigatory material and classified intelligence information in system of records 09-90-1701 HHS Insider Threat Program Records from subsections (c)(3), (d)(1)-(4), (e)(1), (e)(4)(G), (H), and (I), and (f) of the Act, which contain requirements to provide an accounting of disclosures; provide notification, access, and amendment rights, rules, and procedures; maintain only relevant and necessary information; and identify categories of record sources. In addition, HHS affirms that if the HHS Insider Threat Program obtains law enforcement investigatory material from another Privacy Act system of records that has been exempted from Privacy Act requirements based on subsection (j)(2) of the Act, that material will be exempt in System No. 09-90-1701 to the same extent it is exempt in the source system.

Notwithstanding these exemptions, consideration will be given to any requests for notification, access, and amendment that are addressed to the System Manager, as provided in the SORN for system of records 09-90-1701, and to accounting of disclosure requests. Where HHS determines that compliance with a request would not interfere with or adversely affect the purpose of this system of records to detect, deter, or mitigate insider threats, the applicable exemption may be waived by HHS in its sole discretion.

The Federal Register notice containing the SORN proposed for new system of records 09-90-1701 provides for that SORN to be effective upon publication of this final rule. No changes were made to the SORN as a result of public comments and, therefore, the SORN, as published at 83 FR 42667 (Aug. 23, 2018), is now effective.

The agency has reviewed this rule under Executive Orders 12866 and 13563, which direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to maximize the net benefits. The agency believes that this rule is not a significant regulatory action under Executive Order 12866, and therefore does not constitute an Executive Order 13771 regulatory action, because it will not (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees or loan programs, or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866.

The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. Because the rule imposes no duties or obligations on small entities, the Department certifies that the rule will not have a significant economic impact on a substantial number of small entities.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $144 million, using the most current (2015) Implicit Price Deflator for the Gross Domestic Product. The Department does not expect that this final rule would result in any one-year expenditure that would meet or exceed this amount.

In the Federal Register of March 26, 2019, in FR Doc. 2019-05620, on page 11226, in the first column, the compliance dates are corrected to read as set forth in the DATES section above and the first paragraph of the “Compliance” section in SUPPLEMENTARY INFORMATION is corrected to read:

“The amendments of the Commission's rules as set forth in this document are effective 30 days after publication of a notice in the Federal Register announcing approval by the Office of Management and Budget (OMB). Compliance will not be required for §§ 52.15(f)(1)(ii) and (f)(8), 52.103(d), and 64.1200(l)(1) until after approval by the OMB of information collection requirements contained in §§ 52.15(f)(8) and 64.1200(l)(1). The compliance date for §§ 52.15(f)(1)(ii) and (f)(8), 52.103(d), and 64.1200(l)(1) will be specified in a document published in the Federal Register . Compliance will not be required for § 64.1200(l)(2) until after approval by OMB and the reassigned numbers database administrator is ready to begin accepting reports of the data collected in accordance with § 64.1200(l)(1). The Commission will publish another document in the Federal Register announcing the compliance date for the requirements contained in § 64.1200(l)(2).”

As part of GSA's regulatory reform efforts, GSA has been performing a comprehensive review of the regulatory requirements in the GSAR. As a part of these efforts, GSA discovered that a Federal Register notification had not been published to finalize this interim rule. As a result, GSA included as part of the Fall edition of the Unified Agenda of Federal Regulatory and Deregulatory Actions in the Federal Register at 83 FR 58086 on November 16, 2018 its intention to publish a final rule notification in the Federal Register .

The purpose of this rule is the straightforward implementation of the statutory authority provided by Public Law 110-248, The Local Preparedness Acquisition Act to open Schedule 84 or any amended or subsequent version of that Federal supply classification group to cooperative purchasing. GSA exercised this authority effective on the date of publication of the interim rule. GSA published the interim rule in the Federal Register at 73 FR 54334, on September 19, 2008.

The interim rule was a straight implementation of the statute. No public comments were submitted in response to the interim rule. The program has been operating under the interim rule since 2008 without concern and with no statutory changes. Therefore, there are no changes from the interim rule made in the final rule. This action represents administrative clean-up for purposes of publishing a notification in the Federal Register of the finalization of this rule.

No public comments were submitted in response to the interim rule. Therefore, there are no changes from the interim rule made in the final rule.

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

This final rule is not subject to E.O. 13771, because this rule is not a significant regulatory action under E.O. 12866.

The change may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.

GSA has prepared a Final Regulatory Flexibility Analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. The FRFA is summarized as follows:

Interested parties may obtain a copy of the FRFA from the Regulatory Secretariat Division. The Regulatory Secretariat Division has submitted a copy of the FRFA to the Chief Counsel for Advocacy of the Small Business Administration.

The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply; however, these changes to the GSAR do not impose additional information collection requirements to the paperwork burden previously approved under the Office of Management and Budget Control Number 3090-0250, titled: Zero Burden Information Collection Reports.

On March 19, 2019, VA published a rule in the Federal Register (84 FR 9968) which contained an error in the description of the contents of section 801.106.

In FR Rule Doc. No. 2019-04900, appearing on page 9968 in the Federal Register of March 19, 2019, make the following correction: