Background 1. Overview

This document contains proposed amendments to the Income Tax Regulations (26 CFR part 1) under sections 641 and 1361 of the Internal Revenue Code (Code).

Section 13541(a) of “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” Public Law 115-97,131 Stat. 2054, 2154 (TCJA) amended section 1361(c)(2)(B)(v) of the Code to allow NRAs to be PCBs of ESBTs. As amended, section 1361(c)(2)(B)(v) provides that NRA PCBs will not be taken into account for purposes of the S corporation shareholder-eligibility requirement that otherwise prohibits NRA shareholders. See section 1361(b)(1)(C).

An S corporation is a “small business corporation” for which an election, made under section 1362(a), is in effect. Section 1361(b)(1) defines the term “small business corporation” as a domestic corporation that (i) is not an ineligible corporation (as defined in section 1361(b)(2)); (ii) does not have more than 100 shareholders; (iii) does not have a shareholder who is not an individual, estate, a certain type of trust, or a certain type of tax-exempt organization; (iv) does not have more than one class of stock; and (v) as relevant to these proposed regulations, does not have an NRA as a shareholder.

Section 7701(b)(1)(B) defines an NRA as an individual who is neither a citizen of the United States nor a resident of the United States, within the meaning of section 7701(b)(1)(A). Section 7701(b)(1)(A) provides that an alien individual is treated as a resident of the United States with respect to any calendar year if (and only if) such individual (i) is a lawful permanent resident of the United States at any time during such calendar year; (ii) meets the substantial presence test of section 7701(b)(3); or (iii) makes the first-year election provided in section 7701(b)(4).

Only certain trusts are permitted to be an S corporation shareholder. Specifically, sections 1361(c)(2) and (d)(1)(A) provide that the following trusts may be an S corporation shareholder: (i) A grantor trust wholly owned by an individual who is a citizen or resident of the United States; (ii) a voting trust; (iii) certain grantor trusts that continue to exist for a period generally not longer than two years after the grantor's death; (iv) certain testamentary trusts for two years after the S corporation stock is transferred to it; (v) a qualified subchapter S trust; (vi) certain individual retirement accounts under section 408(a) that hold certain bank or company stock; and (vii) as relevant to these proposed regulations, a domestic trust that qualifies as an ESBT.

To expand the categories of trusts permitted to be S corporation shareholders under section 1361(c)(2) and thereby, in particular, to facilitate family financial planning, Congress added ESBTs to the list of permitted categories of S corporation shareholders over two decades ago. See H. Rept. 104-586, at 82 (1996); S. Rept. 104-281, at 46 (1996). An ESBT must be a domestic trust based on the flush language under section 1361(c)(2)(A), which provides that a foreign trust cannot be an eligible S corporation shareholder. Read together with section 1361(e)(1), an ESBT is any domestic trust that satisfies the following requirements: (i) The trust does not have as a beneficiary any person other than an individual, an estate, or an organization described in section 170(c)(2) through (5), or an organization described in section 170(c)(1) that holds a contingent interest in such trust and is not a PCB; (ii) no interest in the trust was acquired by purchase; and (iii) an election has been made under section 1361(e) with respect to the trust. An ESBT may hold S corporation stock as well as other property, and may accumulate trust income. In addition, and as relevant to these proposed regulations, (i) a PCB may be one of multiple beneficiaries of an ESBT, and (ii) a grantor trust may elect to be an ESBT.

For purposes of determining whether a corporation is an S corporation, each PCB of an ESBT is treated as a separate S corporation shareholder. See section 1361(c)(2)(B)(v). A PCB, with respect to any period, is any person who at any time during such period is entitled to, or at the discretion of any person may receive, a distribution from the principal or income of the ESBT (determined without regard to any power of appointment to the extent such power remains unexercised). See section 1361(e)(2). As relevant to these proposed regulations, a PCB also can be the deemed owner of a grantor trust that elects to be an ESBT.

An ESBT that owns stock of an S corporation, as well as other property, is treated as two separate trusts (S portion and non-S portion, respectively) for purposes of chapter 1 of subtitle A of the Code (chapter 1), even though the ESBT is treated as a single trust for administrative purposes. See § 1.641(c)-1(a). Specifically, section 641(c)(1)(A) provides that the S portion, which consists solely of S corporation stock, is (i) treated as a separate trust for purposes of chapter 1, and (ii) taxed in accordance with section 641(c)(2). The non-S portion of the ESBT remains subject to the normal trust income taxation rules of subparts A through D of subchapter J of chapter 1 (subchapter J) that govern simple and complex trusts. In addition, the S portion or non-S portion (or both) can be treated as owned by a grantor under § 1.641(c)-1(b)(1), referred to as the “grantor portion,” and is subject to the rules under subpart E of subchapter J.

A grantor trust generally is a trust over which the grantor or other deemed owner retains the power to control or direct the trust's income or assets. If a trust is a grantor trust, then (i) the deemed owner is treated as the owner of the assets, (ii) the trust is disregarded as a separate entity for Federal income tax purposes, and (iii) all items of income, deduction, and credit are taxed to the deemed owner. Wholly or partially-owned grantor trusts can make an ESBT election but the grantor trust taxation rules of the Code override the ESBT provisions. Therefore, an ESBT pays tax directly at the trust level on its S corporation income and that income is not passed through to the beneficiaries, except for the amount that is taxed to the owner of the grantor trust portion.

The Department of the Treasury (Treasury Department) and the IRS promulgated regulations in 2002 to clarify that the items of income, deduction, and credit of the portion of an ESBT treated as owned by a grantor or other person under the grantor trust rules are taken into account by the deemed owner (rather than the ESBT) under section 671 in computing the deemed owner's taxable income. See § 1.641(c)-1(c). Therefore, under those regulations, a wholly-owned grantor trust can be an ESBT, but with no immediate change to the grantor trust's taxation. While an ESBT may be divided into a non-S portion, an S portion, and a grantor trust portion, the statutory definitions of an ESBT and of a PCB focus on all the persons who are beneficiaries or PCBs of the entire trust, rather than beneficiaries of only the S portion. As relevant to these proposed regulations, the deemed owner of the grantor trust portion is treated as a PCB of the ESBT.

Prior to the enactment of the TCJA, a change in the immigration status of a PCB of an ESBT that owns S corporation stock from resident alien to NRA would have terminated an ESBT election, and therefore also terminated the corporation's election as an S corporation. This result would have occurred because, prior to the TCJA-enacted exception to the section 1361(b)(1)(C) eligible-shareholder requirement, section 1361(c)(2)(B)(v) provided, in relevant part, that each PCB of an ESBT must be treated as a shareholder of the S corporation. As discussed in part 1(A) of this Background section, if a purported S corporation has an NRA shareholder, such S corporation would fail the qualification requirements listed in section 1361(b)(1), resulting in the termination of its status as an S corporation.

Section 13541(a) of the TCJA amended section 1361(c)(2)(B)(v) to provide that the rule treating each PCB of an ESBT as a shareholder does not apply for purposes of the eligible-shareholder requirement of section 1361(b)(1)(C). As a result of that TCJA amendment, if a resident alien PCB of an ESBT becomes an NRA, the status of that PCB as an NRA will not cause the S corporation of which the ESBT is a shareholder to fail the requirement in section 1361(b)(1)(C), which otherwise would terminate its S election. While Congress amended section 1361(c)(2)(B)(v) to expand the scope of qualifying beneficiaries of ESBTs, Congress left unaltered the rule under section 1361(b)(1)(C) that an S corporation cannot have an NRA as a shareholder.

Prior to the TCJA, only individuals subject to Federal income taxation could receive an ESBT's share of S corporation income because a grantor trust that elected ESBT status could not have had a deemed owner who was an NRA. Without these proposed regulations, the TCJA's expansion of an ESBT's permissible PCBs to include an NRA would allow S corporation income attributed to the grantor portion of an ESBT that is received by a NRA deemed owner of that portion, to escape Federal income taxation, contrary to Congressional intent. For example, if an NRA were to be a deemed owner of a grantor trust that elected to be an ESBT, and thus were to be allocated foreign source income of the S corporation or income not effectively connected with the conduct of a U.S. trade or business under section 864(c)(4)(B), that NRA would not be required to include such S corporation items in income under section 671 because the NRA would not be liable for Federal income tax on such income under section 871(a) or (b). Additionally, if that NRA is a resident of a country with which the United States has an income tax treaty, U.S. source income of the S corporation also might be exempt from tax or subject to a lower rate of Federal income tax in the hands of that NRA.

Under section 672(f)(2)(A)(ii), trust income, deductions, and credits are taxed to NRA grantors if the only amounts distributable from such portion (whether income or corpus) during the lifetime of the grantor are amounts distributable to the grantor or the spouse of the grantor. Such a trust would not be a foreign trust solely because the grantor retained this right, provided that (1) a U.S. court had primary jurisdiction over the trust, as required by section 7701(a)(30)(E)(i), and (2) U.S. persons controlled substantial trust decisions, as required by section 7701(a)(30)(E)(ii). Accordingly, a domestic trust described in section 672(f)(2)(A)(ii) that elects ESBT status would be a grantor trust, and the income from the trust would be taxed to the NRA grantor-owner(s) (that is, the grantor and the grantor's spouse) during the grantor's lifetime. These NRA deemed owners would not be subject to U.S. Federal income tax on the S corporation income unless this income was U.S. source fixed or determinable income or income effectively connected with a U.S. trade or business.

In discussing the amendment to section 1361(c)(2)(B)(v) allowing an NRA to be a PCB of an ESBT, the Conference Report made the following two observations regarding present S corporation law: First, the portion of an ESBT that consists of S corporation stock “is treated as a separate trust” and generally (that is, not taking into account capital gains) is “taxed on its share of the S corporation's income at the highest rate of tax imposed on individual taxpayers.” H. Rept. 115-466, at 517 (2017). See also § 1.641(c)-1(e)(1) (articulating the capital gains exception regarding Congress' use of the word “generally”). Second, Congress noted that an “[ESBT's share of S corporation] income (whether or not distributed by the ESBT) is not taxed to the beneficiaries of the ESBT.” Id. These observations reflect the general rule of ESBT taxation that (i) subjects the ESBT to tax on its S corporation income at the trust level, rather than the beneficiary level, and accordingly (ii) is indifferent to the citizenship or residence status of the ESBT's beneficiaries because the ESBT must be domestic. The observations do not take into account the interaction between the ESBT and grantor trust tax regimes, which allows a trust to be an ESBT for S corporation qualification purposes while permitting all or a portion of the trust subject to the grantor trust provisions to be taxed as a grantor trust, rather than as an ESBT. As described earlier, § 1.641(c)-1(c) provides that the taxable income of a grantor trust that elects to be an ESBT is treated as the taxable income of the deemed owner of the trust (including a deemed owner who is an NRA), regardless of whether the ESBT distributes the income.

The report accompanying the Senate bill (Senate Report) similarly indicates that Congress assumed that the taxation of income at the ESBT level would protect against potential tax avoidance that might otherwise result from permitting an NRA to be a PCB of an ESBT: “An ESBT that is an S corporation shareholder is taxed on its share of the S corporation's income at the highest rate of tax imposed on individual taxpayers. For that reason, the Committee believes that allowing a nonresident alien individual to be a potential current beneficiary of an ESBT presents little risk of tax avoidance.” S. Comm. on the Budget, Reconciliation Recommendations Pursuant to H. Con. Res. 71, S. Print No. 115-20, at 235-236 (2017).

Based on this legislative history of section 1361(c)(2)(B)(v), the Treasury Department and the IRS have determined that the expansion of that clause to allow an NRA to be an ESBT PCB was not intended to override longstanding statutory provisions that have operated to ensure that all of the S corporation income remains subject to Federal income tax. In the absence of regulations, the post-TCJA ability of an NRA to be a PCB of an ESBT, in combination with the potential for a grantor trust portion of an ESBT to be owned by an NRA under section 672(f)(2)(A)(1)(ii), could result in S corporation income passing without tax from the domestic ESBT to the NRA and escaping Federal income taxation.

These proposed regulations would ensure that, with respect to situations in which an NRA is a deemed owner of a grantor trust that has elected to be an ESBT, the S corporation income of the ESBT would continue to be subject to U.S. Federal income tax. Specifically, the proposed regulations would modify the allocation rules under § 1.641(c)-1 to require that the S corporation income of the ESBT be included in the S portion of the ESBT if that income otherwise would have been allocated to an NRA deemed owner under the grantor trust rules. Accordingly, such income would be taxed to the domestic ESBT by providing that, if the deemed owner is an NRA, the grantor portion of net income must be reallocated from the grantor portion of the ESBT to the ESBT's S portion.

The proposed regulations also would implement Congress' amendment to section 1361(c)(2)(B)(v) by making conforming revisions to § 1.1361-1(m). For example, the proposed regulations would update the description of PCBs in § 1.1361-1(m)(4)(i) to reflect the ability of NRAs to be PCBs of ESBTs. The proposed regulations similarly would update other provisions in § 1.1361-1(m) to reflect that ability.

Section 7805(b)(1)(A) and (B) of the Code generally provide that no temporary, proposed, or final regulation relating to the internal revenue laws may apply to any taxable period ending before the earliest of (A) the date on which such regulation is filed with the Federal Register , or (B) in the case of a final regulation, the date on which a proposed or temporary regulation to which the final regulation relates was filed with the Federal Register . However, section 7805(b)(2) provides that regulations filed or issued within 18 months of the date of the enactment of the statutory provision to which they relate are not prohibited from applying to taxable periods prior to those described in section 7805(b)(1). Furthermore, section 7805(b)(3) provides that the Secretary may provide that any regulation may take effect or apply retroactively to prevent abuse.

Accordingly, to prevent abuse of sections 641 and 1361 and the regulations thereunder, these proposed regulations are proposed to apply to all ESBTs after December 31, 2017.

This regulation is not subject to review under section 6(b) of Executive Order 12866 pursuant to the Memorandum of Agreement (April 11, 2018) between the Department of the Treasury and the Office of Management and Budget regarding review of tax regulations.

This notice of proposed rulemaking does not impose a collection of information on any small entities. Accordingly, a regulatory flexibility analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Notwithstanding this certification, the Treasury Department and the IRS invite comments from interested members of the public on both the number of entities affected and the economic impact on small entities.

Pursuant to section 7805(f) of the Code, this notice of proposed rulemaking has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the ADDRESSES heading.

All comments will be available at http://www.regulations.gov or upon request. A public hearing may be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register .

The principal author of these proposed regulations is Cynthia Morton of the Office of Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and the Treasury Department participated in their development.

Accordingly, 26 CFR part 1 is proposed to be amended as follows:

The revisions and additions read as follows:

The revisions and additions read as follows:

I. Table of Abbreviations AHP Above Head of Passes COTP Captain of the Port New Orleans CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register MM Mile marker NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background, Purpose, and Legal Basis

On April 11, 2019, MIP Inc. notified the Coast Guard that they will be conducting a fireworks display at 9:45 on June 20, 2019. The fireworks are to be launched from a barge at approximately MM 100 Above Head of Passes, Lower Mississippi River, New Orleans, LA. Hazards from firework displays include accidental discharge of fireworks, dangerous projectiles, and falling hot embers or other debris. The Captain of the Port New Orleans (COTP) has determined that potential hazards associated with the fireworks to be used in this display would be a safety concern for anyone within a half mile upbound and downbound of the barge.

The purpose of this rulemaking is to ensure the safety of vessels and the navigable waters within a mile span of the river before, during, and after the scheduled event. The Coast Guard is proposing this rulemaking under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231).]

The COTP is proposing to establish a safety zone from 9:30 to 10:30 p.m. on June 20, 2019. The safety zone would cover all navigable waters between mile marker (MM) 99.5 and 100.5 Above Head of Passes, Lower Mississippi River, New Orleans, LA. The duration of the zone is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled 9:45 p.m. fireworks display. No vessel or person would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. The regulatory text we are proposing appears at the end of this document.

We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.

This regulatory action determination is based on the location, time, and duration of the safety zone. The safety zone will be enforced for one hour on one day on a one mile span of the Lower Mississippi River.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section IV.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has 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. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

We have analyzed this proposed rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a safety zone lasting one hour on a one mile span of the Lower Mississippi River. Normally such actions are categorically excluded from further review under paragraph L 60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES . We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places, or vessels.

We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.

We encourage you to submit comments through the Federal eRulemaking Portal at http://www.regulations.gov. If your material cannot be submitted using http://www.regulations.gov, contact the person in the FOR FURTHER INFORMATION CONTACT section of this document for alternate instructions.

We accept anonymous comments. All comments received will be posted without change to https://www.regulations.gov and will include any personal information you have provided. For more about privacy and the docket, visit https://www.regulations.gov/privacyNotice.

Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at https://www.regulations.gov and can be viewed by following that website's instructions. Additionally, if you go to the online docket and sign up for email alerts, you will be notified when comments are posted or a final rule is published.

Section 5304(c) of title 38, United States Code, provides that “Pension, compensation, or retirement pay on account of any person's own service shall not be paid to such person for any period for which such person receives active service pay.” “Active service pay” is defined by VA at 38 CFR 3.654 as “pay received for active duty, active duty for training or inactive duty training” and therefore encompasses both active duty and training pay. VA implements the statutory prohibition on receiving concurrent VA benefits and active service pay in current 38 CFR 3.700(a)(1). In order to reduce hardships for veterans and improve processing of benefits, VA proposes to amend the current procedural requirements related to the 60-day notice period and take immediate action to suspend compensation payments upon notice of receipt of active service pay from DoD when the veteran has received prior notice that the law prevents concurrent receipt of certain VA benefits and active service pay or VA has received a statement from the veteran indicating knowledge that concurrent receipt of VA benefits and active service pay is prohibited. This proposed change would only apply to compensation payments, not pension.

Current 38 CFR 3.103 generally establishes the procedures for notice of law in the VA benefits system. In particular, § 3.103(b)(2) establishes procedures that VA must follow before an “award of compensation, pension or dependency and indemnity compensation” can be “terminated, reduced or otherwise adversely affected.” Importantly, VA must provide a veteran with notice of a proposed adverse action and 60 days to provide evidence showing why the adverse action should not be taken. VA continues to pay benefits during this 60-day period.

Current regulations provide exceptions for when VA may dispense with the 60-day notice requirement and terminate or reduce benefits at the same time it notifies a veteran of such action. One exception is specific to veterans who inform VA when they return to active duty or participate in training duty. Under 38 CFR 3.103(b)(3)(v), VA may take immediate action to suspend payment of VA benefits when the decision is “based upon a written statement provided to VA by a veteran indicating that he or she has returned to active service, the nature of that service, and the date of reentry into service, with the knowledge or notice that receipt of active service pay precludes concurrent receipt of VA compensation or pension.” In other words, when a veteran proactively notifies VA of his or her receipt of active service pay, VA may suspend benefits without waiting 60 days, thereby eliminating or reducing the overpayment that VA must collect from the veteran. VA proposes to expand this exception to include notice of receipt of active service pay from DoD. Not only would this proposal further eliminate or reduce overpayments VA must collect, it also reduces the reporting burden on veterans in cases where VA receives information directly from DoD.

“[T]he Secretary generally is required to recover erroneous VA payments,” including the overpayment of benefits. Edwards v. Peake, 22 Vet. App. 57, 59 (2008) (citing 38 U.S.C. 5314); see also VAOPGCPREC 1-2010 (Jan. 4, 2010). Section 5304(c) of title 38, United States Code, precludes concurrent receipt of VA compensation and active service pay. If VA pays benefits to a veteran for a period in which he or she is not entitled to receive them, including during the 60-day notice period, VA must generally recover these overpayments. At present, the only way for VA to avoid the overpayment and resulting recoupment action is if the veteran provides VA a statement prior to the receipt of active service pay, which allows VA to immediately suspend benefit payments. See 38 CFR 3.103(b)(3)(v). Otherwise VA must provide a 60-day response period prior to suspending benefits. Only upon expiration of the response period or a timely response from a veteran, whichever is sooner, may VA create an overpayment and initiate recoupment action. As discussed further in section II below, this process has created financial hardships for veterans, who must repay the duplicate benefits they received, as well as burdensome inefficiencies in processing overpayments, further amplifying the impact on veterans.

VA processes two basic types of benefit adjustments based on concurrent receipt of active service pay: Training pay offsets, which can be performed either prospectively or retrospectively, and active duty suspensions. The respective processes for adjusting benefits differ. For training pay, DoD, until recently, transmitted an annual notice to VA with the number of days for which a veteran received training pay. Training pay is characteristically periodic and recurring, and of shorter duration than active duty pay. However, active duty pay, which DoD previously transmitted information about to VA quarterly, is typically of indeterminate duration that could extend months, or even years, particularly for members of the Reserves and National Guard returning to active duty. Because there are significant systemic differences in the processes for adjusting VA benefits based on receipt of either active duty or training pay, the processes for adjusting benefits will be discussed separately to assist the reader with understanding the unique hardships created by each type.

Training pay is the monetary benefit a reservist or member of the National Guard receives for performing periodic active duty for training, as discussed in more detail below, or inactive duty training. See 38 CFR 3.6(c) (active duty for training) and 3.6(d) (inactive duty training). During a single fiscal year, reservists and members of the National Guard commonly receive training pay for a total of 63 days, which consists of 48 drill periods (a drill period is defined as four hours), and 15 days of active duty training. Previously, at the end of each fiscal year, DoD's Defense Manpower Data Center (DMDC) sent VA an electronic file identifying veterans who received both training pay and VA disability compensation benefits during that fiscal year (ending in September). For data matches after the fiscal year (FY) 2017 match, VA will use the Reserve military pay data in the VA-DoD Identity Repository (VADIR) to match against VA recipients of VA disability compensation or pension. DMDC sends Reserve military pay data to VADIR monthly. DoD's provision, and VA's use of, DMDC data is based upon terms set forth in a computer matching agreement between DoD and VA. See Notice of a New Matching Program, 83 FR 51673 (Oct. 12, 2018).

VA may not learn of a veteran's receipt of training pay until the annual data match is received from DMDC. VA then sends each affected veteran VA Form 21-8951, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances, notifying the veteran that concurrent receipt of VA disability compensation or pension benefits and active service pay is prohibited, and that the veteran may use the form to elect to keep the training pay in lieu of VA compensation. If the veteran elects to keep the training pay, he or she must use the form to waive VA benefits for the number of days equal to the number of training days for which he or she received payment. Occasionally, a veteran will proactively notify VA of receipt (or anticipated receipt) of training pay by submitting VA Form 21-8951-2, Notice of Waiver of VA Compensation or Pension to Receive Military Pay and Allowances. Similar to VA Form 21-8951, this form allows a veteran to waive VA benefits or training pay. VA typically requires the signature of the veteran's military unit commander to ensure the number of days reported is accurate.

Both forms notify the veteran that if he or she elects to waive VA benefits in order to receive training pay, VA will adjust VA benefit payments for the total number of days waived. Generally, VA calculates the withholding at the monthly benefit rate in effect at the end of the fiscal year for which the veteran received training pay. Historically, VA withheld future compensation payments in lieu of creating an overpayment as an alternative mechanism of collecting the erroneous concurrent payments of training pay and VA compensation. However, adjustments by future withholding did not provide repayment options, leaving the veteran with no means to mitigate the adverse effect of losing the withheld benefits.

Consequently, starting in June 2016, VA began automating the annual process for training days completed in FY 2015. The new process is no longer dependent on employees initiating the adverse actions, which were previously delayed due to conflicting workload priorities. The automated process releases the notice letter upon receipt of notice from DMDC. After the veteran responds or the response period expires, VA issues a decision. If the decision results in an overpayment in the veteran's account, VA provides the veteran an opportunity to request a waiver of the overpayment or develop a payment plan to resolve the resulting debt. Subsequent data indicates that automation has increased the number of training pay adjustments processed by almost 62.9 percent from FY 2015 to FY 2016 while also reducing the number of days it takes to process the proposed compensation adjustment from 232 to 181 days, respectively. The average days to process the proposed compensation adjustment will continue to improve once the older training pay notices, received prior to the June 2016 automation process, are adjudicated. However, as discussed below, further improvement is possible.

A veteran may receive active duty pay as a result of returning to active duty in the United States Armed Forces. Additionally, VA treats some active duty for training in the same manner as active duty for purposes of processing VA benefit adjustments on the grounds that individuals performing such duty earn leave and time towards retirement on par to a servicemember on active duty status. Moreover, like active duty, some active duty for training can be of a longer duration and may not necessarily have an ascertainable end date. Therefore, active service pay for active duty for training described in 38 CFR 3.6(c), with the exception of annual active duty for training (typically performed 15 days each year by reservists and members of the National Guard) and Active Duty for Special Work to receive training, is generally processed as active duty pay for purposes of the cessation of VA compensation payments. Pay received for annual active duty for training and Active Duty for Special Work to receive training is processed as training pay. VA is proposing to amend 38 CFR 3.654(b) to accurately account for all instances in which VA discontinues an award, in the same manner as return to active duty, based on receipt of active service pay for active duty for training. See 38 U.S.C. 101(22) and 38 CFR 3.6(c).

VA's processing of concurrent VA benefits and active duty payments is generally different from processing of concurrent VA benefits and training pay. VA typically receives notice of a veteran's return to active duty or full-time duty in one of two ways: Either written notice from a veteran or through a DMDC active duty, and on some occasions training pay, data match. While veterans returning to active duty or full-time duty can notify VA of their status, due to the fast-paced nature of some military deployments, or the fact that the veteran may be stationed in areas with limited mail service, VA frequently learns of a veteran's return to active duty through the DMDC active duty data match. The DMDC active duty data match differs from the data match described for training pay, as VA and DMDC previously conducted the active duty data match quarterly ( i.e., approximately every 3 months). VA is in the process of developing a new computer matching agreement with DoD that may change the frequency with which VA receives this information.

When the data match shows that a veteran has returned to active or full-time duty, VA will confirm the date of return by reviewing electronic VA and DoD shared databases, such as the Defense Personnel Records Image Retrieval System (DPRIS) or the Veterans Information Solution. After confirming a veteran's return to active or full-time duty, VA must, under current requirements, notify the veteran of VA's proposal to discontinue the payment of compensation or pension. VA sometimes encounters difficulties when trying to locate and contact veterans who have returned to active duty. As VA must notify a veteran of its intent to suspend disability payments, this becomes problematic when some veterans on active duty serve in remote locations, such as a combat zone or similarly austere environments, with infrequent mail service, and have no reasonable method for dealing with financial difficulties. VA's current regulations allow the veteran 60 days to respond to the proposed decision, submit evidence, and request a hearing before VA may suspend benefits. 38 CFR 3.103(b)(2). Following the end of the 60-day period, and provision of a hearing if requested, VA considers any relevant evidence, and, if warranted, discontinues the award of benefits effective the day preceding return to active or full-time duty. See 38 CFR 3.501(a) and 3.654(b).

Under current § 3.103(b), which we propose to amend, VA cannot suspend compensation benefit payments before the veteran responds to the proposed benefit adjustment or the expiration of the prescribed 60-day response period. During this period, a veteran who has returned to active duty continues to receive benefits that VA will be required to recoup. As such, in the case of a veteran who returned to active duty, the 60-day delay potentially harms the veteran by increasing the amount of the overpayment that VA must ultimately recover. Additionally, when a veteran is overpaid, VA is required to take “aggressive collection action . . . to collect all claims for money or property arising from its activities.” See 38 CFR 1.910(a). This action can include disclosure of debt information to consumer reporting agencies. See 38 CFR 1.916. Collection and reporting of debt can negatively impact a veteran's credit rating, ability to borrow money, or ability to qualify for a security clearance or a job.

As discussed below, VA believes that processing benefits adjustments on a more frequent basis will be beneficial to veterans. However, under current 38 CFR 3.103, depending on the frequency with which DMDC sends the electronic file to VA (see section III below), VA could potentially send multiple notice letters (up to 12 or more letters per year in the case of a veteran who regularly drills and multiple letters referring to the same period of service in the case of a veteran returning to active duty). This could result in overlapping notice periods and would create administrative inefficiencies associated with tracking and promulgating each action. For veterans who returned to active duty, it may be confusing to receive multiple notice letters related to the same period of service. VA also encourages veterans to respond promptly to each letter to minimize the overpayment; however, a prompt response may be difficult, at best, and create an undue burden to those who may have returned to active duty and are in remote locations with infrequent mail service. The multiple notice letters could also create unnecessary distractions for veterans who may already be experiencing stressful situations in hostile areas and would likely create an influx of calls to VA's National Call Centers from veterans or their family members seeking assistance, clarification, or guidance.

Moreover, once VA issues a decision, the veteran receives one post-determination letter from the Veterans Benefits Administration (VBA) and, if an overpayment is created, a collections letter from VA's Debt Management Center. The first letter, from VBA, provides VA's decision, the summary of the evidence, and the veteran's appellate rights. The second letter is a collections letter from VA's Debt Management Center, which notifies the veteran of his or her rights and obligations, explains why the debt was created, and provides repayment options and waiver rights. In total, the veteran receives up to two post-determination notices for each adverse action. This indicates that even with the proposed removal of the response period and pre-determination letter, the veteran would still receive sufficient notice of VA's decision and the veteran's appellate rights, repayment options, and waiver rights.

As discussed above, active service pay creates large compensation overpayments and burdensome reporting requirements for veterans. The data for FY 2016 indicates that the average overpayment was $1,309.00 for training pay and $5,545.00 for return to active duty. VA and DoD are presently discussing changes to the way VA receives notification that a veteran has received active service pay. VA would like to leverage technological advancements, such as the DMDC data discussed above, to process benefits adjustments based upon receipt of active service pay on a frequent and reoccurring basis. This would reduce large overpayments in cases of return to active duty. Additionally, VA believes that processing adjustments based on receipt of active service pay more frequently will minimize stress and financial impact on veterans by making adjustments as close in time to the receipt of the active service pay as possible. Veterans will also be able to more clearly associate the benefit adjustment with the receipt of training pay when it occurs closer in time, rather than having to recall the number of training days performed in the previous fiscal year. Moreover, processing adjustments more frequently helps VA identify veterans who may have returned to active duty or full-time duty, which is indicated, for example, when data shows a veteran performed more than 15 training days in a month. VA's current regulations, however, would remain an impediment to reducing or ending overpayments and bureaucratic inefficiencies because we must currently notify the veteran of VA's intent to suspend payments upon receipt of the DMDC data and wait 60 days for the veteran to respond before taking action.

Information received directly from DoD regarding a veteran's receipt of active service pay is sufficiently reliable for VA to initiate suspension of VA disability compensation to avoid or minimize overpayments. The data sent to DMDC is based on information from the Defense Finance and Accounting Service, which pays all DoD military personnel, providing the most current and accurate payment information. Amending 38 CFR 3.103(b)(3) to permit VA to suspend disability compensation payments upon receipt of notice from DoD that the veteran has received, is receiving, or will begin to receive active service pay would allow VA to take action immediately and with little likelihood of error, thus reducing or eliminating these overpayments. Additionally, the proposed rule reduces the number of notices a veteran receives, thus simplifying the process while still providing sufficient notice and appellate rights. This proposed regulatory amendment would provide better service to our veterans by eliminating the 60-day notice period (for veterans who received prior notice that the law prevents concurrent receipt of VA benefits and active service pay or from whom VA has received a statement indicating knowledge that concurrent receipt of VA benefits and active service pay is prohibited), thereby reducing potential overpayments and minimizing the financial impact on the veteran.

As relevant here, the Fifth Amendment generally requires that an individual receive due process of law before being finally deprived of a property interest. See Mathews v. Eldridge, 424 U.S. 319, 332-33 (1976). In the context of receipt of monetary government benefits, the Supreme Court has held that a pre-termination hearing is necessary before subsistence payments, such as welfare benefits, may be terminated. See Goldberg v. Kelly, 397 U.S. 254, 260-264 (1970). While the changes we propose here deal with suspension of monthly compensation payments rather than final termination, and with disability compensation rather than welfare payments, it is clear that suspending the payment implicates a valid property interest in continued receipt of the award.

However, the fact that due process of law applies does not mean that VA's current cumbersome procedures are constitutionally required. See Morrissey v. Brewer, 408 U.S. 471, 481 (1972) (“Once it is determined that due process applies, the question remains what process is due.”). Rather, the Supreme Court has made clear that “ `due process' is a flexible concept [and] the processes required by the [Due Process] Clause with respect to the termination of a protected interest will vary depending upon the importance attached to the interest and the particular circumstances under which the deprivation may occur.” Walters v. Nat'l Ass'n of Radiation Survivors, 473 U.S. 305, 320 (1985).

VA believes that in the limited circumstance of temporary suspension of compensation payments based upon DoD notification that a veteran is in receipt of active service pay, constitutionally sufficient due process may be provided in a manner that does not unduly delay payment adjustments. To begin with, the inquiry that determines whether benefits must be suspended is straightforward: There is a clear statutory prohibition on receipt of compensation while a veteran is in receipt of active service pay. Further, this prohibition is only triggered by factual information that is relatively clear, straightforward, and reliable, such as notice from DoD indicating a veteran has received active service pay. On its face, the risk of erroneous suspension in this context is low and would be mitigated, as is currently done by VA, by cross referencing identifiers ( e.g., service number, social security number, date of birth).

Although VA is able to minimize the possibility of erroneous suspension of benefits, it has identified one primary scenario where benefits might be erroneously suspended due to the application of 10 U.S.C. 12316. This statute provides that a reservist called to active duty for a period of more than 30 days is precluded from receiving disability compensation “[u]nless the payments because of his earlier military service are greater than the compensation [payable for his current service].” See 10 U.S.C. 12316(b). Accordingly, it is theoretically possible that VA's suspension of VA benefits, which exceeded the veteran's active service pay, could adversely impact the veteran.

While this scenario is theoretically possible, VA views the probability of this occurring as extremely low. Nevertheless, VA has structured this proposed rule to include a safeguard to address the unlikely scenario by cross referencing VA disability compensation pay to DMDC pay to identify veterans who may be impacted. In the proposed rule, VA would specify that it will continue to require a statement directly from the veteran in order to suspend payment of compensation without advance notice and opportunity for a hearing “[w]hen notice provided by the Department of Defense contains information indicating that the monthly level of disability compensation for a veteran exceeds the veteran's monthly active service pay rate.” Further, we note that portions of 38 CFR 3.103 unaltered by this proposed rule would still provide the veteran with significant procedural protection that would allow VA to correct any errors. The amended regulation will still require VA to send a written notice to the veteran of the suspension at the time it takes the adverse action. See 38 CFR 3.103(b)(3). That notice must advise the veteran of the reasons for the decision and his or her right to appeal. See 38 CFR 3.103(f).

In sum, VA believes that the current 60-day waiting period, required by 38 CFR 3.103, when applied to the unique context of a veteran receiving active service pay, places unnecessary burdens on both the veteran and VA. Further, in this narrow situation, the 60-day waiting period protects against only a minimal risk of minor errors that can be mitigated or retrospectively corrected. The proposed amendments are beneficial to veterans and consistent with due process requirements.

For the reasons stated above, VA proposes to amend 38 CFR 3.103 to expand the existing exception in paragraph (b)(3)(v) so as to allow VA to suspend compensation benefits upon receipt of DoD notice that a veteran has received, is receiving, or will receive active service pay. The proposed amendment is intended to widen the exception created by paragraph (b)(3)(v) for suspension of compensation payments only and does not affect the process for suspending pension payments. VA's experience shows that the vast majority of recoupment cases involve the overpayment of compensation, not pension, benefits. Additionally, VA does not foresee that significant numbers of pension recipients will return to active service.

Therefore, this rule proposes to add the clause “or, in the case of compensation, written or electronic notice from the Department of Defense” in § 3.103(b)(3)(v), to dispense with tailored notice of VA's proposed suspension of benefits and the 60 days traditionally provided to respond before VA makes the required adjustment. The proposed rule would reference receipt of active service pay, rather than return to active service, to account for the possibility that in certain circumstances, see 10 U.S.C. 12316, a veteran may return to service and still receive VA compensation. The proposed rule would require that the notice from the Department of Defense include the date on which the service resulting in receipt of active service pay began or is expected to begin or, in the case of training pay, the number of training days performed during a specified period of time. Additionally, the rule would note that the exception created by paragraph (b)(3)(v) can only be triggered when the veteran has received prior notice, or has submitted a statement to VA indicating knowledge, that receipt of active service pay precludes concurrent receipt of VA benefits.

We note that the fourth and final sentence of paragraph (b)(3)(v), as we propose to revise it, would ensure that VA continues to account for information indicating a veteran's rate of disability compensation exceeds his or her rate of active duty pay. This sentence is designed to provide a procedural safeguard to minimize the possibility of erroneous suspension of benefits for any veterans who return to active duty but their monthly disability compensation exceeds their monthly active service pay. The sentence would ensure that this rare classification of veteran has the opportunity to elect to receive disability compensation in lieu of active duty pay.

The amended regulation would include cross-references to 38 CFR 3.654, which includes VA's definition of active service pay and an explanation of how benefit adjustments based on receipt of active service pay are adjudicated, and 38 CFR 3.700(a)(1), which implements the statutory prohibition on receiving concurrent VA benefits and active service pay. As noted above, “active service pay means pay received for active duty, active duty for training or inactive duty training.” See 38 CFR 3.654(a). Cross-referencing § 3.654 in amended 3.103(b)(3)(v) would ensure clarity with regard to the limited population to whom the exception to the notice response period applies. The amended language would also include a cross-reference to § 3.217(a), VA's policy regarding submission of statements or information affecting entitlement to benefits. Cross referencing § 3.217(a) would clarify that information affecting entitlement to benefits may be received by email, facsimile, or other written electronic means to satisfy the requirement that the statement or information be submitted in writing.

VA proposes to amend 38 CFR 3.654(b) to include all circumstances in which VA processes benefit adjustments for pay received for active duty for training in the same manner as active duty pay in 3.654(b). This is due to certain types of active duty for training being on par with full-time active duty due to that duty being of longer duration and not necessarily having an ascertainable end date. Therefore, an award will be discontinued effective the day preceding reentrance into active duty or active duty for training and payments, if otherwise in order, will be resumed as described in 38 CFR 3.654(b)(2). The types of active duty for training included are those described in § 3.6(c), with the exception of annual active duty for training typically performed 15 days each year by reservists and members of the National Guard and Active Duty for Special Work to receive training, which are processed as training pay. VA proposes a corresponding amendment to 38 CFR 3.654(c) to clarify the types of active duty for training that are processed as training pay.

VA also proposes to amend the first sentence of 38 CFR 3.654(b) to replace the reference to return to active duty status with a reference to receipt of active service pay to account for the possibility that in certain circumstances, see 10 U.S.C. 12316, a veteran may return to service and still receive VA compensation. VA additionally proposes to amend the final sentence of 38 CFR 3.654(b)(1) for clarity. The revised sentence will clarify that when the exact date of reentrance to active duty is not known, payments will be discontinued effective date of last payment, and the effective date of discontinuance will be adjusted to the day preceding reentrance when the date of reentrance has been ascertained from the service department. Finally, VA proposes to add an authority citation at the end of 38 CFR 3.654 because the section does not currently have an authority citation.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action” which requires review by the Office of Management and Budget (OMB), as “any regulatory action that is likely to result in a rule that may: (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 this Executive Order.”

The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined and it has been determined not to be a significant regulatory action under E.O. 12866. VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of this rulemaking and its impact analysis are available on VA's website at http://www.va.gov/orpm/, by following the link for VA Regulations Published From FY 2004 Through Fiscal Year to Date.

This proposed rule is not expected to be an E.O. 13771 regulatory action because this proposed rule is not significant under E.O. 12866.

The Secretary hereby certifies that this proposed rule will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-612). This proposed rule will not directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This proposed rule will have no such effect on State, local, and tribal governments, or on the private sector.

This action contains provisions constituting a collection of information, at 38 CFR 3.151, under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501-3521). There are no new collections of information associated with this proposed rule, but there will be a reduction in the number of respondents associated with an approved Office of Management and Budget (OMB) control number. The information requirement for 38 CFR 3.103 is currently approved by the Office of Management and Budget (OMB) and has been assigned control numbers 2900-0747 and 2900-0463. This proposed rule would reduce the number of respondents from the existing information collection requirements associated with this action at 38 CFR 3.654, Active service pay. Under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501-3521), while the actual OMB control number will remain in existence due to other information collections on the same OMB control number that are approved and active, it reduces the respondent burden for the approved OMB control number, 2900-0463. As a result of this proposed rule, there would be a reduction in the information collection burden that is associated with it. For 38 CFR 3.654, Active service pay, which is included on OMB control number 2900-0463, this would result in a reduction of 3,465 estimated annual burden hours and an annual cost savings of $84,338.10. As required by the Paperwork Reduction Act of 1995 (at 44 U.S.C. 3507(d)), VA will submit this information collection amendment to OMB for its review. Notice of OMB approval for this information collection will be published in a future Federal Register document.

The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.102, Compensation for Service-Connected Deaths for Veterans' Dependents; 64.105, Pension to Veterans, Surviving Spouses, and Children; 64.109, Veterans Compensation for Service-Connected Disability; and 64.110, Veterans Dependency and Indemnity Compensation for Service-Connected Death.

The Secretary of Veterans Affairs approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Robert L. Wilkie, Secretary, Department of Veterans Affairs, approved this document on April 10, 2019, for publication.

For the reasons stated in the preamble, the Department of Veterans Affairs proposes to amend 38 CFR part 3 as set forth below:

I. Background

On June 29, 2018, the Department of Natural Resources and Environmental Control (DNREC) submitted on behalf of the state of Delaware a formal SIP revision, requesting EPA's approval of its NNSR Certification for the 2008 8-hour ozone NAAQS. This SIP revision is in response to EPA's final 2008 8-hour ozone NAAQS Findings of Failure to Submit for NNSR requirements. See 82 FR 9158 (February 3, 2017). Specifically, Delaware is certifying that its existing NNSR program, covering the Delaware portion of the Philadelphia-Wilmington-Atlantic City, PA-NJ-MD-DE (Philadelphia Area) nonattainment area (which includes New Castle County) and the entire Seaford, DE (Seaford Area) nonattainment area (which includes Sussex County) for the 2008 8-hour ozone NAAQS, is at least as stringent as the requirements at 40 CFR 51.165, as amended by the final rule titled “Implementation of the 2008 National Ambient Air Quality Standards for Ozone: State Implementation Plan Requirements” (SIP Requirements Rule), for ozone and its precursors. 1 2 See 80 FR 12264 (March 6, 2015).

On March 12, 2008, EPA promulgated a revised 8-hour ozone NAAQS of 0.075 parts per million (ppm). See 73 FR 16436 (March 27, 2008). Under EPA's regulations at 40 CFR 50.15, the 2008 8-hour ozone NAAQS is attained when the three-year average of the annual fourth-highest daily maximum 8-hour average ambient air quality ozone concentration is less than or equal to 0.075 ppm.

Upon promulgation of a new or revised NAAQS, the CAA requires EPA to designate as nonattainment any area that is violating the NAAQS based on the three most recent years of ambient air quality data at the conclusion of the designation process. The Seaford and Philadelphia Areas were classified as marginal nonattainment for the 2008 8-hour ozone NAAQS on May 21, 2012 (effective July 20, 2012) using 2008-2010 ambient air quality data. See 77 FR 30088. On March 6, 2015, EPA issued the final SIP Requirements Rule, which establishes the requirements that state, tribal, and local air quality management agencies must meet as they develop implementation plans for areas where air quality exceeds the 2008 8-hour ozone NAAQS. See 80 FR 12264. Areas that were designated as marginal ozone nonattainment areas were required to attain the 2008 8-hour ozone NAAQS no later than July 20, 2015, based on 2012-2014 monitoring data. See 40 CFR 51.1103. The Seaford Area attained the 2008 8-hour ozone NAAQS by July 20, 2015 and the EPA Administrator signed a final Determination of Attainment (DOA) on April 11, 2016. See 81 FR 26697 (May 4, 2016). The Philadelphia Area did not attain the 2008 8-hour ozone NAAQS by July 20, 2015; however, the area did meet the CAA section 181(a)(5) criteria, as interpreted in 40 CFR 51.1107, for a one-year attainment date extension. Id. Therefore, in same rulemaking action, the EPA Administrator signed a final rule extending the Philadelphia Area 8-hour ozone NAAQS attainment date from July 20, 2015 to July 20, 2016. Id. 3

Based on initial nonattainment designations for the 2008 8-hour ozone NAAQS, as well as the March 6, 2015 final SIP Requirements Rule, Delaware was required to develop a SIP revision addressing certain CAA requirements for the Seaford and Philadelphia Areas, and submit to EPA a NNSR Certification SIP or SIP revision no later than 36 months after the effective date of the areas designations for the 2008 8-hour ozone NAAQS ( i.e., July 20, 2015). 4 See 80 FR 12264 (March 6, 2015). EPA is proposing to approve Delaware's June 29, 2018 NNSR Certification SIP revision. EPA's analysis of how this SIP revision addresses the NNSR requirements for the 2008 8-hour ozone NAAQS is provided in Section II of this rulemaking action.

Areas designated nonattainment for the ozone NAAQS are subject to the general nonattainment area planning requirements of CAA section 172 and also to the ozone-specific planning requirements of CAA section 182. 5 States in the ozone transport region (OTR), such as Delaware, are additionally subject to the requirements outlined in CAA section 184.

Ozone nonattainment areas in the lower classification levels have fewer and/or less stringent mandatory air quality planning and control requirements than those in higher classifications. For marginal areas, such as the Seaford and Philadelphia Areas, a state is required to submit a baseline emissions inventory, adopt a SIP requiring emissions statements from stationary sources, and implement a NNSR program for the relevant ozone standard. See CAA section 182(a). 6 For each higher ozone nonattainment classification, a state needs to comply with all lower area classification requirements, plus additional emissions controls and more expansive NNSR offset requirements.

The CAA sets out specific requirements for states in the OTR. 7 Upon promulgation of the 2008 8-hour ozone NAAQS, states in the OTR were required to submit a SIP revision addressing reasonable available control technology (RACT). See 40 CFR 51.1116. This requirement is the only recurring obligation for an OTR state upon revision of a NAAQS, unless that state also contains some portion of a nonattainment area for the revised NAAQS. 8 In that case, the nonattainment requirements described previously also apply to those portions of that state (Delaware in this case). In the March 6, 2015 SIP Requirements Rule, EPA detailed the requirements applicable to ozone nonattainment areas, as well as requirements that apply in the OTR, and provided specific deadlines for SIP submittals. See 80 FR 12264.

On February 3, 2017, EPA found that 15 states and the District of Columbia failed to submit SIP revisions in a timely manner to satisfy certain requirements for the 2008 8-hour ozone NAAQS that apply to nonattainment areas and/or states in the OTR. See 82 FR 9158. These Findings of Failure to Submit established certain deadlines for the imposition of sanctions, if a state does not submit a timely SIP revision addressing the requirements for which the finding is being made, and for EPA to promulgate a Federal implementation plan (FIP) to address any outstanding SIP requirements.

EPA found, inter alia, that Delaware failed to submit SIP revisions in a timely manner to satisfy NNSR requirements for the Seaford and Philadelphia Areas. Delaware submitted its June 29, 2018 SIP revision to address the specific NNSR requirements for the 2008 8-hour ozone NAAQS, located in 40 CFR 51.160-165, as well as its obligations under EPA's February 3, 2017 Findings of Failure to Submit. EPA's analysis of how this SIP revision addresses the NNSR requirements for the 2008 8-hour ozone NAAQS and the Findings of Failure to Submit is provided in Section II of this rulemaking action.

This rulemaking action is specific to Delaware's NNSR requirements. NNSR is a preconstruction review permit program that applies to new major stationary sources or major modifications at existing sources located in a nonattainment area. 9 The specific NNSR requirements for the 2008 8-hour ozone NAAQS are located in 40 CFR 51.160 through 51.165. As set forth in the SIP Requirements Rule, for each nonattainment area, a NNSR plan or plan revision was due no later than 36 months after the July 20, 2012 effective date of area designations for the 2008 8-hour ozone standard ( i.e., July 20, 2015). 10

The minimum SIP requirements for NNSR permitting programs for the 2008 8-hour ozone NAAQS are located in 40 CFR 51.165. See 40 CFR 51.1114. These NNSR program requirements include those promulgated in the “Phase 2 Rule” implementing the 1997 8-hour ozone NAAQS (75 FR 71018 (November 29, 2005)) and the SIP Requirements Rule implementing the 2008 8-hour ozone NAAQS. Under the Phase 2 Rule, the SIP for each ozone nonattainment area must contain NNSR provisions that: Set major source thresholds for oxides of nitrogen (NO X ) and volatile organic compounds (VOC) pursuant to 40 CFR 51.165(a)(1)(iv)(A)(1)(i)-(iv) and (2); classify physical changes as a major source if the change would constitute a major source by itself pursuant to 40 CFR 51.165(a)(1)(iv)(A)(3); consider any significant net emissions increase of NO X as a significant net emissions increase for ozone pursuant to 40 CFR 51.165(a)(1)(v)(E); consider certain increases of VOC emissions in extreme ozone nonattainment areas as a significant net emissions increase and a major modification for ozone pursuant to 40 CFR 51.165(a)(1)(v)(F); set significant emissions rates for VOC and NO X as ozone precursors pursuant to 40 CFR 51.165(a)(1)(x)(A)-(C) and (E); contain provisions for emissions reductions credits pursuant to 40 CFR 51.165(a)(3)(ii)(C)(1)-(2); provide that the requirements applicable to VOC also apply to NO X pursuant to 40 CFR 51.165(a)(8); and set offset ratios for VOC and NO X pursuant to 40 CFR 51.165(a)(9)(i)-(iii) (renumbered as (a)(9)(ii)-(iv) under the SIP Requirements Rule for the 2008 8-hour ozone NAAQS). Under the SIP Requirements Rule for the 2008 8-hour ozone NAAQS, the SIP for each ozone nonattainment area designated nonattainment for the 2008 8-hour ozone NAAQS and designated nonattainment for the 1997 ozone NAAQS on April 6, 2015, must also contain NNSR provisions that include the anti-backsliding requirements at 40 CFR 51.1105. See 40 CFR 51.165(a)(12).

Delaware's SIP approved NNSR program, established in Title 7 Delaware Administrative Code (DE Admin Code) 1125 ( Requirements for Preconstruction Review ), apply to the construction and modification of major stationary sources in nonattainment areas. In its June 29, 2018 SIP revision, Delaware certifies that the version of Title 7 DE Admin Code Section 1125 approved in the SIP is at least as stringent as the Federal NNSR requirements for the Seaford and Philadelphia Areas. EPA last approved revisions to Delaware's NNSR SIP on February 28, 2013. See 78 FR 13496. In that action, EPA approved revisions to Delaware's SIP which made DNREC's NNSR program consistent with Federal requirements. Id. EPA notes that neither 7 DE Admin Code 1125 nor Delaware's approved SIP have the regulatory provision for any emissions change of VOC in extreme nonattainment areas, specified in 40 CFR 51.165(a)(1)(v)(F), because Delaware has never had an area designated extreme nonattainment for any of the ozone NAAQS. Therefore, the Delaware SIP is not required to have this requirement for VOC in extreme nonattainment areas until such time as Delaware has an extreme ozone nonattainment area.

As for consistency with 40 CFR 51.165(a)(3)(ii)(C)(1), Delaware's approved SIP contains appropriate regulatory provisions establishing emissions reduction credits (ERC) that are permanent, quantifiable, and Federally enforceable. 11 See 7 DE Admin Code 1125 Section 2.5.1. However, neither 7 DE Admin Code 1125 nor Delaware's approved SIP contain a regulatory provision pertaining to establishing ERC, as specified in 40 CFR 51.165(a)(3)(ii)(C)(2)(i) and 40 CFR 51.165(a)(3)(ii)(C)(2)(ii). Nonetheless, even if Delaware's regulations do not offer these specific emissions reductions credit options, as stated previously, their approved SIP is still adequate to meet the standard ERC requirements found in 40 CFR 51.165(a)(3)(ii)(C)(1), where emissions reductions must be surplus, permanent, quantifiable, and Federally enforceable, for example. See 7 DE Admin Code 1125, Section 2.5.1. Delaware has the appropriate ERC requirements approved in their SIP, which enables them to implement the program appropriately and in accordance with Federal requirements.

Given the D.C. Cir. Court's recent ruling in South Coast Air Quality Mgmt. Dist. v. EPA vacating the anti-backsliding provisions of the SIP Requirements Rule, Delaware remains required to comply with the anti-backsliding provisions found in 40 CFR 51.165(a)(12). In Delaware, neither 7 DE Admin Code 1125 nor the Delaware SIP contain the anti-backsliding language found in 40 CFR 51.165(a)(12), which applied to NNSR requirements for the 1997 ozone NAAQS. However, EPA finds that 7 DE Admin Code 1125 and Delaware's SIP presently include all required major stationary source thresholds and emissions offset ratios for NSR purposes.

The entire state of Delaware is located within the OTR and any source in the OTR is considered major for NO X and VOC if it emits or has the potential to emit at least 100 tons per year or 50 tons per year, respectively. See CAA section 184(b). This major stationary source threshold requirement is specified in 7 DE Admin Code 1125, Sections 1.9 and 2.2.2.1, as well as Delaware's approved SIP, and is equivalent to the requirements which would be applicable to major stationary sources in a moderate nonattainment area. On April 30, 2004, the Philadelphia Area, which included New Castle, Kent, and Sussex Counties, was designated as moderate nonattainment for the 1997 8-hour ozone NAAQS. See 69 FR 23951 and 40 CFR 81.308.

Additionally, in Delaware, the term “significant” when used in reference to a source's emission rates for NO X and VOC are lower than the typical emissions rate for an area that is moderate nonattainment. For example, in 7 DE Admin Code 1125 Section 1.9, an emissions increase is considered “significant” if it equals or exceeds 25 tons per year of NO X or VOC in New Castle or Kent Counties, which is based on the severe area designation those counties had for the prior 1-hour ozone NAAQS and 40 tons per year of NO X or VOC in Sussex County. 12 Therefore, EPA finds that Delaware's regulations and approved SIP are more stringent than EPA's NNSR anti-backsliding requirements and its program is adequate to implement NNSR for the 2008 ozone NAAQS. Delaware's major stationary source threshold and offset provisions in 7 DE Admin Code 1125 remain in its Federally-approved SIP unless and until EPA approves a full NAAQS redesignation request from Delaware in accordance with CAA section 107. Thus, EPA finds that Delaware's SIP includes relevant and required anti-backsliding requirements. EPA expects that DNREC will continue to implement its NNSR program consistent with its approved SIP for major stationary source thresholds and emission offset ratios.

The version of 7 DE Admin Code 1125 that is contained in the current SIP has not changed, with respect to NNSR since the 2013 rulemaking where EPA last approved Delaware's NNSR provisions. This version of the SIP approved rule covers the Seaford and Philadelphia Areas and remains adequate to meet all applicable NNSR requirements for the 2008 8-hour ozone NAAQS found in 40 CFR 51.165, the Phase 2 Rule and the SIP Requirements Rule.

EPA is proposing to approve Delaware's June 29, 2018 SIP revision addressing the NNSR requirements for the 2008 ozone NAAQS for the Seaford and Philadelphia Areas. EPA has concluded Delaware's submission fulfills the 40 CFR 51.1114 revision requirement, meets the requirements of CAA sections 110 and 172 and the minimum SIP requirements of 40 CFR 51.165, as well as its obligations under EPA's February 3, 2017 Findings of Failure to Submit. See 82 FR 9158. EPA is soliciting public comments on the issues discussed in this document. These comments will be considered before taking final action.

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

In addition, this proposed rule, approving Delaware's 2008 8-hour ozone NAAQS Certification SIP revision for NNSR does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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).

If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT for the division listed at the end of the pesticide petition summary of interest.

1. Submitting CBI. Do not submit this information to EPA through regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2. Tips for preparing your comments. When preparing and submitting your comments, see the commenting tips at http://www.epa.gov/dockets/comments.html.

3. Environmental justice. EPA seeks to achieve environmental justice, the fair treatment and meaningful involvement of any group, including minority and/or low-income populations, in the development, implementation, and enforcement of environmental laws, regulations, and policies. To help address potential environmental justice issues, the Agency seeks information on any groups or segments of the population who, as a result of their location, cultural practices, or other factors, may have atypical or disproportionately high and adverse human health impacts or environmental effects from exposure to the pesticides discussed in this document, compared to the general population.

EPA is announcing its receipt of several pesticide petitions filed under section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, requesting the establishment or modification of regulations in 40 CFR part 174 or part 180 for residues of pesticide chemicals in or on various food commodities. The Agency is taking public comment on the requests before responding to the petitioners. EPA is not proposing any particular action at this time. EPA has determined that the pesticide petitions described in this document contain the data or information prescribed in FFDCA section 408(d)(2), 21 U.S.C. 346a(d)(2); however, EPA has not fully evaluated the sufficiency of the submitted data at this time or whether the data support granting of the pesticide petitions. After considering the public comments, EPA intends to evaluate whether and what action may be warranted. Additional data may be needed before EPA can make a final determination on these pesticide petitions.

Pursuant to 40 CFR 180.7(f), a summary of each of the petitions that are the subject of this document, prepared by the petitioner, is included in a docket EPA has created for each rulemaking. The docket for each of the petitions is available at http://www.regulations.gov.

As specified in FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), EPA is publishing notice of the petitions so that the public has an opportunity to comment on these requests for the establishment or modification of regulations for residues of pesticides in or on food commodities. Further information on the petitions may be obtained through the petition summaries referenced in this unit.

1. PP 8E8715. (EPA-HQ-OPP-2018-0784). Interregional Research Project No. 4 (IR-4), IR-4 Project Headquarters, Rutgers, The State University of NJ, 500 College Road East, Suite 201 W, Princeton, NJ 08540, requests to amend 40 CFR 180.578 by removing the established tolerances residues of acetamiprid, (1 E )- N -[(6-chloro-3-pyridinyl)methyl]- N′ -cyano- N -methylethanimidamide, including its metabolites and degradates, in or on the raw agricultural commodities: Vegetable, leafy, except Brassica, group 4 at 3.00 ppm, Brassica, leafy greens, subgroup 5B at 15 ppm, Turnip, greens at 15 ppm, Brassica, head and stem, subgroup 5A at 1.20 ppm, Fruit, stone, group 12, except plum, prune at 1.20 ppm, Plum, prune, fresh at 0.20 ppm, Nut, tree, group 14 at 0.10 ppm, Pistachio at 0.10 ppm, Canola, seed at 0.010 ppm, Mustard, seed at 0.010 ppm, and Cotton, undelinted seed at 0.60 ppm. Contact: RD.

2. PP 8E8724. (EPA-HQ-OPP-2019-0046). Interregional Research Project Number 4 (IR-4), Rutgers, The State University of New Jersey, 500 College Road East, Suite 201 W, Princeton, NJ 08540, requests, upon approval of “New Tolerances for PP 8E8724” listed elsewhere in this document, to amend 40 CFR 180.677 by revising or removing the existing tolerances for residues of the insecticide cyflumetofen, 2-methoxyethyl α-cyano-α-[4-(1,1-dimethylethyl)phenyl]-β-oxo-2-(trifluoromethyl)benzenepropanoate, including its metabolites and degradates, to be determined by measuring only cyflumetofen, in or on the agricultural commodities: Strawberry at 0.60 parts per million (ppm) and Tomato at 0.40 ppm. Contact: RD.

1. PP IN-11079. (EPA-HQ-OPP-2018-0204). SciReg, Inc. (12733 Director's Loop, Woodbridge, VA 22192) on behalf of Italpollina USA, Inc. (1100 South Tower, 225 Peachtree Street NE, Atlanta, GA 30303), requests to establish an exemption from the requirement of a tolerance for residues of hydrolyzed vegetable proteins (CAS Reg. No. 100209-45-8) when used as a pesticide inert ingredient (pH adjusting agent, surfactant or adhesive) in pesticide formulations applied to growing crops pre-harvest under 40 CFR 180.920. The petitioner believes no analytical method is needed because it is not required for an exemption from the requirement of a tolerance. Contact: RD.

2. PP IN-11238. (EPA-HQ-OPP-2018-0670). Lewis & Harrison, LLC (122 C Street NW, Suite 505, Washington, DC 20001) on behalf of BASF Corporation (100 Park Avenue, Florham Park, NJ 07932), requests to establish an exemption from the requirement of a tolerance for residues of acrylamide-sodium acrylamidomethylpropanesulfonate copolymer (CAS Reg. No. 38193-60-1) when used as a pesticide inert ingredient in pesticide formulations under 40 CFR 180.960. The petitioner believes no analytical method is needed because it is not required for an exemption from the requirement of a tolerance. Contact: RD.

1. PP 8E8715. (EPA-HQ-OPP-2018-0784). Interregional Research Project No. 4 (IR-4), IR-4 Project Headquarters, Rutgers, The State University of NJ, 500 College Road East, Suite 201 W, Princeton, NJ 08540, requests to amend 40 CFR part 180 by establishing tolerances for residues of acetamiprid, (1 E )- N -[(6-chloro-3-pyridinyl)methyl]- N′ -cyano- N -methylethanimidamide, including its metabolites and degradates in or on the raw agricultural commodities: Tropical and subtropical, medium to large fruit, smooth, inedible peel, subgroup 24B at 0.50 parts per million (ppm), Leafy greens subgroup 4-16A at 3.0 ppm, Leaf petiole vegetable subgroup 22B at 3.0 ppm, Celtuce at 3.0 ppm, Florence fennel at 3.0 ppm, Brassica, leafy greens, subgroup 4-16B at 15 ppm, Vegetable, Brassica, head and stem, group 5-16 at 1.2 ppm, Kohlrabi at 1.2 ppm, Fruit, stone, group 12-12 at 1.5 ppm, Nut, tree, group 14-12 at 0.10 ppm, Rapeseed subgroup 20A at 0.01 ppm, and Cottonseed subgroup 20C at 0.70 ppm. The analytical method involves extraction of acetamiprid from crop matrices with a solvent followed by a decantation and filtration and finally analysis by a LC/MS/MS method. The limit of quantification (LOQ) was calculated to be 0.01 ppm. Contact: RD.

2. PP 8E8716. (EPA-HQ-OPP-2018-0785). Interregional Research Project No. 4 (IR-4), IR-4 Project Headquarters, Rutgers, The State University of NJ, 500 College Road East, Suite 201 W, Princeton, NJ 08540, requests to amend 40 CFR 180.547 by establishing (c) tolerances with regional registrations in Wisconsin and Pennsylvania for residues of prohexadione calcium (calcium 3-oxido-5-oxo-4-propionylcyclohex-3-enecarboxylate) in or on the raw agricultural commodities Corn, field, forage at 0.10 parts per million (ppm), Corn, field, grain at 0.10 ppm; Corn, field, stover at 0.10 ppm, Alfalfa, forage at 0.10 ppm, and Alfalfa, hay at 0.10 ppm. Adequate enforcement methodology (BASF Analytical Method D9601 and 564/0) is available to enforce the tolerance expression for residues of prohexadione calcium. Contact: RD.

3. PP 8E8724. (EPA-HQ-OPP-2019-0046). Interregional Research Project Number 4 (IR-4), Rutgers, The State University of New Jersey, 500 College Road East, Suite 201W, Princeton, NJ 08540, requests to establish tolerances in 40 CFR part 180 for residues of the insecticide cyflumetofen, 2-methoxyethyl α-cyano-α-[4-(1,1-dimethylethyl)phenyl]-β-oxo-2-(trifluoromethyl)benzenepropanoate, including its metabolites and degradates, to be determined by measuring only cyflumetofen, in or on the agricultural commodities: Cucumber at 0.15 parts per million (ppm), Fruit, stone, group 12-12 at 2.0 ppm, Plume, prune, dried at 0.41 ppm, Strawberry at 0.80 ppm, and Vegetable, fruiting, group 8-10 at 2.0 ppm. The analytical method D1003, “Method for Determination of Residues of Cyflumetofen (BAS 9210 I) and Its Metabolites in Plant Matrices Using Liquid Chromatography, Tandem Mass Spectrometry (LC-MS/MS)” was validated successfully for the analysis of cyflumetofen and its metabolites. The analytical method has a limit of quantitation (LOQ) of 0.01 ppm for residues of cyflumetofen and its metabolites in all matrix types. Contact: RD.

4. PP 8F8696. (EPA-HQ-OPP-2018-0688). Syngenta Crop Protection, LLC, P.O. Box 18300, Greensboro, NC 27419, requests to establish a tolerance in 40 CFR part 180 for residues of the fungicide, pydiflumetofen, in or on Root Vegetable Crop Subgroup 1A at 0.30 parts per million (ppm); Bulb Vegetable Crop Subgroup 3-07A at 0.20 ppm; Bulb Vegetable Crop Subgroup 3-07B at 2 ppm; Brassica Leafy Greens Subgroup 4-16B at 50 ppm; Brassica Head and Stem Crop Group 5-16 at 3 ppm; Leaves of Root and Tuber Vegetables, Crop Group 2 at 15.0 ppm; Edible-podded Legume Vegetable Subgroup 6A at 1.0 ppm; Succulent Shelled Pea and Bean Subgroup 6B at 0.09 ppm; Citrus Fruit Crop Group 10-10 at 0.90 ppm; Citrus oil at 15 ppm; Pome Fruit Crop Group 11-10 at 0.20 ppm; Apple, Wet Pomace at 1.0 ppm; Stone Fruit, Cherry Subgroup 12-12A at 2.0 ppm; Stone Fruit, Peach Subgroup 12-12B at 1.0 ppm; Stone Fruit, Plum Subgroup 12-12C at 0.6 ppm; Plum, Prune at 1.5 ppm; Bushberry Crop Subgroup 13-07B at 5 ppm; Berries, Low Growing Crop Subgroup 13-07G, except cranberry and blueberry, at 1 ppm; Tree Nuts Crop Group 14-12, Nutmeat at 0.05 ppm; Almond Hull at 9.0 ppm; Cottonseed Subgroup 20C, Cotton Undelinted Seed at 0.4 ppm; Cotton Gin By-Products at 7.0 ppm; Sunflower Subgroup 20B at 0.60 ppm; Sorghum grain at 3.0 ppm; Sorghum forage at 1.5 ppm; and Sorghum Stover at 10 ppm. The QuEChERS method is used to measure and evaluate the chemical in plant commodities. Contact: RD.

5. PP 8F8709. (EPA-HQ-OPP-2018-0762). BASF corporation, 26 Davis Drive, P.O. Box 13528, Research Triangle Park, NC 27709, requests to establish a tolerance in 40 CFR part 180 for residues of the herbicide, Trifludimoxazin 1,5-dimethyl-6-thioxo-3-[2,2,7-trifluoro-3-oxo-4-(prop-2-yn-1-yl)-3,4-dihydro-2-1,4-benzoazin-6-yl]-1,3,5-triazinane-2,4-dione, in or on Almond, hulls at 0.15 parts per million (ppm); Fruit, citrus, group 10-10 at 0.01 ppm; Fruit, pome, group 11-10 at 0.01 ppm; Grain, cereal, forage, fodder and straw, group 16 at 0.01 ppm; Grain, cereal, group 15 at 0.01 ppm; Nut, tree, group 14-12 at 0.01 ppm; Peanut at 0.01 ppm; Peanut, hay at 0.01 ppm; Vegetable, foliage of legume, group 07 at 0.01 ppm; and Vegetable, legume, group 06 at 0.01 ppm. An independently validated analytical method is available to measure and evaluate the chemical Trifludimoxazin. Contact: FHB.

You may be potentially affected by this action if you manufacture, process, or use the chemical substances contained in this proposed rule. 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:

• Manufacturers or processors of one or more subject chemical substances (NAICS codes 325 and 324110), e.g., chemical manufacturing and petroleum refineries.

This action may also affect certain entities through pre-existing import certification and export notification rules under TSCA. Chemical importers are subject to the TSCA section 13 (15 U.S.C. 2612) import certification requirements promulgated at 19 CFR 12.118 through 12.127 and 19 CFR 127.28. Chemical importers must certify that the shipment of the chemical substance complies with all applicable rules and orders under TSCA. Importers of chemicals subject to these proposed SNURs would need to certify their compliance with the SNUR requirements should these proposed rules be finalized. The EPA policy in support of import certification appears at 40 CFR part 707, subpart B. In addition, pursuant to 40 CFR 721.20, any persons who export or intend to export a chemical substance that is the subject of this proposed rule on or after May 20, 2019 are subject to the export notification provisions of TSCA section 12(b) (15 U.S.C. 2611(b)) and must comply with the export notification requirements in 40 CFR part 707, subpart D.

1. Submitting CBI. Do not submit CBI to EPA through regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

2. Tips for preparing your comments. When preparing and submitting your comments, see the commenting tips at http://www.epa.gov/dockets/comments.html.

EPA is proposing these SNURs under TSCA section 5(a)(2) for 11 chemical substances which were the subjects of PMNs P-14-482, P-16-422, P-17-152, P-17-239, P-17-245, P-18-48, P-18-73, P-18-122, P-18-162, P-18-222, and P-19-10. These proposed SNURs would require persons who intend to manufacture or process any of these chemical substances for an activity that is designated as a significant new use to notify EPA at least 90 days before commencing that activity.

The record for the proposed SNURs on these chemicals was established as docket EPA-HQ-OPPT-2018-0772. That record includes information considered by the Agency in developing these proposed SNURs.

Section 5(a)(2) of TSCA (15 U.S.C. 2604(a)(2)) authorizes EPA to determine that a use of a chemical substance is a “significant new use.” EPA must make this determination by rule after considering all relevant factors, including the four bulleted TSCA section 5(a)(2) factors listed in Unit III. Once EPA determines that a use of a chemical substance is a significant new use, TSCA section 5(a)(1)(B)(i) (15 U.S.C. 2604(a)(1)(B)(i)) requires persons to submit a significant new use notice (SNUN) to EPA at least 90 days before they manufacture or process the chemical substance for that use. TSCA prohibits such manufacturing or processing from commencing until EPA has conducted a review of the SNUN, made an appropriate determination on the SNUN, and taken such actions as are required in association with that determination (15 U.S.C. 2604(a)(1)(B)(ii)). As described in Unit V., the general SNUR provisions are found at 40 CFR part 721, subpart A.

General provisions for SNURs appear in 40 CFR part 721, subpart A. These provisions describe persons subject to the rule, recordkeeping requirements, exemptions to reporting requirements, and applicability of the rule to uses occurring before the effective date of the rule. Provisions relating to user fees appear at 40 CFR part 700. Pursuant to § 721.1(c), persons subject to these SNURs must comply with the same SNUN requirements and EPA regulatory procedures as submitters of PMNs under TSCA section 5(a)(1)(A) (15 U.S.C. 2604(a)(1)(A)). In particular, these requirements include the information submission requirements of TSCA sections 5(b) and 5(d)(1) (15 U.S.C. 2604(b) and 2604(d)(1)), the exemptions authorized by TSCA sections 5(h)(1), 5(h)(2), 5(h)(3), and 5(h)(5) and the regulations at 40 CFR part 720. Once EPA receives a SNUN, EPA must either determine that the significant new use is not likely to present an unreasonable risk of injury or take such regulatory action as is associated with an alternative determination before the manufacture or processing for the significant new use can commence. If EPA determines that the significant new use is not likely to present an unreasonable risk, EPA is required under TSCA section 5(g) to make public, and submit for publication in the Federal Register , a statement of EPA's findings.

Section 5(a)(2) of TSCA states that EPA's determination that a use of a chemical substance is a significant new use must be made after consideration of all relevant factors, including:

• The projected volume of manufacturing and processing of a chemical substance.

• The extent to which a use changes the type or form of exposure of human beings or the environment to a chemical substance.

• The extent to which a use increases the magnitude and duration of exposure of human beings or the environment to a chemical substance.

• The reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of a chemical substance.

In addition to these factors enumerated in TSCA section 5(a)(2), the statute authorizes EPA to consider any other relevant factors.

To determine what would constitute significant new uses for the chemical substances that are the subject of these SNURs, EPA considered relevant information about the toxicity of the chemical substances, and potential human exposures and environmental releases that may be associated with the conditions of use of the substances, in the context of the four bulleted TSCA section 5(a)(2) factors listed in this unit.

EPA is proposing significant new use and recordkeeping requirements for 11 chemical substances in 40 CFR part 721, subpart E. In this unit, EPA provides the following information for each chemical substance:

• PMN number.

• Chemical name (generic name, if the specific name is claimed as CBI).

• Chemical Abstracts Service (CAS) Registry number (if assigned for non-confidential chemical identities).

• Basis for the SNUR.

• Information identified by EPA that would help characterize the potential health and/or environmental effects of the chemical substances if a manufacturer or processor is considering submitting a SNUN for a significant new use designated by the SNUR.

This information may include testing not required to be conducted but which would help characterize the potential health and/or environmental effects of the PMN substance. Any recommendation for information identified by EPA was made based on EPA's consideration of available screening-level data, if any, as well as other available information on appropriate testing for the chemical substance. Further, any such testing identified by EPA that includes testing on vertebrates was made after consideration of available toxicity information, computational toxicology and bioinformatics, and high-throughput screening methods and their prediction models. EPA also recognizes that whether testing/further information is needed will depend on the specific exposure and use scenario in the SNUN. EPA encourages all SNUN submitters to contact EPA to discuss any potential future testing. See Unit VII. for more information.

• CFR citation assigned in the regulatory text section of these proposed rules.

The regulatory text section of these proposed rules specifies the activities designated as significant new uses. Certain new uses, including production volume limits and other uses designated in the proposed rules, may be claimed as CBI.

The chemical substances that are the subject of these proposed SNURs are undergoing premanufacture review. EPA has initially determined under TSCA section 5(a)(2), 15 U.S.C. 2604(a)(2), that certain changes from the intended conditions of use described in the PMNs could result in changes in the type or form of exposure to the chemical substances and/or increased exposures to the chemical substances and/or changes in the reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of the chemical substances. Consequently, EPA is proposing to designate these changes as significant new uses.

Chemical name: Organic salt (generic).

CAS number: Not available.

Basis for action: The PMNs state that the generic (non-confidential) use of the substance will be as an industrial chemical. Based on the physical/chemical properties of the PMN substance and Structure Analysis Relationships (SAR) analysis of test data on analogous substances, EPA has identified concerns for developmental toxicity, neurotoxicity, skin sensitization, and aquatic toxicity at surface water concentrations exceeding 40 parts per billion (ppb), if the chemical substance is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measures:

1. No manufacture (including import) of an annual production volume of the PMN substance greater than the confidential amount stated in the PMN;

2. No use of the PMN substance other than the four confidential uses stated in the PMN; and

3. No manufacture, processing or use of the PMN substance in any manner that results in inhalation exposures.

The proposed SNUR would designate as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the aquatic and human health toxicity and environmental fate of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of fate, pulmonary effects, developmental toxicity, and aquatic toxicity testing would help characterize the potential health and environmental effects of the PMN substance.

CFR citation: 40 CFR 721.11247.

Chemical name: 1,2-Cyclohexanedicarboxylic acid, 1-(phenylmethyl) ester, ester with 2,2,4-trimethyl-1,3-pentanediol mono(2-methylpropanoate).

CAS number: 1661012-65-2.

Basis for action: The PMN states that the generic (non-confidential) use of the substance will be as an additive for polymers. Based on the physical/chemical properties of the PMN substance, data on the PMN substance, and Structure Analysis Relationships (SAR) analysis of test data on analogous substances, EPA has identified concerns for irritation and sensitization, developmental toxicity, and aquatic toxicity at surface water concentrations exceeding 12 parts per billion (ppb), if the chemical substance is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measures:

1. No use of the PMN substance involving an application method that results in inhalation exposures; and

2. No release of a manufacturing, processing, or use stream associated with any use of the PMN substance, other than releases from the confidential polymer additive use described in the PMN, into the waters of the United States exceeding a surface water concentration of 12 ppb.

The proposed SNUR would designate as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the aquatic and human health toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of developmental toxicity and aquatic toxicity testing would help characterize the potential health and environmental effects of the PMN substance.

CFR citation: 40 CFR 721.11248.

Chemical name: Poly-(2-methyl-1-oxo-2-propen-1-yl) ester with ethanaminium, N,N,N-trialkyl, chloride and methoxypoly(oxy-1,2-ethanediyl) (generic).

CAS number: Not available.

Basis for action: The PMN states that the generic (non-confidential) use of the substance will be as an additive in home care products. Based on analogy to structurally similar substances, EPA has identified concerns for aquatic toxicity and lung effects if the chemical is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measures:

1. No manufacture, processing or use of the substance in any manner that results in inhalation exposures;

2. No manufacture or processing of the PMN substance as a powder or solid; and

3. No release of a manufacturing, processing, or use stream associated with any use of the PMN substance exceeding a surface water concentration of 1 ppb.

The proposed SNUR would designate as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of aquatic toxicity and pulmonary effects testing of the PMN substance may be potentially useful in characterizing the health and environmental effects of the PMN substance.

CFR citation: 40 CFR 721.11249.

Chemical name: Substituted carboxylic acid, polymer with 2,4-diisocyanato-1-methylbenzene, hexanedioic acid, alpha-hydro-omega-hydroxypoly[oxy(methyl-1,2-ethanediyl)], 1,1′-methylenebis[4-isocyanatobenzene], 2,2′- oxybis[ethanol], 1,1′-oxybis[2-propanol] and 1,2-propanediol, (generic).

CAS number: Not available.

Basis for action: The PMN states that the generic (non-confidential) use of the substance will be as an adhesive for open non-descriptive use. Based on data for analogous compounds, EPA has identified concerns for irritation, sensitization, and oncogenicity if the chemical is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measures:

1. No use of the PMN substance involving spray application that results in inhalation exposures;

2. No release of a manufacturing, processing, or use stream associated with any use of the PMN substance exceeding a surface water concentration of 33 ppb;

3. No manufacturing, processing or use of the PMN substance for consumer use; and

4. No manufacture with unreacted isocyanate residual greater than 20% by weight.

The proposed SNUR would designate as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the human health and environmental toxicity of the PMN substance may be potentially useful to characterize the effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of aquatic toxicity, mutagenicity, and sensitization testing would help characterize the potential health and environmental effects of the PMN substance.

CFR citations: 40 CFR 721.11250.

Chemical name: Unsaturated polyfluoro ester (generic).

CAS number: Not available.

Basis for action: The PMN states that the generic (non-confidential) use of the substance will be as an adhesive for open, non-dispersive use. Based on the physical/chemical properties of the PMN substance (as described in the New Chemical Program's PBT category at 64 FR 60194; November 4, 1999) and test data on structurally similar substances, the PMN substance is potentially persistent, bioaccumulative, and toxic (PBT) chemical. EPA estimates that the PMN substance will persist in the environment for more than six months and estimates an unknown bioaccumulation factor. EPA has identified concerns for irritation, respiratory sensitization, and mutagenicity if the chemical is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measures:

1. No releases of a manufacturing, processing, or use stream associated with any use of the PMN substance into the waters of the United States.

2. Use only for the confidential use stated in the PMN.

3. Dispose of the PMN substance and any waste streams containing the PMN substance or its constituent breakdown products only by sending them via a hazardous waste transporter to a hazardous waste incinerator permitted under the Resource Conservation and Recovery Act (RCRA) or an authorized state hazardous waste program.

The proposed SNUR would designate as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the human health toxicity of the PMN substance may be potentially useful to characterize the effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of pulmonary effect and sensitization assay testing would help characterize the potential health effects of the PMN substance.

CFR citation: 40 CFR 721.11251.

Chemical name: Acetic acid, 2-(2-butoxyethoxy)-.

CAS number: 82941-26-2.

Basis for action: The PMN states that the use of the substance will be as an emulsifier for metal working fluid. Based on test data on the PMN substance and on test data on analogous chemical substances, EPA has identified concerns for developmental toxicity and corrosion if the chemical is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measure:

• No manufacture, processing, or use of the PMN substance for uses other than as emulsifier for metal working fluid.

The proposed SNUR would designate as a “significant new use” the absence of this protective measure.

Potentially useful information: EPA has determined that certain information about the PMN substance may be potentially useful to characterize the health effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of specific organ toxicity test and, reproductive/developmental toxicity test would help characterize the potential health effects of the PMN substance.

CFR citation: 40 CFR 721.11252.

Chemical name: Sulfuric acid, ammonium salt (1:?).

CAS number: 10043-02-4.

Basis for action: The PMN states that the generic use of the substance will be as a non-pesticide agricultural use chemical. Based on test data on the PMN substance and on test data on analogous chemical substances, EPA has identified concerns for liver, kidney, lung, and gastrointestinal effects and irritation/corrosion if the chemical is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measure:

• Use only as a Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) inert ingredient, an anti-scalant, chlorine stabilizer, or the additional confidential uses stated in the PMN.

The proposed SNUR would designate as a “significant new use” the absence of this protective measure.

Potentially useful information: EPA has determined that certain information about the PMN substance may be potentially useful to characterize the health effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of specific organ toxicity and skin irritation/corrosion testing would help characterize the potential health effects of the PMN substance.

CFR citation: 40 CFR 721.11253.

Chemical name: Alkylamide, polymer with alkylamine, formaldehyde, and polycyanamide, alkyl acid salt (generic).

CAS number: Not available.

Basis for action: The PMN states that the generic (non-confidential) use of the substance will be as a paper additive. Based on analogy to structurally similar substances, EPA has identified concerns for aquatic toxicity and irritation to skin, eyes and lungs, and lung toxicity if the chemical is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measures:

• No release of a processing or use stream associated with any use of the substance, other than the releases from the intended conditions of use described in the PMN, into the water of the United States exceeding a surface water concentration of 1 ppb.

The proposed SNUR would designate as a “significant new use” the absence of these protective measures.

Potentially useful information: EPA has determined that certain information about the fate and toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of, aquatic toxicity,, skin irritation, eye irritation and corrosion, and pulmonary effects testing of the PMN substance may be potentially useful in characterizing the health and environmental effects of the PMN substance.

CFR citation: 40 CFR 721.11254.

Chemical name: Cashew nutshell liquid, polymer with diisocyanatoalkane, substituted-polyoxyalkyldiol and polyether polyol (generic).

CAS number: Not available.

Basis for action: The PMN states that the generic (non-confidential) use of the substance will be as an adhesive component. Based on analogy to structurally similar substances, EPA has identified concerns for pulmonary effects if the chemical is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measure:

• No manufacture (including import) the PMN substance in a form other than as a paste.

The proposed SNUR would designate as a “significant new use” the absence of this protective measure.

Potentially useful information: EPA has determined that certain information about the fate and toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of pulmonary effects testing of the PMN substance may be potentially useful in characterizing the health and environmental effects of the PMN substance.

CFR citation: 40 CFR 721.11255.

Chemical name: Silane, alkenylalkoxy-, polymer with alkene and alkene (generic).

CAS number: Not available.

Basis for action: The PMN states that the use of the substance will be as a reactive polymer for use in adhesive applications. Based on analogy to structurally similar substances and data on the PMN substance, EPA has identified concerns for neurotoxicity and pulmonary effects if the chemical is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measure:

• No manufacture, processing, or use of the PMN substance other than as a reactive polymer for use in adhesive applications.

The proposed SNUR would designate as a “significant new use” the absence of this protective measure.

Potentially useful information: EPA has determined that certain information about the fate and toxicity of the PMN substance may be potentially useful to characterize the health and environmental effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of absorption and neurotoxicity testing of the PMN substance may be potentially useful in characterizing the health and environmental effects of the PMN substance.

CFR citation: 40 CFR 721.11256.

Chemical name: Hydrogenated fatty acid dimers, polymers with 1,1′-methylenebis[4-isocyanatobenzene], polypropylene glycol, polypropylene glycol ether with trimethylolpropane (3:1), and 1,3-propanediol, polypropylene glycol monomethacrylate-blocked (generic).

CAS number: Not available.

Basis for action: The PMN states that the generic use of the substance will be as an adhesive. Based on analogy to structurally similar isocyanates, EPA has identified concerns for irritation, sensitization, pulmonary toxicity, mutagenicity and carcinogenicity if the chemical is not used following the limitations noted. The conditions of use of the PMN substance as described in the PMN include the following protective measure:

• No use involving an application method that results in inhalation exposures.

The proposed SNUR would designate as a “significant new use” the absence of this protective measure.

Potentially useful information: EPA has determined that certain information about the toxicity of the PMN substance may be potentially useful to characterize the health effects of the PMN substance if a manufacturer or processor is considering submitting a SNUN for a significant new use that would be designated by this proposed SNUR. EPA has determined that the results of skin sensitization, genetic toxicity, pulmonary effects, and eye damage testing of the PMN substance may be potentially useful in characterizing the health effects of the PMN substance.

CFR citation: 40 CFR 721.11257.

During review of the PMNs submitted for the chemical substances that are the subject of these proposed SNURs and as further discussed in Unit IV, EPA identified certain reasonably foreseen changes from the conditions of use identified in the PMNs and determined that those changes could result in changes in the type or form of exposure to the chemical substances and/or increased exposures to the chemical substances and/or changes in the reasonably anticipated manner and methods of manufacturing, processing, distribution in commerce, and disposal of the chemical substances.

EPA is proposing SNURs for 11 specific chemical substances which are undergoing premanufacture review because the Agency wants to achieve the following objectives with regard to the significant new uses that would be designated in this proposed rule:

• EPA would have an opportunity to review and evaluate data submitted in a SNUN before the notice submitter begins manufacturing or processing a listed chemical substance for the described significant new use.

• EPA would be obligated to make a determination under TSCA section 5(a)(3) regarding the use described in the SNUN, under the conditions of use. The Agency will either determine under section 5(a)(3)(C) that the significant new use is not likely to present an unreasonable risk, including an unreasonable risk to a potentially exposed or susceptible subpopulation identified as relevant by the Administrator under the conditions of use, or make a determination under section 5(a)(3) (A) or (B) and take the required regulatory action associated with the determination, before manufacture or processing for the significant new use of the chemical substance can occur.

Issuance of a proposed SNUR for a chemical substance does not signify that the chemical substance is listed on the TSCA Inventory. Guidance on how to determine if a chemical substance is on the TSCA Inventory is available on the internet at http://www.epa.gov/opptintr/existingchemicals/pubs/tscainventory/index.html.

To establish a significant new use, EPA must determine that the use is not ongoing. The chemical substances subject to this proposed rule were undergoing premanufacture review at the time of signature of this proposed rule and were not on the TSCA Inventory. In cases where EPA has not received a notice of commencement (NOC) and the chemical substance has not been added to the TSCA Inventory, no person may commence such activities without first submitting a PMN. Therefore, for the chemical substances subject to this proposed SNUR, EPA concludes that the proposed significant new uses are not ongoing.

EPA designates April 15, 2019 as the cutoff date for determining whether the new use is ongoing. The objective of EPA's approach is to ensure that a person cannot defeat a SNUR by initiating a significant new use before the effective date of the final rule.

Persons who begin commercial manufacture or processing of the chemical substances for a significant new use identified on or after that date would have to cease any such activity upon the effective date of the final rule. To resume their activities, these persons would have to first comply with all applicable SNUR notification requirements and EPA would have to take action under section 5 allowing manufacture or processing to proceed.

EPA recognizes that TSCA section 5 does not require development of any particular new information ( e.g., generating test data) before submission of a SNUN. There is an exception: If a person is required to submit information for a chemical substance pursuant to a rule, order or consent agreement under TSCA section 4 (15 U.S.C. 2603), then TSCA section 5(b)(1)(A) (15 U.S.C. 2604(b)(1)(A)) requires such information to be submitted to EPA at the time of submission of the SNUN.

In the absence of a rule, order, or consent agreement under TSCA section 4 covering the chemical substance, persons are required only to submit information in their possession or control and to describe any other information known to or reasonably ascertainable by them (see 40 CFR 720.50). However, upon review of PMNs and SNUNs, the Agency has the authority to require appropriate testing. Unit IV. lists potentially useful information for all SNURs listed here. Descriptions are provided for informational purposes. The potentially useful information identified in Unit IV. will be useful to EPA's evaluation in the event that someone submits a SNUN for the significant new use. Companies who are considering submitting a SNUN are encouraged, but not required, to develop the information on the substance, which may assist with EPA's analysis of the SNUN.

EPA strongly encourages persons, before performing any testing, to consult with the Agency pertaining to protocol selection. Furthermore, pursuant to TSCA section 4(h), which pertains to reduction of testing in vertebrate animals, EPA encourages consultation with the Agency on the use of alternative test methods and strategies (also called New Approach Methodologies, or NAMs), if available, to generate the recommended test data. EPA encourages dialog with Agency representatives to help determine how best the submitter can meet both the data needs and the objective of TSCA section 4(h).

The potentially useful information described in Unit IV. may not be the only means of providing information to evaluate the chemical substance associated with the significant new uses. However, submitting a SNUN without any test data may increase the likelihood that EPA will take action under TSCA section 5(e) or 5(f). EPA recommends that potential SNUN submitters contact EPA early enough so that they will be able to conduct the appropriate tests.

SNUN submitters should be aware that EPA will be better able to evaluate SNUNs which provide detailed information on the following:

• Human exposure and environmental release that may result from the significant new use of the chemical substances.

• Information on risks posed by the chemical substances compared to risks posed by potential substitutes.

According to 40 CFR 721.1(c), persons submitting a SNUN must comply with the same notification requirements and EPA regulatory procedures as persons submitting a PMN, including submission of test data on health and environmental effects as described in 40 CFR 720.50. SNUNs must be submitted on EPA Form No. 7710-25, generated using e-PMN software, and submitted to the Agency in accordance with the procedures set forth in 40 CFR 720.40 and 721.25. E-PMN software is available electronically at https://www.epa.gov/reviewing-new-chemicals-under-toxic-substances-control-act-tsca.

EPA has evaluated the potential costs of establishing SNUN requirements for potential manufacturers and processors of the chemical substances subject to this proposed rule. EPA's complete economic analysis is available in the docket under docket ID number EPA-HQ-OPPT-2018-0772.

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

This proposed rule would establish SNURs for 11 new chemical substances that were the subject of PMNs. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011).

According to the PRA, 44 U.S.C. 3501 et seq., an Agency may not conduct or sponsor, and a person is not required to respond to a collection of information that requires OMB approval under PRA, unless it has been approved by OMB and displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in title 40 of the CFR, after appearing in the Federal Register , are listed in 40 CFR part 9, and included on the related collection instrument or form, if applicable.

The information collection requirements related to this action have already been approved by OMB pursuant to PRA under OMB control number 2070-0012 (EPA ICR No. 574). This action does not impose any burden requiring additional OMB approval. If an entity were to submit a SNUN to the Agency, the annual burden is estimated to average between 30 and 170 hours per response. This burden estimate includes the time needed to review instructions, search existing data sources, gather and maintain the data needed, and complete, review, and submit the required SNUN.

Send any comments about the accuracy of the burden estimate, and any suggested methods for minimizing respondent burden, including through the use of automated collection techniques, to the Director, Regulatory Strategies Division, Office of Enterprise Information Programs (2822T), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460-0001. Please remember to include the OMB control number in any correspondence, but do not submit any completed forms to this address.

Pursuant to section 605(b) of the RFA, 5 U.S.C. 601 et seq., the Agency hereby certifies that promulgation of this proposed SNUR would not have a significant adverse economic impact on a substantial number of small entities. The requirement to submit a SNUN applies to any person (including small or large entities) who intends to engage in any activity described in the final rule as a “significant new use.” Because these uses are “new,” based on all information currently available to EPA, it appears that no small or large entities presently engage in such activities. A SNUR requires that any person who intends to engage in such activity in the future must first notify EPA by submitting a SNUN. Although some small entities may decide to pursue a significant new use in the future, EPA cannot presently determine how many, if any, there may be. However, EPA's experience to date is that, in response to the promulgation of SNURs covering over 1,000 chemicals, the Agency receives only a small number of notices per year. For example, the number of SNUNs received was seven in Federal fiscal year (FY) 2013, 13 in FY2014, six in FY2015, 12 in FY2016, 13 in FY2017, and 11 in FY2018, only a fraction of these were from small businesses. In addition, the Agency currently offers relief to qualifying small businesses by reducing the SNUN submission fee from $16,000 to $2,800. This lower fee reduces the total reporting and recordkeeping of cost of submitting a SNUN to about $10,116 for qualifying small firms. Therefore, the potential economic impacts of complying with this proposed SNUR are not expected to be significant or adversely impact a substantial number of small entities. In a SNUR that published in the Federal Register of June 2, 1997 (62 FR 29684) (FRL-5597-1), the Agency presented its general determination that final SNURs are not expected to have a significant economic impact on a substantial number of small entities, which was provided to the Chief Counsel for Advocacy of the Small Business Administration.

Based on EPA's experience with proposing and finalizing SNURs, State, local, and Tribal governments have not been impacted by these rulemakings, and EPA does not have any reasons to believe that any State, local, or Tribal government will be impacted by this proposed rule. As such, EPA has determined that this proposed rule does not impose any enforceable duty, contain any unfunded mandate, or otherwise have any effect on small governments subject to the requirements of UMRA sections 202, 203, 204, or 205 (2 U.S.C. 1531-1538 et seq. ).

This action would not have a substantial direct effect on States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999).

This proposed rule would not have Tribal implications because it is not expected to have substantial direct effects on Indian Tribes. This proposed rule would not significantly nor uniquely affect the communities of Indian Tribal governments, nor does it involve or impose any requirements that affect Indian Tribes. Accordingly, the requirements of Executive Order 13175 (65 FR 67249, November 9, 2000), do not apply to this proposed rule.

This action is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because this is not an economically significant regulatory action as defined by Executive Order 12866, and this action does not address environmental health or safety risks disproportionately affecting children.

This proposed rule is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001), because this action is not expected to affect energy supply, distribution, or use and because this action is not a significant regulatory action under Executive Order 12866.

In addition, since this action does not involve any technical standards, NTTAA section 12(d), 15 U.S.C. 272 note, does not apply to this action.

This action does not entail special considerations of environmental justice related issues as delineated by Executive Order 12898 (59 FR 7629, February 16, 1994).

Therefore, it is proposed that 40 CFR part 721 is amended as follows:

On November 3, 2013, the U.S. Department of Energy (DOE) published a rule proposing to make changes to conform to the Federal Acquisition Regulation (FAR). This proposed revision would have updated, clarified and streamlined text in certain DOE intellectual property and technology transfer clauses in order to benefit from DOE's experience under the existing clauses, and, where necessary, make these DOE clauses consistent with recent changes to the FAR. However, the Department has determined that it will not proceed with the rulemaking and, as such, is withdrawing the proposed rule. The changes that were proposed in this rulemaking will be incorporated into a larger rulemaking that will update the entire Department of Energy Acquisition Regulation (DEAR).

This action would implement the management measures in Framework Adjustment 58 to the Northeast Multispecies Fishery Management Plan (FMP). The New England Fishery Management Council reviewed the proposed regulations and deemed them consistent with, and necessary to implement Framework 58 in a February 8, 2019, letter from Council Chairman Dr. John Quinn to Regional Administrator Michael Pentony. Under the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), we are required to publish proposed rules for comment after preliminarily determining whether they are consistent with applicable law. The Magnuson-Stevens Act allows us to approve, partially approve, or disapprove measures that the Council proposes based only on whether the measures are consistent with the fishery management plan, plan amendment, the Magnuson-Stevens Act and its National Standards, and other applicable law. Otherwise, we must defer to the Council's policy choices. We are seeking comments on the Council's proposed measures in Framework 58 and whether they are consistent with the Northeast Multispecies FMP, the Magnuson-Stevens Act and its National Standards, and other applicable law. Through Framework 58, the Council proposes to:

• Set fishing year 2019-2020 shared U.S./Canada quotas for Georges Bank (GB) yellowtail flounder and eastern GB cod and haddock;

• Set 2019-2020 specifications, including catch limits, for four groundfish stocks: Witch flounder; GB winter flounder; Gulf of Maine (GOM) winter flounder; and Atlantic halibut;

• Revise or implement new rebuilding programs for GB winter flounder, southern New England/Mid-Atlantic (SNE/MA) yellowtail flounder, witch flounder, northern windowpane flounder, and ocean pout;

• Revise the trigger for the scallop fishery's accountability measures (AM) for GB yellowtail flounder; and

• Exempt vessels fishing exclusively in the Northwest Atlantic Fisheries Organization (NAFO) Regulatory Area from the U.S. minimum fish size for groundfish species.

This action also proposes a number of other measures that are not part of Framework 58, but that may be, or are required to be, considered and implemented under our authority specified in the FMP. We are proposing these measures in conjunction with the Framework 58 proposed measures for expediency purposes, and because some of these measures are related to the catch limits proposed as part of Framework 58. The additional measures proposed in this action are listed below.

• Adjustment for fishing year 2017 catch overage —this action announces the reduction of the 2019 GOM cod allocation due to an overage that occurred in fishing year 2017.

• Other administrative revisions and corrections —this action proposes to revise the application deadline for days-at-sea (DAS) leases, make regulatory corrections regarding the information required to be included in catch reports submitted via a vessel monitoring system (VMS), and correct a citation in the regulations allocating GB and SNE/MA yellowtail flounder to the scallop fishery. These proposed changes are described in the section 8, Administrative Changes and Regulatory Corrections under Secretarial Authority.

Eastern GB cod, eastern GB haddock, and GB yellowtail flounder are jointly managed with Canada under the United States/Canada Resource Sharing Understanding. The Transboundary Management Guidance Committee (TMGC) is a government-industry committee made up of representatives from the United States and Canada. For historical information about the TMGC see: http://www.bio.gc.ca/info/intercol/tmgc-cogst/index-en.php. Each year, the TMGC recommends a shared quota for each stock based on the most recent stock information and the TMGC's harvest strategy. The TMGC's harvest strategy for setting catch levels is to maintain a low to neutral risk (less than 50 percent) of exceeding the fishing mortality limit for each stock. The harvest strategy also specifies that when stock conditions are poor, fishing mortality should be further reduced to promote stock rebuilding. The shared quotas are allocated between the United States and Canada based on a formula that considers historical catch (10-percent weighting) and the current resource distribution (90-percent weighting).

For GB yellowtail flounder, the Council's Scientific and Statistical Committee (SSC) also recommends an acceptable biological catch (ABC) for the stock. The ABC is typically used to inform the U.S. TMGC's discussions with Canada for the annual shared quota. Although the stock is jointly managed with Canada, and the TMGC recommends annual shared quotas, the Council may not set catch limits that would exceed the SSC's recommendation. The SSC does not recommend ABCs for eastern GB cod and haddock because they are management units of the total GB cod and haddock stocks. The SSC recommends overall ABCs for the total GB cod and haddock stocks. The shared U.S./Canada quota for eastern GB cod and haddock is included in these overall ABCs, and must be consistent with the SSC's recommendation for the total GB stocks.

The Transboundary Resources Assessment Committee conducted assessments for the three transboundary stocks in July 2018, and detailed summaries of these assessments can be found at: https://www.nefsc.noaa.gov/assessments/trac/. The TMGC met in September 2018 to recommend shared quotas for 2019 based on the updated assessments, and the Council adopted the TMGC's recommendations in Framework 58. The proposed 2019 shared U.S./Canada quotas, and each country's allocation, are listed in Table 1.

The proposed 2019 U.S. quotas for eastern GB cod, eastern GB haddock, and GB yellowtail would represent 26-percent, 4-percent, and 50-percent decreases, respectively, compared to 2018. The quota decreases are due to decreases in biomass for each stock, despite increases in the portion of the shared quota that is allocated to the United States for each stock. For a more detailed discussion of the TMGC's 2019 catch advice, see the TMGC's guidance document that will be posted at: https://www.greateratlantic.fisheries.noaa.gov/. The 2019 U.S. quotas for eastern GB cod, eastern GB haddock, and GB yellowtail that are proposed in Framework Adjustment 58, if approved, will replace the 2019 quotas previously specified for these stocks (84 FR 8282; March 7, 2019). This is discussed further in Section 3, Catch Limits for the 2019-2020 Fishing Years.

The regulations implementing the U.S./Canada Resource Sharing Understanding require deducting any overages of the U.S. quota for eastern GB cod, eastern GB haddock, or GB yellowtail flounder from the U.S. quota in the following fishing year. If catch information for the 2018 fishing year indicates that the U.S. fishery exceeded its quota for any of the shared stocks, we will reduce the respective U.S. quotas for the 2019 fishing year in a future management action, as close to May 1, 2019, as possible. If any fishery that is allocated a portion of the U.S. quota exceeds its allocation and causes an overage of the overall U.S. quota, the overage reduction would be applied only to that fishery's allocation in the following fishing year. This ensures that catch by one component of the overall fishery does not negatively affect another component of the overall fishery.

Tables 2 through 8 show the proposed catch limits for the 2019-2020 fishing years. A brief summary of how these catch limits were developed is provided below. More details on the proposed catch limits for each groundfish stock can be found in Appendix II (Calculation of Northeast Multispecies Annual Catch Limits, FY 2019-FY 2020) to the Framework 58 Environmental Assessment (see ADDRESSES for information on how to get this document).

Framework 57 (83 FR 18985; May 1, 2018) previously set quotas for all groundfish stocks for fishing years 2019-2020. Only the eastern portion of the GB cod stock, jointly managed with Canada, did not have a 2019 quota set in Framework 57. Through Framework 58, the Council proposes to adopt new catch limits for 7 of the 20 groundfish stocks for the 2019-2020 fishing years. The fishing year 2019 quotas previously set by Framework 57 will be in effect on May 1, 2019, unless and until replaced by the quotas proposed in this action. A default quota for GB cod will be in effect from May 1, 2019, through July 31, 2019.

The overfishing limit (OFL) serves as the maximum amount of fish that can be caught in a year without constituting overfishing. The OFL for each stock is calculated using the estimated stock size and F MSY ( i.e., the fishing mortality rate that, if applied over the long term, would result in maximum sustainable yield). The OFL does not account for scientific uncertainty, so the SSC typically recommends an ABC that is lower than the OFL in order to account for this uncertainty. Usually, the greater the amount of scientific uncertainty, the lower the ABC is set compared to the OFL. For GB cod, GB haddock, and GB yellowtail flounder, the total ABC is then reduced by the amount of the Canadian quota (see Table 1 for the Canadian and U.S. shares of these stocks). Additionally, although GB winter flounder, white hake, and Atlantic halibut are not jointly managed with Canada, there is some Canadian catch of these stocks. Because the total ABC must account for all sources of fishing mortality, expected Canadian catch of GB winter flounder (45 mt), white hake (33 mt), and Atlantic halibut (33 mt) is deducted from the total ABC. The U.S. ABC is the amount available to the U.S. fishery after accounting for Canadian catch (see Table 2). For stocks without Canadian catch, the U.S. ABC is equal to the total ABC.

Based on the SSC's recommendation, the Council recommended continuing to set the OFL as unknown for GB yellowtail flounder. An empirical stock assessment is used for this stock, and the assessment can no longer provide quantitative estimates of the status determination criteria. No historical estimates of biomass, fishing mortality rate, or recruitment can be calculated because a stock assessment model framework is lacking. Status determination relative to reference points is not possible because reference points cannot be defined. In the absence of an assessment model, the empirical approach based on survey catches indicates stock condition is poor, given a declining trend in survey biomass despite reductions in catch to historical low levels. Total catch has declined in recent years and is at the lowest value in the time series. The stock has been experiencing below average recruitment and a truncation of age structure. Stock biomass is low and productivity is poor.

In the temporary absence of an OFL, given recent catch data, we have preliminarily determined that the GB yellowtail flounder ABC is a sufficient limit for preventing overfishing and is consistent with the National Standards. As an index-assessed stock, an estimate of the probability of overfishing cannot be determined, but the proposed ABC is based on an exploitation rate applied to the most recent estimate of stock size. The proposed ABC is a substantial reduction (53 percent) from the 2018 ABC in light of stock conditions and continued low survey biomass. We previously approved setting the OFL as unknown for GB yellowtail flounder as part of Framework 57, and we are continuing to develop guidance on setting status determination criteria and relevant catch limits in cases when an empirical assessment cannot provide numerical estimates of traditional reference points.

The U.S. ABC for each stock is divided among the various fishery components to account for all sources of fishing mortality. First, an estimate of catch expected from state waters and the “other” sub-component ( e.g., non-groundfish fisheries or some recreational groundfish fisheries) is deducted from the U.S. ABC. These sub-components are not subject to specific catch controls by the FMP. As a result, the state waters and other sub-components are not allocations, and these sub-components of the fishery are not subject to AMs if the catch limits are exceeded. After the state and other sub-components are deducted, the remaining portion of the U.S. ABC is distributed to the fishery components that receive an allocation for the stock. Components of the fishery that receive an allocation are subject to AMs if they exceed their respective catch limit during the fishing year. A fishing year 2017 overage of the GOM cod allocation is discussed in detail in Section 5, Adjustments Due to Fishing Year 2017 Overage.

Once the U.S. ABC is divided, sub-annual catch limits (sub-ACL) are set by reducing the amount of the ABC distributed to each component of the fishery to account for management uncertainty. Management uncertainty seeks to account for the possibility that management measures will result in a level of catch greater than expected. For each stock and fishery component, management uncertainty is estimated using the following criteria: Enforceability and precision of management measures; adequacy of catch monitoring; latent effort; and whether the composition of catch includes landings and discards, or is all discards. The total ACL is the sum of all of the sub-ACLs and state and other sub-components, and is the catch limit for a particular year after accounting for both scientific and management uncertainty. Landings and discards from all fisheries (commercial and recreational groundfish fisheries, state waters, and non-groundfish fisheries) are counted against the ACL for each stock.

For stocks allocated to sectors, the commercial groundfish sub-ACL is further divided into the non-sector (common pool) sub-ACL and the sector sub-ACL, based on the total vessel enrollment in sectors and the cumulative potential sector contributions (PSC) associated with those sectors. The preliminary sector and common pool sub-ACLs proposed in this action are based on fishing year 2019 PSCs and fishing year 2018 sector rosters. All permits enrolled in a sector, and the vessels associated with those permits, have until April 30, 2019, to withdraw from a sector and fish in the common pool for the 2019 fishing year. In addition to the enrollment delay, all permits that change ownership after December 1, 2018, may join a sector (or change sector) through April 30, 2019. The final sector and common pool sub-ACLs will be based on final 2019 sector rosters.

The common pool sub-ACL for each stock (except for SNE/MA winter flounder, both windowpane flounder stocks, ocean pout, Atlantic wolffish, and Atlantic halibut) is further divided into trimester TACs. The distribution of the common pool sub-ACLs into trimesters was adopted in Amendment 16 to the FMP (75 FR 18262; April 9, 2010) and was based on landing patterns at that time. Framework 57 (83 FR 18985; May 1, 2018) revised the apportionment of TACs among the trimesters. Once we project that 90 percent of the trimester TAC is caught for a stock, the trimester TAC area for that stock is closed for the remainder of the trimester. The closure applies to all common pool vessels fishing on a groundfish trip with gear capable of catching the pertinent stock. Any uncaught portion of the TAC in Trimester 1 or Trimester 2 is carried forward to the next trimester. Overages of the Trimester 1 or Trimester 2 TAC are deducted from the Trimester 3 TAC. Any overages of the total common pool sub-ACL are deducted from the following fishing year's common pool sub-ACL for that stock. Uncaught portions of any trimester TAC may not be carried over into the following fishing year. Table 5 summarizes the common pool trimester TACs proposed in this action.

Incidental catch TACs are also specified for certain stocks of concern ( i.e., stocks that are overfished or subject to overfishing) for common pool vessels fishing in the special management programs ( i.e., special access programs (SAP) and the Regular B Days-at-Sea (DAS) Program), in order to limit the catch of these stocks under each program. Tables 6 through 8 summarize the proposed Incidental Catch TACs for each stock and the distribution of these TACs to each special management program.

In fishing year 2017, GOM cod catch exceeded the total ACL and ABC, but not the OFL (Table 10). This overage and the required payback are discussed in detail in Section 5, Adjustments Due to Fishing Year 2017 Overage. The TACs for GOM cod in Tables 5 through 8 have been adjusted for this overage.

The Omnibus Essential Fish Habitat Amendment (OHA2) (83 FR 15240; April 9, 2018) eliminated the year-round closure of Closed Area I. When OHA2 eliminated Closed Area I, the Closed Area I Hook Gear Haddock SAP was no longer necessary, because the geographic area is now an open area accessible to the groundfish fleet (with the exception of the GB Dedicated Habitat Research Area and the Seasonal Closed Area I North closure). However, the Closed Area I Hook Gear Haddock SAP is still part of the FMP. We are required by the FMP to allocate an Incidental Catch Total Allowable Catch for GB cod, which is split between the Closed Area I Hook Gear Haddock SAP, Regular B Days-at-Sea Program, and the Eastern U.S./Canada Haddock SAP (Table 7). However, this allocation (0.1 mt) is a minor portion of the quota, and this is not expected to have any negative impacts for the common pool fishery. Additionally, overall fishing effort by both common pool and sector vessels in the Closed Area I Hook Gear Haddock SAP is controlled by an overall TAC for GB haddock, which is the target species for this SAP. The GB haddock TAC for the SAP is based on the amount allocated to this SAP for the 2004 fishing year (1,130 mt) and adjusted according to the growth or decline of the western GB haddock biomass in relationship to its size in 2004. Based on this formula, the Council's proposed GB Haddock TAC for this SAP is 3,454 mt for the 2019 fishing year and 3,673 for the 2020 fishing year. Until the Council revises the allocations to the Closed Area I Hook Gear Haddock SAP, a portion of the quotas will be allocated to the program, and will be unavailable to be caught. Because no vessel will need to declare into the program, no catch will count against the SAP's quotas.

Framework 53 established a mechanism for setting default catch limits in the event a future management action is delayed. If final catch limits have not been implemented by the start of a fishing year on May 1, then default catch limits are set at 35 percent of the previous year's catch limit, effective until July 31 of that fishing year, or when replaced by new catch limits. If this value exceeds the Council's recommendation for the upcoming fishing year, the default catch limits will be reduced to an amount equal to the Council's recommendation for the upcoming fishing year. Because groundfish vessels are not able to fish if final catch limits have not been implemented, this measure was established to prevent disruption to the groundfish fishery. Additional description of the default catch limit mechanism is provided in the preamble to the Framework 53 final rule (80 FR 25110; May 1, 2015).