This action, pursuant to 5 U.S.C. 553, proposes an amendment to regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing Agreement and Order No. 932, as amended (7 CFR part 932), regulating the handling of olives grown in California. Part 932 (referred to as the “Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Committee locally administers the Order and is comprised of producers and handlers of olives operating within the area of production, and one public member.

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

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order now in effect, California olive handlers are subject to assessments. Funds to administer the Order are derived from such assessments. It is intended that the assessment rate would be applicable to all assessable olives beginning on January 1, 2019, and continue until amended, suspended, or terminated.

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

The Order provides authority for the Committee, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members are familiar with the Committee's needs and with the costs of goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.

This proposed rule would increase the assessment rate from $24.00 per ton of assessed olives, the rate that was established for the 2017-18 and subsequent fiscal years, to $44.00 per ton of assessed olives for the 2019 and subsequent fiscal years. The proposed higher rate is a result of a significantly reduced crop size, a late season freeze, and the need to cover Committee expenses.

The Committee met on December 11, 2018, and unanimously recommended 2019 expenditures of $1,628,923, and an assessment rate of $44.00 per ton of assessed olives. In comparison, last year's budgeted expenditures were $1,749,477. The proposed assessment rate of $44.00 is $20.00 higher than the rate currently in effect. Producer receipts show a yield of 17,953 tons of assessable olives from the 2018 crop year. This is substantially less than the 2017 crop year, which yielded 90,188 tons of assessable olives. The 2019 fiscal year assessment rate increase is necessary to ensure the Committee has sufficient revenue to fund the recommended 2019 budgeted expenditures while ensuring the funds in the financial reserve would be kept within the maximum permitted by § 932.40.

The Order has a fiscal year and a crop year that are independent of each other. The crop year is a 12-month period that begins on August 1 of each year and ends on July 31 of the following year. The fiscal year is the 12-month period that begins on January 1 and ends on December 31 of each year. Olives are an alternate-bearing crop, with a small crop followed by a large crop. For this assessment rate proposed rule, the actual 2018 crop year receipts are used to determine the assessment rate for the 2019 fiscal year.

The major expenditures recommended by the Committee for the 2019 fiscal year includes $713,900 for program administration, $513,500 for marketing activities, and $343,523 for research, and $58,000 for inspection equipment. Budgeted expenses for these items during the 2018 fiscal year were $401,200 for program administration, $973,500 for marketing activities, $297,777 for research, and $77,000 inspection equipment.

The assessment rate recommended by the Committee resulted from consideration of anticipated fiscal year expenses, actual olive tonnage received by handlers during the 2018 crop year, and the amount in the Committee's financial reserve. Income derived from handler assessments, along with interest income and funds from the Committee's authorized reserve will be adequate to cover budgeted expenses. Funds in the reserve will be kept within the maximum permitted by the Order of approximately one fiscal year's expenses.

The assessment rate proposed in this rule would continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Committee or other available information.

Although this assessment rate would be in effect for an indefinite period, the Committee would continue to meet prior to or during each fiscal year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Committee meetings are available from the Committee or USDA. Committee meetings are open to the public and interested persons may express their views at these meetings. USDA would evaluate Committee recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking would be undertaken as necessary. The Committee's budget for subsequent fiscal years would be reviewed and, as appropriate, approved by USDA.

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

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 1,100 producers of olives in the production area and two handlers subject to regulation under the Order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,500,000 (13 CFR 121.201).

Based upon National Agricultural Statistics Service (NASS) information as of June 2018, the average price to producers for the 2017 crop year was $974.00 per ton, and total assessable volume for the 2018 crop year was 17,953 tons. Based on production, price paid to producers, and the total number of California olive producers, the average annual producer revenue is less than $750,000 ($974.00 times 17,953 tons equals $17,486,222 divided by 1,100 producers equals an average annual producer revenue of $15,896.57). Thus, the majority of olive producers may be classified as small entities. Both of the handlers may be classified as large entities under the SBA's definitions because their annual receipts are greater than $7,500,000.

This proposal would increase the assessment rate collected from handlers for the 2019 and subsequent fiscal years from $24.00 to $44.00 per ton of assessable olives. The Committee unanimously recommended 2019 expenditures of $1,628,923 and an assessment rate of $44.00 per ton of assessable olives. The recommended assessment rate of $44.00 is $20.00 higher than the 2018 rate. The quantity of assessable olives for the 2019 Fiscal year is 17,953 tons. Thus, the $44.00 rate should provide $789,932 in assessment revenue. The higher assessment rate is needed because annual receipts for the 2018 crop year are 17,953 tons compared to 90,188 tons for the 2017 crop year. Olives are an alternate-bearing crop, with a small crop followed by a large crop. Income derived from the $44.00 per ton assessment rate, along with funds from the authorized reserve and interest income, should be adequate to meet this fiscal year's expenses.

The major expenditures recommended by the Committee for the 2019 fiscal year include $713,900 for program administration, $513,500 for marketing activities, $343,523 for research, and $58,000 for inspection equipment. Budgeted expenses for these items during the 2018 fiscal year were $401,200 for program administration, $973,500 for marketing activities, $297,777 for research, and $77,000 for inspection equipment. The Committee deliberated on many of the expenses, weighed the relative value of various programs or projects, and increased their expenses for marketing and research activities.

Prior to arriving at this budget and assessment rate, the Committee considered information from various sources including the Committee's Executive, Marketing, Inspection, and Research Subcommittees. Alternate expenditure levels were discussed by these groups, based upon the relative value of various projects to the olive industry and the increased olive production. The assessment rate of $44.00 per ton of assessable olives was derived by considering anticipated expenses, the low volume of assessable olives, a late season freeze, and additional pertinent factors.

A review of NASS information indicates that the average producer price for the 2017 crop year was $974.00 per ton. Therefore, utilizing the assessment rate of $44.00 per ton, the assessment revenue for the 2019 fiscal year as a percentage of total producer revenue would be approximately 4.52 percent.

This proposed action would increase the assessment obligation imposed on handlers. While assessments impose some additional costs on handlers, the costs are minimal and uniform on all handlers. Some of the additional costs may be passed on to producers. However, these costs would be offset by the benefits derived by the operation of the Order. In addition, the Committee's meeting was widely publicized throughout the production area. The olive industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the December 11, 2018, meeting was a public meeting and all entities, both large and small, were able to express views on this issue. Interested persons are invited to submit comments on this proposed rule, including the regulatory and information collection impacts of this action on small businesses.

In accordance with the Paperwork Reduction Act of 1995, (44 U.S.C. chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0178 Vegetable Crops. No changes in those requirements as a result of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval.

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

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

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

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

A 30-day comment period is provided to allow interested persons to respond to this proposed rule. All written comments timely received will be considered before a final determination is made on this rule.

For the reasons set forth in the preamble, 7 CFR part 932 is proposed to be amended as follows:

This action, pursuant to 5 U.S.C. 553, proposes an amendment to regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This proposed rule is issued under Marketing Agreement No. 125 and Order No. 966, as amended (7 CFR part 966), regulating the handling of tomatoes grown in Florida. Part 966 (referred to as the “Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Committee locally administers the Order and is comprised of producers operating within the production area.

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

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This proposed rule is not intended to have retroactive effect.

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

This proposed rule invites comments on redistricting and reapportionment of membership on the Committee prescribed under the Order for the 2020-21 and subsequent fiscal periods. This proposal would reduce the number of districts from four to two and reapportion producer membership on the Committee to provide equitable representation from both districts. Redistricting and reapportionment of membership would make it easier for committee staff to conduct producer nominations and ensure the appointment of a full Committee. When the Committee is fully appointed, it is easier to achieve a quorum for assembled meetings. The Committee unanimously recommended this change at its November 1, 2018, meeting.

Section 966.22 provides for the establishment of membership on the Committee. The twelve members and their alternates shall be producers, or officers or employees of a corporate producer, in the district for which selected and a resident of the production area. The Order provides districts from which producers serve as representatives on the Committee.

Section 966.25 provides the authority for the Committee to recommend, with the approval of the Secretary, reapportionment of members among districts, and the reestablishment of districts within the production area. This section also provides that, in making such recommendations, the Committee shall give consideration to: a. Shifts in tomato acreage within districts and within the production area during recent years; b. the importance of new production in its relation to existing districts; c. the equitable relationship of Committee membership and districts; d. economies to result for producers in promoting efficient administration due to redistricting or reapportionment of members within districts; and e. other relevant factors.

Section 966.24 defined the four districts within the production area by county. Districts 1 and 2 have previously been reestablished pursuant to § 996.160. Section 966.161 apportions Committee membership among the districts pursuant to § 966.25. Currently, Districts 1 and 2 are represented by two committee members and alternates each and Districts 3 and 4 are represented by four committee members and alternates each.

The Committee met on November 1, 2018, to discuss the changes in recent years to production and the shift in acreage location of Florida tomatoes. Over the past two decades, the Florida tomato industry has experienced significant changes in production volume and location. Decreasing production and shifts in acreage are due to increased production costs along with competition from imports and other growing regions. The increased costs and competition has contributed to a decrease in the number of producers and handlers. With fewer producers to represent the industry and the changes to production and acreage, the Committee discussed redistricting and reapportionment of membership on the Committee.

Tomato production has shifted from the eastern part of the production area in the state of Florida (Districts 1 and 2) to the western part of the production area (Districts 3 and 4). According to Committee data, production during the 2017-18 season in District 4 accounted for 56 percent of the production area's total production. The next largest district by production volume was District 3, accounting for 39 percent of total production. In comparison, District 1 accounted for 4 percent of total production and District 2 only 1 percent of the total volume for the production area.

According to Committee data, Districts 1 and 2 accounted for 28 percent of total production during the 1998-99 season but production had decreased to only 8 percent by the 2007-08 season. Industry production has slowly moved into Districts 3 and 4 over the last 20 years and now these two districts make-up 95 percent of total production.

The shift in tomato production between districts has created an imbalance in Committee representation. The members from Districts 1 and 2 combined represent one third of the membership on the Committee while these districts account for only 5 percent of the tomato production volume. Consequently, Districts 3 and 4 are underrepresented with only two thirds of the Committee membership. During the discussion, Committee members reviewed the data for acreage and production from all districts in the production area as required in the Order. The gradual shift in acreage and production from the eastern portion of the production area in the State of Florida to the western portion has made it difficult to find enough qualified producers to represent Districts 1 and 2 on the Committee. Committee members from these two districts represent four seats on the Committee. Committee members also noted that with fewer producers remaining in the Florida tomato industry, particularly in Districts 1 and 2, it is difficult to get enough members together to meet the Order's quorum requirements for a meeting.

As a result of the discussion and analysis, the Committee recommended combining the current Districts 1, 3, and a portion of District 2 into one district, and District 4 and the remaining portion of District 2 into another district. This would divide the production area into two districts with each district representing approximately half of the total volume of tomatoes produced in the production area. The Committee also recommended reapportioning the twelve Committee members and alternates so that six Committee members and alternates represent each district.

The two new districts would comprise the following Florida counties: District 1 would include the counties of Charlotte, Glades, Palm Beach, Lee, Hendry, Collier, Broward, Monroe, and Dade; and District 2 would include the counties of Pinellas, Hillsborough, Polk, Osceola, Brevard, Manatee, Hardee, Highlands, Okeechobee, Indian River, St. Lucie, Sarasota, De Soto, and Martin.

Accordingly, the Committee unanimously voted to reduce the number of districts from four to two and reapportion producer membership on the Committee so that each district would have six members and alternates. The Committee believes these proposed changes would adjust producer representation to reflect the composition of the industry, and create the opportunity for other producers to serve on the Committee.

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

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 75 producers of Florida tomatoes in the production area and 37 handlers subject to regulation under the Order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts less than $750,000, and small agricultural service firms are defined as those whose annual receipts are less than $7,500,000 (13 CFR 121.201).

According to industry and Committee data, the average annual price for fresh Florida tomatoes during the 2017-18 season was approximately $12.56 per 25-pound container, and total fresh shipments were 25.9 million containers. Using the average price and shipment information, the number of handlers, and assuming a normal distribution, the majority of handlers have average annual receipts of more than $7,500,000, ($12.56 times 25.9 million containers equals $325,304,000 divided by 37 handlers equals $8,792,000 per handler).

With an estimated producer price of $6.00 per 25-pound container, the number of Florida tomato producers, and assuming a normal distribution, the average annual producer revenue is above $750,000, ($6.00 times 25.9 million containers equals $155,400,000 divided by 75 producers equals $2,072,000 per producer). Thus, the majority of handlers and producers of Florida tomatoes may be classified as large entities.

The gradual shift in acreage and production from the eastern portion of the production area in the State of Florida to the western portion has made it difficult to find enough qualified producers to represent Districts 1 and 2 on the Committee. Committee members from these two districts represent one third of the seats on the Committee. Redistricting and reapportionment of membership would make it easier for Committee staff to conduct producer nominations, provide nominees for all seats, and readily achieve a quorum when meetings are assembled with a full committee.

This proposed rule would reduce the number of districts from four to two and reapportion producer membership on the Committee to provide six members and alternates from both districts. The Committee believes this change would adjust producer representation to reflect the composition of the industry, provide equitable representation from each district, and create the opportunity for other producers to serve on the Committee. This rulemaking would revise §§ 966.160 and 966.161. Authority for this action is provided in § 966.25 of the Order.

It is not anticipated that this action would impose any additional costs on the industry. This change would save time and operating resources by making it easier to find candidates to serve on the Committee. Additionally, a full committee would reduce the chance of a failed quorum. Thus, this action would help avoid the costs associated with travel and assembly of a meeting where a quorum is not achieved.

This action would have a beneficial impact as it more accurately aligns districts and reapportions Committee membership in accordance with the production of fresh Florida tomatoes. These changes should provide equitable representation to producers on the Committee and make the Committee more representative of the current industry. The effects of this proposed rule would not be disproportionately greater or less for small entities than for larger entities.

The Committee considered one alternative to this proposal. The Committee considered combining Districts 1 and 2 into one district. However, given the small volume of production currently produced in each of these districts, the Committee determined the best course of action was to divide the production area into two new districts with balanced production and representation. Therefore, this alternative was rejected.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the Order's information collection requirements have been previously approved by OMB and assigned OMB No. 0581-0178 Vegetable and Specialty Crops. No changes are necessary in those requirements as a result of this action. Should any changes become necessary, they would be submitted to OMB for approval.

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

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

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

The Committee's meetings were widely publicized throughout the Florida tomato industry, and all interested persons were invited to attend the meetings and participate in Committee deliberations on all issues. Like all Committee meetings, the November 1, 2018, meeting was a public meeting, and all entities, both large and small, were able to express their views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and information collection impacts of this action on small businesses.

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

A 30-day comment period is provided to allow interested persons to respond to this proposal. All written comments timely received will be considered before a final determination is made on this matter.

For the reasons set forth in the preamble, 7 CFR part 966 is proposed to be amended as follows:

The OCC is proposing to update its regulatory framework for other real estate owned (OREO) by revising its rules to clarify and streamline the regulation for national banks and to apply the regulatory framework to OREO activities Federal savings associations for the reasons discussed below. The OCC's last significant revision to the national bank OREO rules occurred over twenty years ago. 1 Since that time, the OCC has gained additional supervisory experience related to OREO, which it can apply to improve the OREO rules. In addition, the OCC now supervises Federal savings associations pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). 2 Federal savings associations, unlike national banks, are not subject to statutory provisions governing OREO. However, capital regulations and handbooks issued by the Office of Thrift Supervision (OTS) generally established requirements and supervisory expectations for OREO activities. Following OCC and OTS integration, the OCC rescinded or superseded many of those documents, creating ambiguity with respect to OREO standards for Federal savings associations. The OCC is proposing a framework for Federal savings associations that generally is consistent with the OTS framework described above. This framework is still followed by many savings associations and would offer flexibility consistent with provisions in the Home Owners' Loan Act (HOLA).

The OCC also is proposing to remove Appendices A and B to 12 CFR part 3 (risk-based capital guidelines for national banks) and 12 CFR part 167 (capital requirements for FSAs) and make conforming technical edits to other parts that reference those provisions. When the OCC revised Part 3 it superseded Appendices A and B to part 3 and part 167. However, because there was a transition period for part 3, the OCC retained those appendices at that time. 3 Part 167 includes provisions relating to treatment of OREO held by Federal savings associations that is no longer in effect. The OCC is proposing to remove part 167 and related references to avoid any confusion with the OREO treatment proposed in this notice. Since Appendices A and B to part 3 include the corresponding capital provisions for national banks and are similarly outdated, the OCC proposes to rescind those appendices in this proposal as well.

Twelve U.S.C. 29 establishes a framework for when a national bank may hold real property. A national bank may hold real property for use in its business as premises, as mortgaged to it as security for a debt, in satisfaction of debts previously contracted (DPC), 4 or as purchased at foreclosure to secure a related debt. The statute limits a national bank to a five-year holding period for real property, other than real property used as premises. However, the statute allows a national bank to seek approval from the Comptroller of the Currency to hold real property for up to five additional years. The OCC may approve this additional time if the bank has made a good faith attempt to dispose of the property within the initial five-year period or if disposal within the five-year period would be detrimental to the bank.

Twelve U.S.C. 1464 establishes requirements for the chartering and operation of Federal savings associations, including the power to make loans and investments. The authority for a Federal savings association to obtain real property in connection with satisfaction of a loan previously made, including at foreclosure, is an inherent power associated with making a loan secured by a mortgage on real property, which is permitted by 12 U.S.C. 1464(c)(1)(B) and (2)(B). In addition, 12 U.S.C. 1464(c)(4)(B) authorizes Federal savings associations to invest in service corporations, 5 which, by regulation, are permitted to engage in additional activities in connection with real property. 6 Federal savings associations are not subject to a five-year statutory limit on the holding period for real property.

This section would contain definitions used in the OREO regulation. This section would continue to use the existing definitions for other real estate owned (OREO); market value; and recorded investment amount in the revised regulation. The term OREO would continue to mean DPC real estate and former banking premises. The term market value would continue to mean the value of the property, as determined under the appraisal rule in 12 CFR part 34, subpart C. Recorded investment amount would continue to mean the recorded loan balance (for loans) or the net book value (for former banking premises).

In addition, the proposal would continue to use the current definition of DPC real estate, but with minor revisions related to lease accounting described below. The definition of DPC real estate would continue to mean real estate acquired through any means in satisfaction of a debt previously contracted, consistent with the authorities described earlier in this preamble for national banks and Federal savings associations to obtain property in this manner. The existing definition of the term includes capitalized and operating leases, which are the two types of leases recognized under current accounting standards from the lessee's perspective. However, revised accounting standards requiring operating leases to be capitalized, among other provisions, are scheduled to be implemented in the near future. 7 Therefore, the OCC proposes to revise the terminology in the current definition of DPC real estate to refer to leased real estate, rather than to refer specifically to capitalized and operating leases. The proposed definition would continue to cover all leases, but the revision will ensure the regulation will not become outdated after implementation of the new accounting standards.

In addition, the proposal would revise the definition of former banking premises to include a reference to 12 CFR 7.1000(a)(2), which establishes categories of real estate that national banks and Federal savings associations are permitted to own for use in their banking activities. The revised definition would define former banking premises as real estate permitted under section 7.1000(a)(2) that is no longer used or contemplated to be used for the purposes permitted by that rule. The proposed revision should improve regulatory consistency by clarifying that both rules cover the same types of real estate for banking activities and eliminate confusion about whether the rules refer to different types of properties.

This section would specify how long a national bank or a Federal saving association may hold OREO, provide the starting date for that holding period, and address additional related provisions affecting the holding period.

The holding period for national banks under the current rule is the period required by 12 U.S.C. 29. The statute and the current rule provide for an initial five-year holding period, with up to an additional five years if approved by the OCC. The proposal would not change this holding period.

The proposal also would establish an initial holding period for Federal savings associations of five years after commencement of the holding period to ensure the safe and sound management of OREO holdings. If the Federal savings association has not disposed of the OREO within the initial five-year holding period, the savings association may request OCC approval to continue to hold the real property as OREO for up to five additional years. These provisions are consistent with the rules that apply to national banks. The OCC's supervisory experience is that both types of institutions generally have or obtain similar types of OREO. As with national banks, in deciding whether to grant the approval to hold OREO beyond the initial five-year holding period, the OCC would expect to consider, among other factors, the Federal savings association's current and prior efforts to dispose of the property and safety and soundness concerns related to an immediate disposition of the property. During the initial five-year holding period and any subsequent approved period, the Federal savings association would need to make reasonable efforts to dispose of the OREO. This provision is consistent with prior OTS expectations. This proposed framework also is consistent with the requirement previously applicable to Federal savings associations under 12 CFR part 167, which required savings associations to deduct from regulatory capital the value of OREO held for more than five years, or a longer period with OCC approval, as an equity investment. This provision created incentives for Federal savings associations to dispose of OREO within five years, or a longer period approved by the OCC, as the regulatory capital treatment for failure to dispose of the property generally would be more onerous than disposing of the property. The OCC believes that an initial five-year holding period is a sufficient amount of time to dispose of most OREO and the option to extend the holding period for an additional five years should be sufficient to address atypical properties or unusual real estate market conditions.

Question 1: Should the OCC require national banks and Federal savings associations to make specific efforts to dispose of OREO within the specified timeframes? If so, what efforts should the OCC require?

The proposal also would adopt for Federal savings associations the existing national bank provision describing the date the holding period for OREO begins. Generally, the holding period for DPC real estate would begin on the date the property is transferred to the national bank or Federal savings association (for example, after a judicial foreclosure or deed-in-lieu of foreclosure), which may be different than the date the institution must recognize the property as OREO for accounting and financial reporting purposes. The title transfer law of the state or other jurisdiction where the property is located would govern when the property is considered transferred to the national bank or Federal savings association. The holding period for former bank premises would begin when the national bank or Federal savings association ceases using a property as bank premises (whether outright or after relocating) or abandons a plan to use property held for future bank premises.

The OCC is proposing a modification for OREO obtained by a Federal savings association prior to the effective date of this proposed rule. For this OREO, the holding period would begin on the rule's effective date to provide for a full initial five-year holding period. The OCC still would consider the entire time the OREO has been held by the Federal savings association in evaluating any request for an additional holding period beyond that initial five years. The OCC believes this accommodation would provide Federal savings associations with a reasonable timeframe to dispose of OREO held prior to the effective date of the rule, rather than calculating the holding period back to the initial transfer date.

Question 2: Does the proposed adjustment to the calculation of the holding period for OREO obtained by a Federal savings association prior to the effective date of the rule provide an appropriate amount of time to dispose of the OREO consistent with the proposed rule?

The OCC also proposes to clarify that when a national bank or Federal savings association obtains OREO from a merged or acquired institution, the relevant holding period would commence on the effective date of the merger or acquisition and would not include any time the OREO had been held by the acquired institution prior to the merger or acquisition. Similarly, when an institution converts to a national bank or Federal savings association, the relevant holding period would begin on the date of conversion. However, if the institution was already a national bank or Federal savings association immediately prior to the conversion, the holding period would not reset on the conversion date. 8 The OCC believes this is appropriate because different OREO standards might apply to an institution before it becomes a national bank or Federal savings association, unless the institution is already covered by the OCC's OREO rule. The proposed revision also would apply to Federal savings associations the existing national bank regulation that the holding period for DPC real estate that is subject to a redemption period imposed under state law begins after the expiration of the redemption period.

The proposed revised section also would address an interpretive issue that arises when a national bank or Federal savings association enters into a transaction to dispose of OREO, but the real estate is conveyed back to the institution for a reason other than a subsequent purchase by the institution (for example, if there is a failure to complete the disposition or the disposition is validly rescinded or unwound). In those cases, the holding period would be tolled during the period of time the OREO property was not under the bank's or savings association's control. For example, if a third party purchases OREO from a national bank or Federal savings association but later legally rescinds the sale, the bank or savings association cannot start a new five-year holding period for the property. Instead, any previous holding period (including approved extensions) would be tolled between the time the bank or savings association sold and reacquired the real property. Similarly, in certain U.S. government mortgage loan programs a national bank or Federal savings association may be required to transfer a foreclosed property to a U.S. government entity, and that entity may later validly reject receipt of the property and return title to the bank or savings association. In that case, the national bank or Federal savings association could not start a new five-year holding period for the property but could toll any previous holding period (including approved extensions) during the time the government entity had possession of the property. However, if the national bank or Federal savings association re-acquires property that was previously OREO and had been disposed of consistent with this part, then the five-year holding period would reset on that property. For example, if a bank originates a mortgage loan in connection with the sale of an OREO property that met the requirements for a valid disposition under part 34, but later foreclose on that property due to missed mortgage payments, then the bank will obtain a new five-year holding period.

Question 3: Are there ways the calculations for the start of the holding period and any subsequent tolling could be improved? Should the OCC establish a bright line for when a property is acquired, rather than rely on state transfer laws and redemption periods? For real property, should the OCC refer to accounting standards to determine when a property is transferred to OREO?

Question 4: Should the OCC allow a national bank or Federal savings association to restart the holding period on OREO, even if the institution converts to a different charter also subject to part 34?

This section would specify methods for national banks and Federal savings associations to dispose of OREO. Generally, the proposal would retain the existing disposal methods for national banks and allow Federal savings associations to dispose of OREO using those same methods. These methods include: (i) Selling the property outright or over a period of time; (ii) using DPC real estate as bank premises or affiliate premises; or (iii) entering into subleases of OREO leases. Writing OREO (whether owned or leased) down to zero for accounting purposes is not a valid disposition under the existing rules and would not be a valid disposition under the proposed revisions.

To provide for additional flexibility to dispose of OREO, the OCC also proposes to add a new paragraph (a)(5) that would allow the disposition of OREO in other ways approved by the OCC consistent with safe and sound banking practices. For example, the OCC previously has approved national banks and Federal savings associations to dispose of OREO in certain circumstances by donating or escheating OREO or by negotiating early terminations of OREO leases.

The proposal would recognize that, unlike a national bank, a Federal savings association also may transfer OREO to a service corporation. Under HOLA and 12 CFR 5.59, a Federal savings association may invest in a service corporation, which may engage in the same activities as its parent Federal savings association under the same terms and conditions. A service corporation also may engage in additional activities not permitted at a Federal savings association, including certain real estate related services such as holding property as an investment in real estate. 9 In addition, 12 CFR 5.59(i) permits a Federal savings association to make a contribution to a service corporation in the exercise of the association's salvage powers. 10 Consistent with HOLA and 12 CFR 5.59, the proposal would allow a Federal savings association, through a service corporation, to hold OREO property as an investment or for longer than 10 years. However, under current statutory and regulatory capital requirements, a Federal savings association must deconsolidate, and deduct any investments in, a subsidiary engaged in activities not permissible for a national bank, including holding property as an investment in real estate. 11

Finally, the proposed revised section would retain the requirement that a national bank must make a diligent and ongoing effort to dispose of OREO and maintain documentation of those efforts. The proposal also would apply these provisions to Federal savings associations. Compliance with the requirement to document the national bank's or Federal savings association's diligence when attempting to dispose of OREO is an important consideration if the national bank or Federal savings association requests an extension to hold OREO beyond the initial five-year holding period. The proposed requirement that a Federal savings association make diligent efforts to dispose of OREO and maintain relevant documentation is consistent with both prior OTS expectations that savings associations develop salvage plans that included provisions for disposition of OREO and the existing requirement that Federal savings associations maintain documentation of appraisals of OREO. 12

Question 5: Should the proposed rule include additional disposition methods for OREO held by national banks and Federal savings associations? Are there ways the proposed methods could be improved or clarified? For owned, rather than leased, real estate, should the OCC defer to accounting standards to determine when a property is sold (that is, based on whether the transfer qualifies for sales treatment under accounting standards)?

This section would specify the appraisal requirements applicable to OREO. The proposal would carry over the existing requirements for appraisals of OREO for national banks and apply those same requirements to Federal savings associations. Generally, this section requires an appraisal consistent with 12 CFR part 34, subpart C when property is obtained as OREO followed by periodic monitoring thereafter. In addition, the proposed section would continue to include existing exceptions from the appraisal requirements. For example, an appraisal would not be required if there is still a valid appraisal that was created in a transaction involving the property, as described in § 34.85(b). Because the requirements for appraisals of OREO held by Federal savings associations would be set out in the proposed rule, the OCC also is proposing to repeal 12 CFR 160.172, which currently includes comparable appraisal standards for OREO held by Federal savings associations.

This section would contain provisions related to permissible expenditures on OREO. The proposal would codify various interpretations regarding other permissible expenses related to OREO for national banks and Federal savings associations in new paragraphs (a) and (b). Paragraph (a) would allow national banks and Federal savings associations to pay any normal operating expenses relating to the OREO property, such as taxes, insurance, utilities, and maintenance, and condominium association fees, to the extent those fees are reasonable and consistent with safe and sound banking practices. This proposed addition is consistent with a provision in existing paragraph (b)(1), prior interpretations issued by the OCC for national banks, and prior OTS expectations concerning payment of taxes, insurance, and similar expenses on OREO by Federal savings associations. 13

Paragraph (b) would allow national banks and Federal savings associations to pay expenses for the operation of a business associated with the OREO property, if: (i) Payment of the expenses reduces the shortfall between the current value of the property and the national bank or Federal savings association's investment in the property; and (ii) the expenses are consistent with safe and sound banking practices. For example, if a national bank or Federal savings association obtains an OREO property that includes a functioning hotel and resort, the national bank or Federal savings association may be able to minimize its loss on the defaulted loan by continuing to pay business expenses to operate the hotel and resort, such as staff wages, inventory, management fees, and licensing fees, while the OREO is being prepared for sale. The OCC has previously addressed these types of expenses for national banks consistent with safe and sound banking practices, and this provision would extend the permission to Federal savings associations. 14

Under the current rule, a national bank is permitted to make advances to complete an OREO development or improvement project (referred to as “additional expenditures”). Paragraph (c) would continue the existing requirements for additional expenditures on OREO for a national bank and apply the same requirements to a Federal savings association. A national bank or Federal savings association could make additional expenditures only if: (i) The expenditures are reasonably calculated to reduce the shortfall between the current value of the property and the bank's investment in the property; (ii) the expenditures are not made for purposes of speculation in real estate; and (iii) the expenditures are consistent with safe and sound banking practices. These proposed requirements are consistent with prior OTS expectations, which addressed a Federal savings association's reasonable capital expenditures to reduce the loss on OREO obtained by the savings association. 15

In addition, paragraph (d) would update the requirements for prior notification for significant additional expenditures on OREO for national banks and extend the provision to Federal savings associations. Currently, under 12 CFR 34.86(b), a national bank must notify the OCC at least 30 days before making additional expenditures if the amount of the expenditures and recorded investment in the OREO exceeds ten percent of the national bank's capital and surplus, which generally is based on regulatory capital calculated under 12 CFR part 3. Federal savings associations, in turn, were subject to supervisory review of any expenditures on OREO in excess of their lending limits, which are calculated based on a formula that incorporates a percentage of capital and surplus. 16 While based on different calculations, the supervisory review for Federal savings associations had a similar purpose as the required OCC notification for national banks, namely, to ensure that institutions did not expend an excessive amount of funds to complete or renovate OREO. The OCC proposes to update and streamline the notification provision by requiring prior notification only when the proposed additional expenditures and recorded investment in an individual OREO property exceeds 10 percent of the institution's total equity capital based on the institution's most recent Consolidated Reports of Condition and Income (Call Report). The OCC believes using a measure based on total equity capital for this purpose, rather than a measure tied to 12 CFR part 3 regulatory capital or lending limits, allows for a less burdensome and more transparent calculation, while not impairing the OCC's supervisory review of institutions that propose making significant additional expenditures on OREO.

A comparison of capital and surplus and total equity capital for national banks supports this approach. 17 Based on information from the June 30, 2018 Call Report, the measures of regulatory capital and total equity capital are numerically comparable, and identical in some cases, for many national banks that hold OREO. Under the proposed measure, national banks with significant loan loss reserves or excessive losses recorded in accumulated other comprehensive income would generally have a lower limit for notification compared with the existing measure. The OCC believes this result is appropriate, as those losses may indicate national banks with a higher risk profile for which notification of significant OREO expenditures is most relevant. National banks holding assets that are deducted under the regulatory capital rule, such as mortgage servicing assets or investments in other financial institutions, would generally have a higher limit for notification under the proposed measure.

Question 6: Is the proposed allowance for payment of operating and business expenses related to OREO, subject to the proposed safety and soundness standards, reasonable? Are there other common OREO expenses the OCC should consider specifically including in the regulation?

Question 7: Should the proposed threshold for notification be based on a measure other than total equity capital? Should the proposed threshold be higher or lower?

The OCC proposes to rescind existing 12 CFR 34.87, which requires national banks to account for OREO consistent with the instructions for the Call Report, because it is now redundant to statutory requirements. Historically, there have been differences between regulatory accounting principles and generally accepted accounting principles (GAAP). However, currently, national banks and Federal savings associations must follow GAAP when accounting for transactions involving OREO. 18 Therefore, codifying this requirement in the OREO rule is unnecessary. Guidance on the application of GAAP for OREO transactions can be found in the instructions for the Call Report and the OCC's Bank Accounting Advisory Series. 19 However, the OCC notes that, although the accounting standard generally establishes a bright line for when a bank must report a property as OREO for financial reporting purposes ( i.e., when a judge completes a judicial foreclosure), section 34.82(b) does not establish a bright line for when property is originally transferred to a bank. As a result, the date on which reporting requirements begin for OREO under the accounting standard may be different than the date that the holding period commences under 34.82(b), as described above in Section III.B. We also note that writing off a property or lease classified as OREO for accounting purposes does not eliminate the need to comply with the requirements of this subpart, including the requirement for appraisals and disposition of the property or lease under one of the allowed methods.

As described above, the OCC also is proposing to remove Appendices A and B to 12 CFR part 3 (risk-based capital guidelines for national banks) and 12 CFR part 167 (capital requirements for FSAs) and make conforming technical edits to other parts, as part 167 is outdated and includes OREO provisions that conflict with the provisions described in this proposal. The OCC did not immediately rescind those rules due to an extended transition period to the new capital rule for certain provisions. The proposed rule also makes conforming technical changes to portions of the OCC's rules that refer to Appendices A and B to 12 CFR part 3 or to 12 CFR part 167. Specifically, the OCC would make conforming edits to 12 CFR 3.1, 6.1, 6.2, Appendix A to Subpart D of part 34, 46.6, 160.100, Appendix A to 160.101, 161.55, 163.74, and 163.80. This proposed rule does not impact the legal status of any reference to the superseded capital rules in outstanding compliance and enforcement orders, agreements, and memoranda of understanding entered into by the OCC and a national bank or Federal savings association, as those references became references to 12 CFR part 3 when the revised capital rule became effective.

Under the Paperwork Reduction Act of 1995, 20 the OCC may not conduct or sponsor, and a person is not required to respond to, an information collection unless the information collection displays a valid OMB control number. The OCC has submitted the information collection requirements imposed by this proposal to OMB for review. However, the proposal will not result in a change in burden. While the respondent count will increase with the addition of Federal savings associations, we estimate fewer notices from national banks due to a decrease in charters since the last review, resulting in no change in burden.

Section 34.86(d) updates the requirements for prior notification for significant additional expenditures on OREO for national banks and extends the provision to Federal savings associations. Currently, a national bank must notify the OCC at least 30 days before making additional expenditures if the amount of the expenditures and recorded investment in the OREO exceeds ten percent of its capital and surplus, based on regulatory capital calculated under 12 CFR part 3. Federal savings associations are subject to supervisory review of any expenditures on OREO in excess of their lending limits, which are calculated based on a formula that incorporates a percentage of capital and surplus.

The proposal updates and streamlines the notification provision by requiring prior notification only when the proposed additional expenditures and recorded investment in an individual OREO property exceeds 10 percent of the institution's total equity capital based on its most recent Call Report. National banks with significant loan loss reserves or excessive losses recorded in accumulated other comprehensive income will generally have a reduced limit for notification. National banks holding assets that are deducted under the regulatory capital rule, will generally have an increase limit for notification under the proposal.

Title: Real Estate Lending and Appraisals.

OMB Control No.: 1557-0190.

Frequency of Response: On occasion.

Affected Public: Businesses or other for-profit organizations.

Estimated Number of Respondents: 6.

Estimated Burden per Respondent: 5 hours.

Estimated Total Annual Burden: 30 hours.

Comments are invited on:

(a) Whether the collections of information are necessary for the proper performance of the functions of the OCC, including whether the information has practical utility;

(b) The accuracy of the OCC's estimates of the burden of the collections of information;

(c) Ways to enhance the quality, utility, and clarity of the information to be collected;

(d) Ways to minimize the burden of the collections on respondents, including through the use of automated collection techniques or other forms of information technology; and

(e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

The Regulatory Flexibility Act  21 requires an agency, in connection with a proposed rule, to prepare an Initial Regulatory Flexibility Analysis describing the impact of the rule on small entities (defined by the SBA for purposes of the RFA to include commercial banks and savings institutions with total assets of $550 million or less and trust companies with total revenue of $38.5 million or less) or to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities. As of December 31, 2017, the OCC supervised 886 small entities. The proposed rule would apply to all entities supervised by the OCC, and therefore would affect a substantial number of small entities. The economic impact on each small Federal savings association is estimated to be approximately $1,872, which is not significant based on 5% of total annual salaries or 2.5% of other noninterest income. The economic impact on each small national bank is estimated to be de minimis. Therefore, the OCC certifies the proposed rule would not have a significant economic impact on a substantial number of small entities.

The OCC analyzed the proposed rule under the factors set forth in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this analysis, the OCC considered whether the proposed rule includes a Federal mandate 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 in any one year (adjusted for inflation). The OCC estimates that the total cost of the proposed rule is $583,000. Therefore, the OCC has determined that this proposed rule would not result in expenditures by State, local, and Tribal governments, or the private sector, of $100 million or more in any one year. Accordingly, the OCC has not prepared a written statement to accompany this proposal.

This rulemaking would not impose additional reporting, disclosure, or other requirements on an insured depository institution. Therefore, section 302(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 does not apply to this rulemaking.

For the reasons set out in the preamble, the OCC proposes to revise the following parts as follows:

Comments Invited

We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2019-0250; Product Identifier 2018-NM-157-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this NPRM. We will consider all comments received by the closing date and may amend this NPRM based on those comments.

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

Fatigue damage can occur locally, in small areas or structural design details, or globally, in widespread areas. Multiple-site damage is widespread damage that occurs in a large structural element such as a single rivet line of a lap splice joining two large skin panels. Widespread damage can also occur in multiple elements such as adjacent frames or stringers. Multiple-site damage and multiple-element damage cracks are typically too small initially to be reliably detected with normal inspection methods. Without intervention, these cracks will grow, and eventually compromise the structural integrity of the airplane. This condition is known as WFD. It is associated with general degradation of large areas of structure with similar structural details and stress levels. As an airplane ages, WFD will likely occur, and will certainly occur if the airplane is operated long enough without any intervention.

The FAA's WFD final rule (75 FR 69746, November 15, 2010) became effective on January 14, 2011. The WFD rule requires certain actions to prevent structural failure due to WFD throughout the operational life of certain existing transport category airplanes and all of these airplanes that will be certificated in the future. For existing and future airplanes subject to the WFD rule, the rule requires that design approval holders (DAHs) establish a limit of validity (LOV) of the engineering data that support the structural maintenance program. Operators affected by the WFD rule may not fly an airplane beyond its LOV, unless an extended LOV is approved.

The WFD rule (75 FR 69746, November 15, 2010) does not require identifying and developing maintenance actions if the DAHs can show that such actions are not necessary to prevent WFD before the airplane reaches the LOV. Many LOVs, however, do depend on accomplishment of future maintenance actions. As stated in the WFD rule, any maintenance actions necessary to reach the LOV will be mandated by airworthiness directives through separate rulemaking actions.

In the context of WFD, this action is necessary to enable DAHs to propose LOVs that allow operators the longest operational lives for their airplanes, and still ensure that WFD will not occur. This approach allows for an implementation strategy that provides flexibility to DAHs in determining the timing of service information development (with FAA approval), while providing operators with certainty regarding the LOV applicable to their airplanes.

We issued AD 2015-17-14, Amendment 39-18247 (80 FR 52182, August 28, 2015) (“AD 2015-17-14”), for all Airbus SAS Model A319 series airplanes; Model A320-211, -212, -214, -231, -232, and -233 airplanes, and Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes. AD 2015-17-14 requires repetitive rototest inspections of the open tack holes and rivet holes at the cargo floor support fittings of the fuselage, including doing all applicable related investigative actions, and repair if necessary. AD 2015-17-14 resulted from reports that during a full-scale fatigue test, several broken frames in certain areas of the cargo compartment were found, especially on the cargo floor support fittings and open tack holes on the left-hand side. We issued AD 2015-17-14 to address cracking in the open tack holes and rivet holes at the cargo floor support fittings of the fuselage, which could affect the structural integrity of the airplane.

Since we issued AD 2015-17-14, further analysis and WFD evaluations identified the need to reduce the compliance time for the repetitive inspections for certain airplanes, and to add work for certain airplanes, and remove certain airplanes from the applicability.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2018-0233R1, dated November 28, 2018 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus SAS Model A319 series airplanes; Model A320-211, -212, -214, -216, -231, -232, and -233 airplanes; and Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2019-0250.

Although this proposed AD does not explicitly restate the requirements of AD 2015-17-14, this proposed AD would retain certain requirements of AD 2015-17-14. Those requirements are referenced in EASA AD 2018-0233R1, which, in turn, is referenced in paragraph (g) of this proposed AD.

EASA AD 2018-0233R1 describes procedures for repetitive inspections of the open tack holes and rivet holes of the fuselage frames below the cargo floor support fittings for cracking. This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section, and it is publicly available through the EASA website.

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

This proposed AD would require accomplishing the actions specified in EASA AD 2018-0233R1 described previously, as incorporated by reference, except for any differences identified as exceptions in the regulatory text of this AD.

In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. As a result, EASA AD 2018-0233R1 will be incorporated by reference in the FAA final rule. This proposed AD would, therefore, require compliance with the provisions specified in EASA AD 2018-0233R1, through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Service information specified in EASA AD 2018-0233R1 that is required for compliance with EASA AD 2018-0233R1 will be available on the internet http://www.regulations.gov by searching for and locating Docket No. FAA-2019-0250 after the FAA final rule is published.

We estimate that this proposed AD affects 1,009 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

We have received no definitive data that would enable us to provide cost estimates for the on-condition actions specified in this proposed AD.

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

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

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

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

For the reasons discussed above, I certify this proposed regulation:

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

1. Pursuant to section 215(d)(2) of the Federal Power Act (FPA), 1 the Commission proposes to approve Reliability Standard CIP-012-1 (Cyber Security—Communications between Control Centers). The North American Electric Reliability Corporation (NERC), the Commission-certified Electric Reliability Organization (ERO), submitted the proposed Reliability Standard for Commission approval in response to a Commission directive in Order No. 822. 2 Specifically, pursuant to section 215(d)(5) of the FPA, the Commission directed that NERC develop modifications to require responsible entities to implement controls to protect, at a minimum, communications links and sensitive bulk electric system data communicated between bulk electric system Control Centers “in a manner that is appropriately tailored to address the risks posed to the bulk electric system by the assets being protected ( i.e., high, medium, or low impact).”  3

2. Proposed Reliability Standard CIP-012-1 is intended to augment the currently-effective Critical Infrastructure Protection (CIP) Reliability Standards to mitigate cybersecurity risks associated with communications between bulk electric system Control Centers. 4 Specifically, proposed Reliability Standard CIP-012-1 supports situational awareness and reliable bulk electric system operations by requiring responsible entities to protect the confidentiality and integrity of Real-time Assessment and Real-time monitoring data transmitted between bulk electric system Control Centers. 5 Accordingly, the Commission proposes to approve proposed Reliability Standard CIP-012-1 based on a determination that the standard is largely responsive to the Commission's directive in Order No. 822 and improves the cybersecurity posture of applicable entities.

3. However, we are concerned that there still may be certain cyber security risks associated with the protection of communications links and sensitive bulk electric system data communicated between bulk electric system Control Centers that are not adequately addressed in NERC's proposal. First, proposed Reliability Standard CIP-012-1 does not require protections regarding the availability of communication links and data communicated between bulk electric system Control Centers as directed in Order No. 822. 6 As discussed below, at this time, we are not persuaded by NERC's explanation that certain currently-effective CIP Reliability Standards address the issue of availability. Second, proposed Reliability Standard CIP-012-1 does not adequately identify the types of data covered by its requirements, due to, among other things, the fact that the term “Real-time monitoring” is not defined in the proposed Reliability Standard or the NERC Glossary. Clarification of the types of covered data is warranted.

4. To address these issues, pursuant to section 215(d)(5) of the FPA, the Commission proposes to direct that NERC develop modifications to the CIP Reliability Standards to: (1) Require protections regarding the availability of communication links and data communicated between bulk electric system Control Centers; and (2) clearly identify the types of data that must be protected.

5. Section 215 of the FPA requires a Commission-certified ERO to develop mandatory and enforceable Reliability Standards, subject to Commission review and approval. Reliability Standards may be enforced by the ERO, subject to Commission oversight, or by the Commission independently. 7 Pursuant to section 215 of the FPA, the Commission established a process to select and certify an ERO, 8 and subsequently certified NERC. 9

6. In Order No. 822, the Commission approved seven modified CIP Reliability Standards and directed NERC to develop additional modifications to the CIP Reliability Standards. 10 Specifically, the Commission directed NERC to, among other things, develop modifications to the CIP Reliability Standards to require responsible entities to implement controls to protect, at a minimum, communications links and sensitive bulk electric system data communicated between bulk electric system Control Centers “in a manner that is appropriately tailored to address the risks posed to the bulk electric system by the assets being protected ( i.e., high, medium, or low impact).”  11 The Commission observed that NERC, as well as other commenters in that proceeding, “recognize that inter-Control Center communications play a critical role in maintaining bulk electric system reliability by . . . helping to maintain situational awareness and support reliable operations through timely and accurate communication between Control Centers.”  12

7. The Commission explained that Control Centers associated with responsible entities, including reliability coordinators, balancing authorities, and transmission operators, must be capable of receiving and storing a variety of bulk electric system data from their interconnected entities in order to adequately perform their reliability functions. The Commission, therefore, determined that “additional measures to protect both the integrity and availability of sensitive bulk electric system data are warranted.”  13 The Commission also recognized that the data managed by responsible entities has different attributes that may require different information protection controls, and the Commission stated that NERC should consider the different attributes of bulk electric system data as it assesses appropriate information protection controls. The Commission concluded that NERC “should have flexibility in the manner in which it addresses the Commission's directive.”  14

8. In Order No. 822, the Commission found to be reasonable the following principles outlined in NERC's comments in that Commission proceeding regarding protections for communication links and sensitive bulk electric system data communicated between bulk electric system Control Centers:

9. On September 18, 2018, NERC submitted for Commission approval proposed Reliability Standard CIP-012-1 and the associated violation risk factors and violation severity levels, implementation plan, and effective date. 17 NERC states that the purpose of the proposed Reliability Standard is to help maintain situational awareness and reliable bulk electric system operations by protecting the confidentiality and integrity of Real-time Assessment and Real-time monitoring data transmitted between Control Centers.

I. Background

FDA is announcing the availability of a draft guidance for industry and FDA staff entitled “Initiation of Voluntary Recalls Under 21 CFR part 7, subpart C.” The draft guidance, if finalized, would establish guidance for industry and FDA staff regarding timely initiation of voluntary recalls of FDA-regulated products under 21 CFR part 7, subpart C. The draft guidance is part of a larger effort FDA is undertaking to give additional guidance to industry and FDA staff regarding the execution and oversight of voluntary recalls under part 7, subpart C.

This draft guidance is being issued consistent with FDA's good guidance practices regulation (21 CFR 10.115). The draft guidance, if finalized, would represent the current thinking of FDA on “Initiation of Voluntary Recalls Under 21 CFR part 7, subpart C.” It does not establish any rights for any person and is not binding on FDA or the public. You can use an alternative approach if it satisfies the requirements of the applicable statutes and regulations. This guidance is not subject to Executive Order 12866.

This draft guidance refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The collections of information in 21 CFR 7.45(c), 7.46(a), and 7.59 have been approved under OMB control number 0910-0249.

Persons with access to the internet may obtain the guidance at either https://www.fda.gov/FoodGuidances or https://www.regulations.gov.

I. Background

In the Federal Register of March 16, 2015 (80 FR 13508), we announced the filing of a food additive petition (FAP 4B4808) (“petition”) submitted by the Natural Resources Defense Council, 1152 15th St. NW, Suite 300, Washington, DC 20005; the Center for Food Safety, 303 Sacramento St., Second Floor, San Francisco, CA 94111; Clean Water Action, 1444 I St. NW, Suite 400, Washington, DC 20005; the Center for Science in the Public Interest, 1220 L St. NW, Suite 300, Washington, DC 20005; Children's Environmental Health Network, 110 Maryland Ave. NE, Suite 402, Washington, DC 20002; the Breast Cancer Fund (now known as Breast Cancer Prevention Partners), 1388 Sutter St., Suite 400, San Francisco, CA 94109-5400; the Center for Environmental Health, 2201 Broadway, Suite 302, Oakland, CA 94612; Environmental Working Group, 1436 U St. NW, Suite 100, Washington, DC 20009; and Improving Kids' Environment, 1915 West 18th St., Indianapolis, IN 46202 (collectively, “petitioners”). The petition asked FDA to take three separate regulatory actions: (1) Revoke our 2005 approval of Threshold of Regulation (TOR) exemption No. 2005-006 allowing as much as 1.2 percent sodium perchlorate monohydrate in dry food packaging; (2) issue a new regulation under part 189 (21 CFR part 189) prohibiting the use of perchlorate as a conductivity enhancer in the manufacture of antistatic agents to be used in food contact articles; and (3) remove potassium perchlorate as an allowed additive in sealing gaskets for food containers in existing § 177.1210 (21 CFR 177.1210).

In the Federal Register of June 30, 2016 (81 FR 42585), we announced that we filed a food additive petition (FAP 6B4816) (“abandonment petition”) submitted on behalf of Society of the Plastics Industry, Inc. (SPI) by Keller and Heckman LLP, 1001 G Street NW, Suite 500 West, Washington, DC 20001. The abandonment petition proposed to amend § 177.1210 to no longer provide for the use of potassium perchlorate as an additive in closure sealing gaskets for food containers because the use has been intentionally and permanently abandoned.

In response to the abandonment petition, we issued a final rule in the Federal Register on May 4, 2017 (82 FR 20829), to no longer provide for the use of potassium perchlorate as an additive in closure-sealing gaskets for food containers because this use has been abandoned. The final rule removed the entry for “Potassium perchlorate” from § 177.1210(b)(5), table 1.

Additionally, in the Federal Register of May 4, 2017 (82 FR 20847), we announced that we were denying the petition (“2017 denial”). The 2017 denial advised that objections and requests for a hearing were due by June 4, 2017. The 2017 denial explained that the requests to revoke TOR exemption No. 2005-006 and issue a regulation under part 189 prohibiting the use of perchlorate in the manufacture of antistatic agents to be used in food-contact articles are not directed at regulations issued under the food additive petition process and are not subject to the statutory processes for food additive petitions (82 FR 20847 at 20858). Because the requests to revoke TOR exemption No. 2005-006 and issue a regulation under part 189 are not within the scope of a food additive petition, the provision for objections and a hearing under section 409(f) of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 348(f)) does not apply to these two requests (Id.). The 2017 denial also explained that the petitioners' request to remove potassium perchlorate as an allowed additive in closure-sealing gaskets for food containers in § 177.1210 was moot when we amended § 177.1210 to no longer authorize this use of potassium perchlorate because it had been abandoned (see 82 FR 20847 at 20849).

Section 409(f) of the FD&C Act provides that, within 30 days after publication of an order relating to a food additive regulation, any person adversely affected by such order may file objections, specifying with particularity the provisions of the order deemed objectionable, stating reasonable grounds therefor, and requesting a public hearing upon such objections. FDA may deny a hearing request if the objections to the regulation do not raise genuine and substantial issues of fact that can be resolved at a hearing ( Community Nutrition Inst. v. Young, 773 F.2d 1356, 1364 (D.C. Cir. 1985)).

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

Within the 30-day objection period following publication of the 2017 denial, we received one submission raising objections. The submission, dated June 4, 2017, from most of the petitioners and the Environmental Defense Fund, raised specific objections to the 2017 denial and requested a hearing on the issues raised by each objection. However, as explained in this document, the provision for objections and a hearing under section 409(f) of the FD&C Act does not apply to all objections in the submission. As further explained in this document, for the objections to which this provision does not apply, we do not address the submission's arguments and we do not consider the related requests for a hearing. For purposes of this document, our use of the term “objections” does not mean that the provision for objections and hearing under section 409(f) of the FD&C Act necessarily applies.

Specific criteria for deciding whether to grant or deny a request for a hearing are set out in § 12.24(b). Under that regulation, a hearing will be granted if the material submitted by the requester shows, among other things, the following: (1) There is a genuine and substantial factual issue for resolution at a hearing; a hearing will not be granted on issues of policy or law; (2) the factual issue can be resolved by available and specifically identified reliable evidence; a hearing will not be granted on the basis of mere allegations or denials or general descriptions of positions and contentions; (3) the data and information submitted, if established at a hearing, would be adequate to justify resolution of the factual issue in the way sought by the requester; a hearing will be denied if the data and information submitted are insufficient to justify the factual determination urged, even if accurate; (4) resolution of the factual issue in the way sought by the person is adequate to justify the action requested; a hearing will not be granted on factual issues that are not determinative with respect to the action requested ( e.g., if the action would be the same even if the factual issue were resolved in the way sought); (5) the action requested is not inconsistent with any provision in the FD&C Act or any FDA regulation; and (6) the requirements in other applicable regulations, e.g., 21 CFR 10.20 and §§ 12.21 and 12.22, and in the document issuing the final regulation or the notice of opportunity for hearing are met.

A party seeking a hearing is required to meet a “threshold burden of tendering evidence suggesting the need for a hearing” ( Costle v. Pac. Legal Found., 445 U.S. 198, 214 (1980), citing Weinberger v. Hynson, Westcott & Dunning, Inc., 412 U.S. 609, 620-21 (1973)). An allegation that a hearing is necessary to “`sharpen the issues' and `fully develop the facts' does not meet this test” ( Georgia-Pacific Corp. v. U.S. EPA, 671 F.2d 1235, 1241 (9th Cir. 1982)). If a hearing request fails to identify any factual evidence that would be the subject of a hearing, there is no point in holding one. In judicial proceedings, a court is authorized to issue summary judgment without an evidentiary hearing whenever it finds that there are no genuine issues of material fact in dispute and a party is entitled to judgment as a matter of law (see Fed. R. Civ. P. 56). The same principle applies in administrative proceedings (see § 12.24).

A hearing request must not only contain evidence, but that evidence should raise a material issue of fact “concerning which a meaningful hearing might be held” ( Pineapple Growers Ass'n v. FDA, 673 F.2d 1083, 1085 (9th Cir. 1982)). Where the issues raised in the objection are, even if true, legally insufficient to alter the decision, an agency need not grant a hearing (see Dyestuffs and Chem., Inc. v. Flemming, 271 F.2d 281, 286 (8th Cir. 1959)). A hearing is justified only if the objections are made in good faith and if they “draw in question in a material way the underpinnings of the regulation at issue” ( Pactra Indus. v. CPSC, 555 F.2d 677, 684 (9th Cir. 1977)). A hearing need not be held to resolve questions of law or policy (see Citizens for Allegan Cnty., Inc. v. FPC, 414 F.2d 1125, 1128 (D.C. Cir. 1969); Sun Oil Co. v. FPC, 256 F.2d 233, 240 (5th Cir. 1958)).

Even if the objections raise material issues of fact, FDA need not grant a hearing if those same issues were adequately raised and considered in an earlier proceeding. Once an issue has been so raised and considered, a party is estopped from raising that same issue in a later proceeding without new evidence. The various judicial doctrines dealing with finality, such as collateral estoppel, can be validly applied to the administrative process (see Pac. Seafarers, Inc. v. Pac. Far East Line, Inc., 404 F.2d 804, 809 (D.C. Cir. 1968)). In explaining why these principles ought to apply to an agency proceeding, the U.S. Court of Appeals for the District of Columbia Circuit wrote: “The underlying concept is as simple as this: justice requires that a party have a fair chance to present his position. But overall interests of administration do not require or generally contemplate that he will be given more than a fair opportunity” ( Retail Clerks Union, Local 1401 v. NLRB, 463 F.2d 316, 322 (D.C. Cir. 1972); see also Costle v. Pac. Legal Found., 445 U.S. at 215-17).

As explained in the 2017 denial (82 FR 20847 at 20849), a food additive petition must either propose the issuance of a regulation prescribing the conditions under which a food additive may be safely used or propose the amendment or repeal of an existing food additive regulation (see section 409(b)(1) and (i) of the FD&C Act). The petitioners' requests to revoke TOR exemption No. 2005-006 and issue a regulation under part 189 prohibiting the use of perchlorate in the manufacture of antistatic agents to be used in food-contact articles do not propose the issuance of a new food additive regulation or the amendment or repeal of an existing food additive regulation (82 FR 20847 at 20849). As the 2017denial states, the petitioners' TOR exemption revocation request and part 189 regulation request are not within the scope of a food additive petition and FDA's denial of these requests is not an order under section 409(c)(1)(B) of the FD&C Act (82 FR 20847 at 20858). Therefore, the provision for objections and public hearing under section 409(f) of the FD&C Act does not apply to the requests to revoke TOR exemption No. 2005-006 and issue a regulation under part 189.

The submission's first two “objections” are not subject to the objections and hearing procedure in section 409(f) of the FD&C Act. Therefore, we will not address the arguments detailed in those objections and we do not consider the related requests for a hearing.

The submission's first “objection” asserts that we improperly dismissed its request to revoke TOR exemption No. 2005-006 because, it claims, we relied on a flawed interpretation of the definition of a food additive in the TOR regulation. The submission additionally asserts that the use of sodium perchlorate monohydrate allowed under TOR exemption No. 2005-006 is not eligible for a TOR exemption and that we made “myriad errors” in determining that it was eligible for a TOR exemption. Because TOR exemption No. 2005-006 is not subject to the objections and hearing procedure in section 409(f) of the FD&C Act, we will not address the arguments detailed in “objection” 1.

To the extent that any of the arguments made in “objection” 1 may be construed as also pertaining to the petitioners' request to amend § 177.1210 to remove potassium perchlorate as an allowed additive in closure-sealing gaskets for food containers, a request that is subject to section 409(f) of the FD&C Act, this request became moot when we amended § 177.1210 to no longer authorize this use of potassium perchlorate because it had been abandoned (see 82 FR 20847 at 20849). A hearing will not be granted on factual issues that are not determinative with respect to the action requested (see § 12.24(b)(4)). Therefore, to the extent that “objection” 1 pertains to the petitioners' request to amend § 177.1210, we are overruling the submission's objection and denying the submission's request for a hearing on this point.

The submission's second “objection” challenges as “contrary to law” FDA's determination that the petition's requests to revoke TOR exemption No. 2005-006 and issue a regulation under part 189 are not within the scope of a food additive petition. Section 409(f)(1) of the FD&C Act permits objections and requests for a hearing only to orders made under section 409(c) and (d) of the FD&C Act. Because FDA's denial of the petitioners' TOR revocation request and part 189 request was not an order under section 409(c)(1)(B) of the FD&C Act (see 82 FR 20847 at 20850), the submission's second “objection” is not an objection to an order under section 409(c)(1)(B) of the FD&C Act and is not subject to the objections and hearing procedure in section 409(f) of the FD&C Act. Therefore, we will not address the arguments presented in “objection” 2.

Objection 3 challenges FDA's determination that the petitioners' request to amend § 177.1210 was moot when we issued a final rule in response to the abandonment petition that removed potassium perchlorate as an allowed additive in closure-sealing gaskets for food containers. Specifically, the submission alleges that FDA's mootness determination was “poor public policy” because it discourages industry to file abandonment petitions except in the face of a petition that may find the use no longer safe, and unfair to the petitioners, whose petition was filed before the abandonment petition.

In presenting objection 3, the submission fails to identify any specific factual dispute that could be resolved by a hearing. Accordingly, we are denying the submission's hearing request on objection 3 because a hearing will not be granted on issues of policy (§ 12.24(b)(1)). We also note that, in granting the abandonment petition and removing potassium perchlorate as an allowed additive in closure-sealing gaskets for food containers, we took the third action requested in the petition. As stated in response to a similar comment from the petitioners to the filing notice for the abandonment petition, FDA has numerous responsibilities related to food additives, and we receive and respond to hundreds of submissions annually under the various petition and notification programs that we administer. Accordingly, if a use of a food additive is no longer authorized in response to an abandonment petition, we may determine that it is neither necessary nor an efficient use of our limited resources to address safety arguments related to an abandoned use (see 82 FR 20829 at 20831).

After evaluating the objections from the submitters, we have concluded that “objections” 1 and 2 are not within the scope of the objections and hearing provision under section 409(f) of the FD&C Act. Therefore, we do not address the arguments related to these “objections” and we do not address the related requests for a hearing. To the extent that “objection” 1 pertains to the petitioners' request to amend § 177.1210, this request became moot when we amended § 177.1210 to no longer authorize this use of potassium perchlorate, and therefore we are overruling the submission's objection and denying the request for a hearing on this point. Objection 3 does not provide any basis to reconsider our decision to deny the petition. We also have determined that objection 3 does not raise any genuine and substantial issue of fact that would justify an evidentiary hearing. Therefore, we are overruling this objection and are denying the related request for a hearing.

The Federal Food, Drug, and Cosmetic Act (FD&C Act), as amended, establishes a comprehensive system for the regulation of medical devices intended for human use. Section 513 of the FD&C Act (21 U.S.C. 360c) established three categories (classes) of devices, reflecting the regulatory controls needed to provide reasonable assurance of their safety and effectiveness. The three categories of devices are class I (general controls), class II (special controls), and class III (premarket approval).

Section 513(a)(1) of the FD&C Act defines the three classes of devices. Class I devices are those devices for which the general controls of the FD&C Act (controls authorized by or under section 501, 502, 510, 516, 518, 519, or 520 (21 U.S.C. 351, 352, 360, 360f, 360h, 360i, or 360j) or any combination of such sections) are sufficient to provide reasonable assurance of safety and effectiveness; or those devices for which insufficient information exists to determine that general controls are sufficient to provide reasonable assurance of safety and effectiveness or to establish special controls to provide such assurance, but because the devices are not purported or represented to be for a use in supporting or sustaining human life or for a use which is of substantial importance in preventing impairment of human health, and do not present a potential unreasonable risk of illness or injury, are to be regulated by general controls (section 513(a)(1)(A) of the FD&C Act). Class II devices are those devices for which general controls by themselves are insufficient to provide reasonable assurance of safety and effectiveness, and for which there is sufficient information to establish special controls to provide such assurance, including the promulgation of performance standards, postmarket surveillance, patient registries, development and dissemination of guidelines, recommendations, and other appropriate actions the Agency deems necessary to provide such assurance (section 513(a)(1)(B) of the FD&C Act). Class III devices are those devices for which insufficient information exists to determine that general controls and special controls would provide a reasonable assurance of safety and effectiveness, and which are purported or represented to be for a use in supporting or sustaining human life or for a use which is of substantial importance in preventing impairment of human health, or which present a potential unreasonable risk of illness or injury (section 513(a)(1)(C) of the FD&C Act).

Under section 513(d)(1) of the FD&C Act, devices that were in commercial distribution before the enactment of the 1976 amendments (Medical Device Amendments of 1976, Pub. L. 94-295), May 28, 1976 (generally referred to as “preamendments devices”), are classified after FDA has: (1) Received a recommendation from a device classification panel (an FDA advisory committee); (2) published the panel's recommendation for comment, along with a proposed regulation classifying the device; and (3) published a final regulation classifying the device. FDA has classified most preamendments devices under these procedures.

Devices that were not in commercial distribution before May 28, 1976 (generally referred to as “postamendments devices”), are automatically classified by section 513(f)(1) of the FD&C Act into class III without any FDA rulemaking process. Those devices remain in class III and require premarket approval, unless, and until: (1) FDA reclassifies the device into class I or II or (2) FDA issues an order finding the device to be substantially equivalent, in accordance with section 513(i) of the FD&C Act, to a predicate device that does not require premarket approval. The Agency determines whether new devices are substantially equivalent to previously marketed devices by means of premarket notification procedures in section 510(k) of the FD&C Act and part 807, subpart E of the regulations (21 CFR part 807).

On July 9, 2012, Congress enacted the Food and Drug Administration Safety and Innovation Act (FDASIA) (Pub. L. 112-144). Section 608(a) of FDASIA amended section 513(e) of the FD&C Act, changing the process for reclassifying a device from rulemaking to an administrative order. Section 513(e)(1)(A)(i) of the FD&C Act sets forth the process for issuing a final order. Specifically, prior to the issuance of an administrative order reclassifying a device, the following must occur: (1) Publication of a proposed reclassification order in the Federal Register , (2) a meeting of a device classification panel described in section 513(b) of the FD&C Act, and (3) consideration of comments to a public docket. The proposed reclassification order must set forth the proposed reclassification and a substantive summary of the valid scientific evidence concerning the proposed reclassification, including the public health benefits of the use of the device, and the nature and incidence (if known) of the risks of the device.

Section 513(e)(1)(A)(i) provides that FDA may, by administrative order, reclassify a device based on “new information.” FDA can initiate a reclassification under section 513(e) or an interested person may petition FDA. The term “new information,” as used in section 513(e) of the FD&C Act, includes information developed as a result of a reevaluation of the data before the Agency when the device was originally classified, as well as information not presented, not available, or not developed at that time. (See, e.g., Holland-Rantos v. United States Dep't of Health, Educ. & Welfare, 587 F.2d 1173, 1174 n.1 (D.C. Cir. 1978); Upjohn Co. v. Finch, 422 F.2d 944 (6th Cir. 1970); Bell v. Goddard, 366 F.2d 177 (7th Cir. 1966).)

Reevaluation of the data previously before the Agency is an appropriate basis for subsequent regulatory action where the reevaluation is made in light of newly available regulatory authority (see Bell v. Goddard, 366 F.2d 177, 181 (7th Cir. 1966)) or in light of changes in “medical science” (see Upjohn Co. v. Finch, 422 F.2d 944, 951 (6th Cir. 1970)). Whether data before the Agency are old or new, the “new information” to support reclassification under section 513(e) of the FD&C Act must be “valid scientific evidence”, as defined in section 513(a)(3) of the FD&C Act and 21 CFR 860.7(c)(2). (See, e.g., General Medical Co. v. FDA, 770 F.2d 214 (D.C. Cir. 1985); Contact Lens Mfrs. Assoc. v. FDA, 766 F.2d 592 (D.C. Cir.1985), cert. denied, 474 U.S. 1062 (1986)).

FDA relies upon “valid scientific evidence” in the classification process to determine the level of regulation for devices. To be considered in the reclassification process, the “valid scientific evidence” upon which the Agency relies must be publicly available. Publicly available information excludes trade secret and/or confidential commercial information, e.g., the contents of a pending premarket approval application (see section 520(c) of the FD&C Act).

Section 510(m) of the FD&C Act provides that a class II device may be exempted from the premarket notification requirements under section 510(k) of the FD&C Act if the Agency determines that premarket notification is not necessary to assure the safety and effectiveness of the device. FDA has determined that premarket notification is necessary to reasonably assure the safety and effectiveness of surgical staplers for internal use. Therefore, the Agency does not intend to exempt this proposed class II device from premarket notification (510(k)) submission as provided under section 510(m) of the FD&C Act.

Surgical staplers were classified in part 878 (21 CFR part 878) in a final rule published in the Federal Register on June 24, 1988 (53 FR 23856), that classified 51 general and plastic surgery devices. This 1988 rule classified staplers into class I (general controls). These devices were grouped with other devices under “Manual surgical instrument for general use” in § 878.4800 (21 CFR 878.4800). At the time, surgical staplers had been in common use in medical practice for many years, and FDA believed that general controls were sufficient to provide reasonable assurance of the safety and effectiveness of those devices. This rule was amended on April 5, 1989 (54 FR 13826), to clarify that manual surgical instruments for general use, § 878.4800, made of the same materials as used in the preamendments devices were exempt from premarket notification (510(k)) review.

On December 7, 1994, FDA further amended the classification when it published a final rule in the Federal Register (59 FR 63005) that exempted 148 class I devices from premarket notification, with limitations. Surgical staplers were one of those exempted devices. FDA determined that manufacturers' submissions of premarket notifications were unnecessary for the protection of the public health and that FDA's review of such submissions would not advance its public health mission.

On March 8, 2019, FDA issued a letter to healthcare providers to inform them of the risks associated with misuse of surgical staplers and to provide recommendations for reducing the risk of adverse events associated with these devices (Ref. 1). This letter recommends that users carefully follow the stapler manufacturer's instructions for use and provides additional recommendations for selecting the appropriate staple sizes and tissue types appropriate for use with the stapler.

Elsewhere in this issue of the Federal Register , FDA is publishing a notice of availability for a draft guidance entitled “Surgical Staplers and Staples for Internal Use—Labeling Recommendations; Draft Guidance for Industry and Food and Drug Administration Staff.” As identified in this draft guidance, FDA has become aware of a large number of adverse events associated with surgical staplers and staples for internal use. This draft guidance communicates FDA's recommendations for contraindications, warnings, directions for use, and technical characteristics and performance parameters to be included in the product labeling to help promote the safe and effective use of surgical staplers and staples for internal use. This draft guidance also provides recommendations for content to be included in the package labels, so that users may easily look at the label and obtain critical information necessary for proper device selection.

Surgical staples are currently regulated as class II devices under 21 CFR 878.4750 (Implantable staple) and are subject to premarket notification (510(k)) review. FDA does not intend to change the classification of surgical staples at this time and they are outside the scope of this reclassification action.

A surgical stapler is a specialized prescription device used to deliver compatible staples during surgery. Prescription devices are exempt from the requirement for adequate directions for use for the layperson under section 502(f)(1) of the FD&C Act and 21 CFR 801.5, as long as the conditions of 21 CFR 801.109 are met.

To delineate between surgical staplers and their intended uses, FDA has identified two subsets of surgical staplers: (1) Surgical staplers for internal use and (2) surgical staplers for external use.

A surgical stapler for internal use is a specialized prescription device used to deliver compatible staples to internal tissues during surgery for removing part of an organ ( i.e., resection), cutting through organs and tissues ( i.e., transection), and creating connections between structures ( i.e., anastomoses). It may be used in open, minimally invasive, and endoscopic surgery. Surgical staplers for internal use may be indicated for use in a wide range of surgical applications, including, but not limited to, gastrointestinal, gynecologic, and thoracic surgery.

Many types of surgical staplers for internal use exist, including, but not limited to, linear non-cutting staplers, transverse approximating staplers, transverse anastomoses staplers, gastrointestinal anastomoses linear cutting (articulating and non-articulating) staplers, and circular ( i.e., end-to-end anastomoses) staplers. Surgical staplers for internal use include both manual and powered staplers.

A surgical stapler for external use is a specialized prescription device used to deliver compatible staples to skin during surgery. FDA is proposing to reclassify internal staplers only; external staplers will remain class I, exempt from premarket review.

FDA is proposing to reclassify surgical staplers for internal use from class I (general controls), exempt from premarket review, to class II (special controls), subject to premarket review. FDA believes that general controls by themselves are insufficient to provide reasonable assurance of safety and effectiveness for these devices, and that there is sufficient information to establish special controls to provide such assurance. In accordance with section 513(e)(1)(A)(i) of the FD&C Act, FDA, on its own initiative, is proposing to reclassify these devices based on new information. The process for issuing a final order for reclassification of a device from class I to class II pursuant to section 513(e) of the FD&C Act is provided in 21 CFR 860.130 of the regulations. Specifically, prior to the issuance of a final order reclassifying a device, the following must occur: (1) Publication of a proposed reclassification order in the Federal Register ; (2) a meeting of a device classification panel described in section 513(b) of the FD&C Act; and (3) consideration of comments to a public docket. The Commissioner of Food and Drugs is required to consult with a classification panel and may secure a recommendation with respect to the reclassification of the device. FDA will consult with the panel regarding the reclassification of the device in accordance with the procedures set forth in 21 CFR 860.125 and intends to secure the panel's recommendation. If FDA issues a final order, the Agency will publish the panel's recommendation in the Federal Register when the Agency publishes the final order.

FDA is also proposing to revise § 878.4800 (Manual surgical instrument for general use) to remove staplers and to create a separate classification regulation in part 878 for surgical staplers that distinguishes between surgical staplers for internal use and external use.

As required by section 513(e)(1)(A)(i) of the FD&C Act, FDA is providing a substantive summary of the valid scientific evidence concerning the proposed reclassification including the public health benefit of the use of surgical staplers for internal use, and the nature, and if known, the incidence of the risk of the devices, as discussed in section VI of this proposed order.

Surgical staplers for internal use provide benefit to the public health by facilitating surgical procedures and allowing for shorter surgical procedure times compared to manual suturing.

FDA has evaluated the risks to health associated with the use of surgical staplers for internal use and has identified the following risks for this device:

• Complications associated with device failure/malfunction. Device failures or malfunctions may result in prolonged surgical procedures, unplanned surgical interventions, and other complications such as bleeding, sepsis, fistula formation, tearing of internal tissues and organs, increased risk of cancer recurrence, and death.

• Complications associated with use error/improper device selection and use. Use error may result from a device design that is difficult to operate and/or labeling that is difficult to comprehend. For example, user difficulty in firing the stapler may result in staples not being fully deployed, and misfiring may result in staples being inadvertently applied to the wrong tissue. Inadequate instructions for use may result in selection of incorrectly sized staples for the target tissue. When staples are applied to the wrong tissue or when incorrectly sized staples are applied, staples are unable to properly approximate the underlying tissue, resulting in tissue damage, anastomotic leakage, and bleeding. This in turn, may lead to more severe complications, such as abscess, sepsis, peritonitis, hemorrhage, or death.

• Adverse tissue reaction. If the patient-contacting materials of the device are not biocompatible, local tissue irritation and sensitization, cytotoxicity, or systemic toxicity may occur when the device contacts sterile tissue.

• Infection. If the device is not adequately reprocessed or sterilized, the device may introduce pathogenic organisms into sterile tissue and may cause an infection in a patient.

As discussed further in this document, these findings regarding the public health benefits and risks to health associated with surgical staplers for internal use are based on publicly available information, including Medical Device Reporting (MDR) analyses, recalls, and the published literature.

Surgical staplers for internal use have been shown to provide several benefits over manual suturing, including reduction in surgical time, reduced tissue trauma/manipulation, reduction in surgical contamination by intestinal contents, and simple closure of vessels and/or tissues (Ref. 2); however, they have also been associated with numerous adverse events.

As discussed below, based on a review of the MDR database, recalls database, and the published scientific literature, there have been many malfunctions and other problems associated with surgical staplers for internal use, and some of these malfunctions or other problems have been associated with serious complications, including death.

Because surgical staplers are used together with staples as a system, a search of the MDR database was conducted for both surgical staplers for internal use under product code GAG (Stapler, Surgical) and surgical staples for internal use under product code GDW (Staple, Implantable) to obtain a comprehensive picture of the safety profile for surgical staplers for internal use. From January 1, 2011, to March 31, 2018, FDA received over 41,000 individual MDRs for surgical staplers and staples for internal use, including 366 deaths, over 9,000 serious injuries, and over 32,000 malfunctions. Some of the most commonly reported problems in these adverse event reports include an opening of the staple line or malformation of staples, misfiring, difficulty in firing, failure of the stapler to fire the staple, and misapplied staples ( e.g., user applying staples to the wrong tissue or applying staples of the wrong size to tissue). Although the majority of the adverse events were reported under product code GDW, FDA believes that many of the problems identified in these reports can be primarily attributed to surgical staplers for internal use, since proper staple formation is largely contingent on proper function and use of the stapler.

Of the 366 deaths, the cause of death was associated with an opening of the staple line or malformation of staples in 159 reports, bleeding during surgery in 53 reports, sepsis in 47 reports, peritonitis in 5 reports, necrosis in 5 reports, and air embolism in 4 reports. Additionally, of the 366 deaths, 195 reports included misfiring, difficulty in firing, and/or misapplied staples. Common reasons cited for these problems included mechanical issues with the device ( e.g., mechanical jams), broken device components, and the device operating differently than the user expected ( e.g., different force needed to deploy the device than expected). In 11 of the 366 deaths, use error was determined to be a contributing factor to the death. Many of the same complications that resulted in death ( e.g., bleeding during surgery, peritonitis, and sepsis) were also reported in the serious injury reports; additional complications commonly reported in the serious injury reports included tissue damage, organ perforation or dehiscence, fistula formation, infection, hernia, and pain.

The majority of staplers reported in these adverse events were linear staplers, including articulating and curved tip linear staplers, followed by circular staplers. Of the 366 deaths, 262 deaths were reported for linear staplers while 63 were reported for circular staplers; of the remaining 41 deaths, a type of stapler was not identified in the MDR. The staplers involved in these adverse events spanned a variety of different manufacturers; there were no distinct differences between manufacturers and the reported causes of death.

Of the 41,000 individual MDRs, over 32,000 MDRs were received for malfunctions, under either the product code GAG (Stapler, Surgical) or product code GDW (Staple, Implantable). The most common device-related malfunctions included failure of the stapler to fire the staple, failure to form staples, difficulty of opening/closing the stapler, stapler misfiring, and stapler breakage. The most commonly reported patient consequences from malfunctions with surgical staplers for internal use included a delay in surgical procedure, hemorrhage, and tissue damage. It should be noted that some patient consequences may not be limited to a single reporting category of death, serious injury, or malfunction. For example, a malfunction could result in sepsis, which could lead to other serious injury and later death.

The types and incidence of malfunctions and clinical consequences to patients seen in the adverse event reports are also corroborated by the published literature. In a systematic review of 30 clinical studies (Refs. 3 to 32), including randomized controlled trials and observational studies, the occurrence of stapler malfunctions in these studies ranged from incidents in 0 to 19.2 percent (median = 1.8 percent) of patients and 0.1 to 5.2 percent of deployments.

Consistent with the malfunctions seen in the adverse event reports received by FDA, the most common malfunctions reported in these clinical studies were related to opening of the staple line or malformation of staples. In these studies, malformed staples and/or staple lines comprised 31.8 percent of the malfunctions, while missing staples and/or staple lines not forming comprised 19.5 percent of the malfunctions. Problems with stapler firing and/or stapler function were also commonly reported. Device sticking, locking, and/or jamming comprised 15.9 percent of the malfunctions, while stapler misfiring comprised 10.3 percent of the malfunctions. Inability of the stapler to cut through tissue comprised 3.1 percent of the malfunctions, while stapler breakage comprised 2.6 percent of all malfunctions. Finally, problems with the stapler cartridge not loading properly comprised 2.1 percent of the malfunctions. Although the majority of studies in the systematic literature review did not report on the incidence of stapler problems associated with use error, a prospective, single-arm study evaluating use of a surgical stapler in gastrointestinal stapling applications found that 3.5 percent of stapler deployments in the study (15 of 423 deployments) were attributed to use error (Ref. 10). Additionally, as discussed further below, common causes for surgical complications reported in the literature include use error.

While 75.8 percent of the stapler malfunctions in these studies did not result in any major consequences to the patient, 10.5 percent of the malfunctions resulted in the need to convert to open surgery, while 9.7 percent of the malfunctions resulted in hemorrhage; 4.0 percent of the malfunctions resulted in both hemorrhage and the need to convert to open surgery. In addition, multiple studies suggest that surgical stapler malfunctions are associated with a higher risk of complications. In a retrospective study of 349 colorectal resections using a circular stapler, surgeries with surgical stapler malfunctions were found to have higher incidences of unplanned proximal diversions, ileus, gastrointestinal bleeding, and blood transfusions (Ref. 27). In a retrospective study of 1,174 patients undergoing liver transections using a stapler device, surgeries with surgical stapler malfunctions were found to have a higher likelihood of transfusion, higher median blood loss, and higher odds of morbidity and mortality compared to surgeries without stapler malfunctions (Ref. 28). Anastomotic leaks from surgical stapler malfunctions have also been associated with an increased risk of cancer recurrence (Refs. 33 to 35). Altogether, the adverse event reports and published literature indicate that surgical stapler malfunctions are not uncommon and may produce adverse outcomes such as conversion to open surgery, bleeding, morbidity, and death.

Common causes for surgical complications reported in the literature also include the use of incorrectly sized staples for the tissue, incorrect use of the device by the user, and improper use of the device for the condition of the patient's tissues, which may result in reoperation or prolonged hospitalization (Ref. 36). For example, early postoperative anastomotic leak due to such device issues may result in a septic patient with peritonitis, requiring immediate surgery with diversion of stool into a stoma. Minor or delayed anastomotic leaks due to such device issues may result in an intra-abdominal abscess requiring surgical or other invasive drainage procedures, temporary diversion of stool, and prolonged intravenous nutrition. These complications commonly result in prolonged hospital stays (Ref. 37). Altogether, the adverse event reports and published literature indicate that surgical stapler for internal use use error may cause or contribute to surgical complications, e.g., anastomotic leaks, abscess, sepsis, peritonitis, and death.

From November 1, 2002, to December 30, 2018, FDA received a total of 168 recalls for surgical staplers and staples for internal use under product codes GAG and GDW, including one class I recall and 167 class II recalls. The class I recall was for a hemorrhoidal circular stapler that may result in incomplete staple formation due to difficulty in firing. Of the 167 class II recalls, the most common reasons for recall included non-conforming device components or device design-related issues that may result in incomplete staple formation, failure to form a staple line, malformed staples, or difficulty in firing. Several devices were also recalled due to a potential breach in sterility.

FDA acknowledges that the available valid scientific evidence, including the review of the MDR database, recalls database, and the published literature, primarily discuss surgical staplers for internal use, and not surgical staplers for external use. At this time, FDA does not believe that available information suggests that reclassification of surgical staplers for external use is necessary to maintain a reasonable assurance of safety and effectiveness of these devices.

Based on its review of the MDR database, recalls database, and the published literature, FDA has tentatively determined that special controls, in addition to general controls, are necessary to provide a reasonable assurance of safety and effectiveness for surgical staplers for internal use. FDA believes the establishment of special controls is necessary to ensure that the risks to health are adequately mitigated by an assessment of these devices through completion of performance testing, usability and labeling comprehension testing, biocompatibility evaluation, sterility and shelf-life testing, and adequate labeling. In addition, FDA believes that design controls under 21 CFR 820.30 are necessary to ensure that specified design requirements are met and to ensure compatibility of surgical staplers for internal use with staples. Therefore, FDA, on its own initiative, is proposing to reclassify these devices from class I into class II (special controls) subject to premarket review.

Based on the information reviewed by FDA, including the valid scientific evidence regarding the public health benefit and nature and incidence of the risk of the devices discussed in section VI, FDA tentatively concludes that special controls, in addition to general controls, are necessary to provide a reasonable assurance of safety and effectiveness for surgical staplers for internal use. Therefore, FDA proposes to reclassify surgical staplers for internal use from class I into class II (special controls).

FDA believes that the following special controls, together with general controls, are necessary and sufficient to mitigate the risks to health described in section V (complications associated with device failure/malfunction, complications associated with use error/improper device selection and use, adverse tissue reaction, and infection) and provide a reasonable assurance of safety and effectiveness for surgical staplers for internal use.

Both device misuse and device malfunctions are root causes of the adverse events associated with use of surgical staplers for internal use (Ref. 38). Device misuse may be exacerbated by inadequate instructions for use and insufficient warnings or precautions in the device labeling (Ref. 39). To mitigate the risks of tissue damage, anastomotic leakage, and bleeding arising from use error or improper device use, FDA believes that the labeling must include specific instructions for device use, including procedures associated with proper device use and measures for preventing device malfunction, evaluating the appropriateness of the target tissue for stapling, and evaluating the resultant staple line. To further mitigate these risks, the labeling must also include appropriate warnings, contraindications, and limitations needed for safe use of the device. To prevent stapler malfunction ( e.g., from stapler jamming, locking, sticking, or misfiring), information on the staples with which the stapler is compatible must be provided in the labeling, such as models of compatible staples, cartridge colors/staple heights, staple rows per cartridge, staple patterns, and maximum and minimum tissue thicknesses for each staple type. To prevent improper application of staples to target tissue, the recommended tissues ( e.g., tissue thicknesses and tissue types) on which the stapler is intended to be used must be identified in the labeling. Unless data demonstrates the safety of doing so, contraindications must be identified regarding use of the device on tissues for which the risk of stapling outweighs any reasonably foreseeable benefit due to known complications, including the stapling of necrotic or ischemic tissues and tissues outside of the labeled limits of tissue thickness. The labeling must provide appropriate warnings regarding how to avoid known hazards associated with device use, including avoidance of obstructions to the creation of a staple line ( e.g., clips) and the unintended stapling of other anatomic structures; avoidance of clamping and unclamping of delicate tissue structures ( e.g., venous structures and bile ducts) to prevent tissue damage; avoidance of use of the stapler on large blood vessels, such as the aorta; establishing and maintaining proximal control of blood vessels prior to stapling; appropriate measures to take if a stapler malfunction occurs while applying staples across a blood vessel, such as clamping or ligating the vessel before releasing the stapler, while the stapler is still closed on the tissue; and ensuring stapler compatibility with staples, unless information is provided demonstrating that the warnings do not apply to a particular device. Usability testing and a labeling comprehension study must demonstrate that the clinician can correctly select and use the device for its indicated use based on the information in the labeling.

To mitigate the risk of complications associated with device failure or device malfunction, adequate performance testing is needed to ensure that the stapler with compatible staples performs as intended under anticipated conditions of use. FDA believes that adequate performance testing must include an evaluation of staple formation characteristics in the maximum and minimum tissue thicknesses for each staple type; measurement of the worst-case deployment pressures on stapler firing force; and a measurement of staple line strength. Performance testing must also demonstrate confirmation of staple line integrity ( e.g., through the absence of vertically contiguous malformed staples), as well as in vivo confirmation of staple line hemostasis following staple deployment. 1

FDA believes that the inclusion of important technical characteristics and device performance parameters in the labeling will also help mitigate use error and device malfunctions by informing end users on device limitations. Therefore, FDA believes that the labeling must identify key technical characteristics and performance parameters of the surgical stapler and compatible staples needed for safe use of the device. Key technical characteristics include stapler specifications ( e.g., jaw length, shaft length, jaw opening, and angles of articulation), as well as compatible staple specifications ( e.g., open and closed staple heights). Key technical characteristics also include identification of any safety mechanisms of the stapler, such as a color-firing zone and/or lock-out mechanism. Examples of key performance parameters include information on firing the stapler, such as the firing force, pre-fire compression time, and maximum number of consecutive firings, and information relevant to creating a staple line, such as the percentage of properly formed staples, number of incremental firings required to complete a staple line, and maximum number of reloads.

FDA believes that the device must be demonstrated to be biocompatible because the risk of adverse tissue reaction may result from contact of the materials of the device with the body. Additionally, because the risk of infection can arise from a contaminated device, sterility testing must demonstrate the sterility of the device. If any components of the device are reusable, the labeling must include validated methods and instructions for cleaning and sterilization of these reusable components. Validation of cleaning and sterilization instructions must demonstrate that any reusable device components can be safely and effectively reprocessed per the recommended cleaning and sterilization protocol in the labeling.

In addition, loss of package integrity can result in compromised sterility and compromised device performance over time. Therefore, shelf-life testing must demonstrate that the device maintains its performance characteristics and the packaging of the device maintains its integrity for the duration of the proposed shelf-life. Finally, the labeling must also specify an expiration date to inform users of the shelf-life of the device based on the shelf-life testing.

Table 1 shows how FDA believes each risk to health described in section V would be mitigated by the proposed special controls.

If finalized, the reclassification of surgical staplers for internal use into class II would subject these devices to premarket notification under section 510(k) of the FD&C Act and part 807, subpart E, and the identified special controls in this order. FDA believes that the proposed reclassification would provide reasonable assurance of safety and effectiveness of surgical staplers for internal use.

The Agency has determined under 21 CFR 25.34(b) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

FDA tentatively concludes that this proposed order contains no new collections of information. Therefore, clearance by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520) is not required. This proposed order refers to previously approved collections of information found in FDA regulations. These collections of information are subject to review by OMB under the PRA. The collections of information in part 807, subpart E, have been approved under OMB control number 0910-0120; the collections of information in 21 CFR part 814, subparts A through E, have been approved under OMB control number 0910-0231; the collections of information in 21 CFR part 801 have been approved under OMB control number 0910-0485; and the collections of information in 21 CFR part 820 have been approved under OMB control number 0910-0073.

FDA proposes that any final order based on this proposed order become effective on its date of publication in the Federal Register .

• Surgical staplers for internal use that have not been offered for sale prior to the effective date of the final order or have been offered for sale but are required to submit a new 510(k) under 21 CFR 807.81(a)(3): Manufacturers would have to obtain 510(k) clearance before marketing their devices after the effective date of the order. If a manufacturer markets such a device without receiving 510(k) clearance, then FDA would consider taking action against such a manufacturer under its usual enforcement policies.

• Surgical staplers for internal use that have been offered for sale prior to the effective date of the final order and do not already have 510(k) clearance: FDA does not intend to enforce compliance with the 510(k) requirement or special controls until 180 days after the effective date of the final order. After that date, if a manufacturer continues to market such a device but does not have 510(k) clearance or FDA determines that the device is not substantially equivalent or not compliant with special controls, then FDA would consider taking action against such manufacturer under its usual enforcement policies.

For surgical staplers for internal use that have prior 510(k) clearance, FDA would accept a new 510(k) and would issue a new clearance letter, as appropriate, indicating substantial equivalence and special controls compliance. These devices could serve as predicates for new devices. These clearance letters would be made publicly available in FDA's 510(k) database, and compliance with special controls at the time of clearance would also be stated in the publicly available 510(k) Summary posted in this database. FDA believes that our public database is a transparent tool allowing users to confirm that their devices have been submitted under a new 510(k) and demonstrated conformance to applicable special controls.

Prior to the amendments by FDASIA, section 513(e) of the FD&C Act provided for FDA to issue regulations to reclassify devices. Although section 513(e) as amended requires FDA to issue final orders rather than regulations, it also provides for FDA to revoke previously issued regulations by order. FDA will continue to codify classifications and reclassifications in the Code of Federal Regulations (CFR). Changes resulting from final orders will appear in the CFR as changes to codified classification determinations or as newly codified orders. Therefore, under section 513(e)(1)(A)(i), as amended by FDASIA, in the proposed order, we are proposing to revoke the classification of surgical staplers in § 878.4800 and to codify surgical staplers in the new 21 CFR 878.4740, under which surgical staplers for internal use would be reclassified into class II and surgical staplers for external use would remain in class I.

The following references are on display at the Dockets Management Staff (see ADDRESSES ) and are available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; references with website addresses are also available electronically at https://www.regulations.gov. FDA has verified the website addresses, as of the date this document publishes in the Federal Register , but websites are subject to change over time.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR part 878 be amended as follows:

On June 17, 2010, the Postal Regulatory Commission (PRC) approved the initial request of the Postal Service to transfer some Post Office Box (PO Box TM ) Service locations from the market dominant list to the competitive product list (see Order No. 473, Order Approving Request to Transfer Selected Post Office Box Service Locations to the Competitive Product List, PRC Docket No. MC2010-20). Additional locations were transferred following PRC approval in subsequent Order No. 780, Order Approving Request to Transfer Additional Post Office Box Service Locations to the Competitive Product List, PRC Docket No. MC2011-25 (Jul. 29, 2011). At these locations, the Postal Service now provides some of the same services offered by its competitors. These “Additional Services,” which are available at Premium PO Box service locations (formerly referred to as “Move To Competitive” locations) for no additional fee above the PO Box fees, include a service called “Street Addressing.”

On February 14, 2013, language was added to the Mail Classification Schedule (MCS) describing the Street Addressing feature, including the option of receiving “packages from private carriers” (see Order No. 1657, Order on Elective Filing Regarding Post Office Box Service Enhancements, PRC Docket No. MC2012-26; MCS § 2640.1.g). In related proceedings, the Postal Service explained that the delivery of private carrier packages would provide a service frequently requested by its customers, addressing a concern posed by the fact that some eCommerce merchants will not ship to a PO Box address (See id. at 6). A description of the Street Addressing feature was subsequently added to DMM 508.4.5.4.a, which states that customers who choose to use the street addressing designation also have the option of receiving packages from private carriers at the customer's Post Office Box address, if the packages conform to the maximum standards of 70 pounds in weight and 130 inches in combined length and girth. The street addressing feature may be used when the merchant or retailer does not accept the PO Box address format as a deliverable address.

When the Postal Service first introduced PO Box Street Addressing, there were very few private carriers or delivery competitors who would deliver packages to a PO Box customer. This made it simple for Premium PO Box Post Offices to accept and deliver packages that bore the street address equivalent of the PO Box address. They could easily recognize a private carrier, and accept and deliver the PO Box customer's packages with little concern as to whether the carrier was legitimate or the customer actually had requested that the package be delivered to the PO Box. However, as the shipping and delivery industry has evolved, so has the competition for last mile delivery.

Since the introduction of PO Box Street Addressing, a number of pilot efforts have aimed to reduce the delivery time of packages to the customer. These efforts include, but are not limited to, employees delivering packages using their personally owned vehicles, online retailers creating their own delivery operations, and retailers using crowdsourcing or taxi services to deliver packages. Where once the term “private carriers” would be commonly understood to include traditional shipping providers such as UPS and FedEx, now there are many more delivery options, including “regional” delivery companies such as LaserShip and localized or crowdsourced delivery startups such as PostMates and Deliv. Not all employees or persons who might deliver a package to a PO Box wear uniforms or are readily identified as being associated with a legitimate “private carrier.” Nor do all items submitted for delivery meet the traditional definition of a “package” according to Postal Service mailability standards. As one example, some Post Offices have been asked to accept open, tote-style shopping bags containing merchandise, in lieu of a sealed box or envelope. Others have been presented with packages labeled only with the customer's name but without the street address, and delivered by employees or contractors of a merchant with no clear indication of where the package originated.

As a practical matter, the advances in last mile delivery have created confusion as to who may deliver packages to a Premium PO Box customer when the customer uses the street address equivalent of their PO Box address to order merchandise. Therefore, the Postal Service seeks input on how the term “private carriers,” as used in DMM 508.4.5.4.a, should be defined, and how best to clarify that only properly sealed items mailed as a “package” may be delivered. These clarifications are necessary to ensure that Postal Service employees follow proper procedures, which helps prevent fraud and ensures the safety and security of customers and Postal Service personnel.

We will publish an appropriate amendment to 39 CFR part 551 if the Postal Service adopts any changes to the definition of “packages from private carriers,” as used in connection with Street Addressing, in DMM 508.4.5.4.a.

On October 11, 2018, the Maryland Department of the Environment (MDE) submitted a revision to its SIP to satisfy the requirements of section 110(a) of the CAA for the 2015 ozone NAAQS.

On October 26, 2015, EPA issued a final rule revising both the primary and secondary NAAQS for ozone based on 8-hour average concentrations to 0.070 parts per million (ppm). Pursuant to section 110(a)(1) of the CAA, states are required to submit SIPs meeting the applicable requirements of section 110(a)(2) within three years after promulgation of a new or revised NAAQS or within such shorter period as EPA may prescribe. Section 110(a)(1) of the CAA provides the procedural and timing requirements for SIPs, while section 110(a)(2) lists specific elements that states must meet for infrastructure SIP requirements related to a newly established or revised NAAQS. Section 110(a)(2) requires states to address basic SIP elements such as requirements for monitoring, basic program requirements and legal authority that are designed to assure attainment and maintenance of the NAAQS. Section 110(a) imposes the obligation upon states to make a SIP submission to EPA for a new or revised NAAQS, but the contents of that submission may vary depending upon the facts and circumstances. In particular, the data and analytical tools available at the time the state develops and submits the SIP for a new or revised NAAQS affects the content of the submission. The content of such SIP submissions may also vary depending upon what provisions the state's existing SIP already contains. In the case of the 2015 ozone NAAQS, states typically have met the basic program elements required in section 110(a)(2) through earlier SIP submissions in connection with the 1997 and 2008 ozone NAAQS.

On October 11, 2018, EPA received a SIP revision submittal from MDE to satisfy the requirements of section 110(a) of the CAA for the 2015 ozone NAAQS (Maryland's submittal). Maryland's submittal addressed the following infrastructure elements, or portions thereof, for the 2015 ozone NAAQS: CAA section 110(a)(2)(A), (B), (C), D(i)(II), D(ii), (E), (F), (G), (H), (J), (K), (L), and (M). EPA is proposing to make a determination that the submittal meets the requirements of section 110(a)(2)(A), (B), (C), D(i)(II), D(ii), (E), (F), (G), (H), (J), (K), (L), and (M), or portions thereof, of the CAA. Following EPA guidance, which was issued on September 13, 2013 (2013 guidance), 1 Maryland's October 11, 2018 SIP submittal did not address the portion of section 110(a)(2)(C) pertaining to permit programs, known as nonattainment new source review (NNSR), under part D, title I of the CAA, and section 110(a)(2)(I), referred to as element (I), also pertaining to the nonattainment requirements of part D, title I of the CAA. Both element (I) and the NNSR portion of element (C) pertain to SIP revisions that are collectively referred to as a nonattainment SIP or an attainment plan and, if required due to an area being designated nonattainment, would be due by the dates statutorily prescribed under subparts 2 through 5 under part D of the CAA. Because the CAA directs states to submit these plan elements on a separate schedule, EPA does not believe it is necessary for states to include these elements in the infrastructure SIP submission due three years after adoption or revision of a NAAQS.

Maryland's submittal also did not include a portion to address section 110(a)(2)(D)(i)(I) (significant contribution to nonattainment or interference of maintenance through interstate transport of air emissions). Therefore, EPA will take later, separate action on section 110(a)(2)(D)(i)(I) for the 2015 ozone NAAQS, once this portion has been submitted.

A detailed summary of EPA's review and rationale for approving Maryland's submittal may be found in the technical support document (TSD) for this proposed rulemaking action which is available online at www.regulations.gov, docket number EPA-R03-OAR-2019-0036.

Pursuant to EPA's interpretation of section 110(a) of the CAA, states must provide SIP revisions addressing relevant infrastructure SIP elements from section 110(a)(2)(A) through (M) or provide certification that the existing SIP contains provisions adequately addressing these elements for the 2015 ozone NAAQS.

Due to ambiguity in some of the language of section 110(a)(2) of the CAA, EPA believes that it is appropriate to interpret these provisions in the specific context of acting on infrastructure SIP submissions. EPA has previously provided comprehensive guidance on the application of these provisions through a guidance document for infrastructure SIP submissions and through regional actions on infrastructure submissions. 2 In addition, in the context of acting on such infrastructure submissions, EPA evaluates the submitting state's SIP for facial compliance with statutory and regulatory requirements, not for the state's implementation of its SIP. 3 EPA has other authority to address any issues concerning a state's implementation of the rules, regulations, consent orders, etc. that comprise its SIP.

EPA is proposing to approve Maryland's October 11, 2018 SIP revision which provides the basic program elements, or portions thereof, specified in section 110(a)(2)(A), (B), (C), (D)(i)(II), (D)(ii), (E), (F), (G), (H), (J), (K), (L), and (M) necessary to implement, maintain, and enforce the 2015 ozone NAAQS. This proposed rulemaking is not taking action on section 110(a)(2)(I) nor on the NNSR permitting program requirements of section 110(a)(2)(C), which pertain to the nonattainment planning requirements of part D, title I of the CAA. Such SIP revisions are required when an area is designated nonattainment and, if required, would be due to EPA by the dates statutorily prescribed in CAA part D, subparts 2 through 5. Because the CAA directs states to submit these plan elements on a separate schedule, EPA does not believe it is necessary for states to include these elements in the infrastructure SIP submission due three years after adoption or revision of a NAAQS. Additionally, EPA is not taking action on CAA section 110(a)(2)(D)(i)(I) (significant contribution to nonattainment or interference of maintenance through interstate transport of air emissions) for the 2015 ozone NAAQS because Maryland's submission did not include this element. EPA will take later, separate action on this element once it has been submitted.

EPA is seeking public comment on whether Maryland's SIP revision meets the infrastructure requirements in 110(a)(2). These comments will be considered before taking final rulemaking action. Please refer to the TSD for this rulemaking which is available online at www.regulations.gov, docket number EPA-R03-OAR-2019-0036, for further discussion of each element being associated with this approval.

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, pertaining to Maryland's section 110(a) infrastructure requirements for the 2015 ozone NAAQS, 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. What action is EPA proposing?

Through a letter dated March 15, 2018, KDAQ submitted SIP revisions to EPA for approval that include changes to the Jefferson County portion of the Kentucky SIP. 1 In this action EPA is proposing to approve the changes to Jefferson County Regulation 6.31, Standards of Performance for Existing Miscellaneous Metal Parts and Products Surface Coating Operations, and Regulation 7.59, Standards of Performance for New Miscellaneous Metal Parts and Products Surface Coating Operations. The SIP revisions update the current SIP-approved versions of Regulation 6.31 (Version 5) and Regulation 7.59 (Version 5) to Version 6 of each. The changes that are being proposed for approval in this rulemaking, and EPA's rationale for proposing approval, are described in more detail below.

EPA has found that surface coatings of miscellaneous metal parts and products operations emit hazardous air pollutants (HAP). See, e.g., 69 FR 129. Regulation of these sources protects air quality and promotes the public health by reducing emissions of HAP into the environment. The organic HAP emitted by surface coatings of miscellaneous metal parts and products operations are VOC as defined by 40 CFR 51.100(s). 2

Tropospheric ozone, commonly known as smog, occurs when VOC and nitrogen oxides (NOx) react in the atmosphere. Because of the harmful health effects of ozone, EPA limits the VOC and NOx emissions that can be released into the atmosphere. VOC are compounds of carbon excluding carbon monoxide, carbon dioxide, carbonic acid, metallic carbides, or carbonates, and ammonium carbonate, which participates in atmospheric photochemical reactions, including in the formation of ozone. The compounds of carbon (or organic compounds) have different levels of photochemical reactivity, therefore, they do not form ozone to the same extent. 3

Jefferson County Air Quality Regulations 6.31 and 7.59 address VOC emitted by miscellaneous metal parts and products surface coating operations at existing and new facilities, respectively. Regulation 6.31, Standards of Performance for Existing Miscellaneous Metal Parts and Products Surface Coating Operations, as amended in Version 6, applies to each affected facility “that was in being or commenced construction, modification, or reconstruction before May 20, 1981.” Regulation 7.59, Standards of Performance for New Miscellaneous Metal Parts and Products Surface Coating Operations, applies to newer affected facilities.

In this action, EPA is proposing to approve changes to Regulations 6.31 and 7.59. In Section 6, Recordkeeping, of each regulation, a recordkeeping requirement for otherwise-exempt facilities has been added. Previously, facilities that qualified for an exemption according to Paragraph 5.1 of Section 5, Exemptions, were not subject to the requirements of the regulation, and facilities that qualified for an exemption according to Paragraph 5.2 of Section 5 were not subject to the requirements in Section 3, Standards for Volatile Organic Compounds. The new recordkeeping provision improves the regulations by requiring facilities to maintain records on an annual basis that support their exemption status.

EPA is also proposing to approve a minor, administrative change to Regulation 6.31, Section 1, Applicability, that clarifies the regulation's applicability based on the date that a facility was in existence or commenced construction, modification, or reconstruction.

The March 15, 2018, SIP revisions that are the primary subject of this proposed rulemaking strengthen Regulations 6.31 and 7.59 by requiring facilities claiming an exemption to maintain records supporting that claim. In Section 6, Recordkeeping, a detailed description of the recordkeeping parameters is outlined in Paragraphs 6.1 through 6.4. Paragraph 6.5 is added and applies to any facility claiming an exemption pursuant to Section 5, Exemptions. Paragraph 6.5 requires the previously exempt facilities to keep records sufficient to demonstrate the applicability of the claimed exemption. For the facilities specifically claiming exemption pursuant to Paragraph 5.2, the records shall include, but not be limited to, the potential VOC emissions from all processes or process operations subject to this regulation prior to any add-on controls on a rolling twelve-month basis. The additional provision will provide more detailed information to the State concerning the emissions of the exempt process. They are not required to be monitored like larger sources but must be able to prove their exemption yearly by following the criteria in Section 3, Standards of Volatile Organic Compounds. EPA is preliminarily determining that these changes strengthen the regulations for miscellaneous metal parts and products coating operations. EPA views these changes as being consistent with the CAA and does not believe that these changes will result in a change in emissions.

The change to Section 1, Applicability, of Regulation 6.31, clarifies the facilities to which the regulation applies based on when the facilities were “in being or commenced construction, modification, or reconstruction.” EPA views this minor, administrative change as consistent with the CAA and does not believe that these changes will result in a change in emissions.

In this action, EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is proposing to incorporate by reference Louisville Metro Air Pollution Control District portion of the Kentucky SIP at Regulation 6.31, Standards of Performance for Existing Miscellaneous Metal Parts and Products Surface Coating Operations, Version 6, and Regulation 7.59 Standards of Performance for New Miscellaneous Metal Parts and Products Surface Coating Operations, Version 6, state effective January 17, 2018. EPA has made, and will continue to make, these materials generally available through www.regulations.gov and at the EPA Region 4 office (please contact the person identified in the For Further Information Contact section of this preamble for more information).

EPA is proposing to approve the aforementioned changes to the Jefferson County portion of the Kentucky SIP because the changes are consistent with section 110 of the CAA and meet the regulatory requirements. The amendments include the addition of a recordkeeping provision in Section 5, Recordkeeping, of both Regulations 6.31 and 7.59, as well as the clarification of Section 1, Applicability, in Regulation 6.31.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. This action merely proposes to approve 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).

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

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

The CAA at section 110(a)(2)C) requires states to develop and submit to the EPA for approval into the SIP, preconstruction review and permitting programs applicable to certain new and modified stationary sources of air pollutants for attainment/unclassifiable and nonattainment areas that cover both major and minor new sources and modifications, collectively referred to as the new source review (NSR) SIP. The CAA NSR SIP program is composed of three separate programs: Prevention of Significant Deterioration (PSD), Nonattainment New Source Review (NNSR), and minor New Source Review (MNSR). The minor NSR SIP program addresses construction or modification activities that do not emit, or have the potential to emit, beyond certain major source/major modification thresholds and thus do not qualify as “major” and applies regardless of the designation of the area in which a source is located. The EPA regulations governing the criteria that states must satisfy for EPA approval of the NSR programs as part of the SIP are contained in 40 CFR 51.160-51.166. The minor NSR regulations are contained in 40 CFR 51.160-51.164.

The City of Albuquerque-Bernalillo County submitted revisions to their minor NSR program on July 26, 2013, and subsequently provided supplemental information on April 21, 2016; July 5, 2016; September 19, 2016; and December 20, 2016. In our final rulemaking action, June 29, 2017 (82 FR 29421), we determined that portions of the City of Albuquerque-Bernalillo County SIP submittal were inconsistent with the applicable Federal regulations. Specifically, we found the portions pertaining to accelerated permitting procedures, technical permit revisions, and conflict of interest were not consistent with the required elements of minor NSR programs at 40 CFR 51.160-51.164.

In a letter dated December 22, 2016, the City of Albuquerque committed to adopt enforceable revisions to 20.11.41 NMAC to address these concerns and submit these revisions to the EPA as a SIP revision within one year of the EPA's conditional approval. The January 18, 2018 SIP revision is the City's fulfillment of this commitment.

The January 18, 2018 SIP submittal addresses and corrects the deficiencies of the City of Albuquerque-Bernalillo County minor NSR program identified in our June 29, 2017, (82 FR 29421), final conditional approval as summarized below. The EPA's Technical Support Document for this action is available in the rulemaking docket and includes a detailed analysis of the submitted revisions to the New Mexico SIP for the City of Albuquerque-Bernalillo County minor NSR program.

In our June 29, 2017 final rule, we found that the abbreviated public notice process established by 20.11.41.13 NMAC for technical permit revisions was inconsistent with the requirements of 40 CFR 51.161 since it did not meet the applicable prominent advertisement requirements. The County adopted a single revision to 20.11.41.13 NMAC, Application for Permit, which removed the abbreviated public participation process for technical permit revisions that the EPA had determined was inconsistent with the requirements found in 40 CFR 51.161.

The County revised and clarified the technical permit provisions in 20.11.41.28 NMAC, Administrative and Technical Permit Revisions. In our June 29, 2017 final rule (82 FR 29421), we noted that the Section 28 provisions were inconsistent with federal regulations for public notice since technical permit revisions potentially allowed permittees to conduct changes that may could result in up to a one pound per hour increase of a NAAQS pollutant or NMAAQS pollutant and such changes require the County and permittee to follow the public notice requirements listed in 40 CFR 51.161. The January 18, 2018 revision satisfies the EPA's concern with the technical permit revision authorizing any emission increases: The proposed language in 20.11.41.28(B)(1)(b) NMAC clearly states that technical permit revisions have no potential increase in emissions and 20.11.41.28(B)(1)(e) NMAC clarifies that any new covered equipment will not result in an emissions increase.

In our June 29, 2017 final rule (82 FR 29421), we conditionally approved the accelerated review provision found in 20.11.41.32 NMAC since it did not comply with the requirement in 40 CFR 51.161 to make the permittee's application, and the County's evaluation of that application, public. The proposed revision to 20.11.41.32 NMAC, Accelerated Review of Application, revised the requirements of public notice to be consistent with federal requirements related to public availability of information and public notice in 40 CFR 51.161 by correcting the citation in 20.11.41.32(B) NMAC.

In our June 29, 2017 final rule, we also conditionally approved the definitions of “conflict of interest” at 20.11.41.7.J NMAC, the references to “technical permit revisions” in the definition for “permit” at 20.11.41.7.EE NMAC, and the definition of “technical permit revision or technical revision” at 20.11.41.7.RR NMAC because these definitions referenced or applied to the underlying provisions for accelerated review and technical permit revisions that were conditionally approved. Because we are proposing to fully approve the revisions to the accelerated review process and technical permit revision, we are also proposing to fully approve the cited definitions as consistent with federal requirements for minor NSR permitting.

In addition to satisfying all elements of our conditional approval, the January 18, 2018 submitted revision to 20.11.41.14 NMAC, Public Notice by Department—Public Participation, removed the requirement to provide public notice in a newspaper and authorized electronic notice on the City of Albuquerque website. The revision to Section 14 is consistent with the EPA's October 18, 2016, 81 FR 71613, publication that authorized electronic notice for the EPA and permitting authorities implementing federal permitting rules. Additionally, the County proposed to increase the timeframe from ten (10) to thirty (30) days for public hearings in 20.11.41.15 NMAC, Public Information Hearing. We find this to be consistent with federal requirements related to public availability of information and public notice (40 CFR 51.161).

Our analysis of the January 18, 2018 submitted revisions indicates that the SIP revision package was developed in accordance with the CAA and the State provided reasonable notice and public hearing. The revisions to 20.11.41 NMAC update the regulations so that the City of Albuquerque-Bernalillo County minor NSR permit program is consistent with federal requirements. Under section 110(l) of the CAA, the EPA finds that these submitted revisions will not interfere with any applicable requirement concerning attainment and reasonable further progress, or any other applicable requirement of the CAA.

We are proposing to approve the January 18, 2018 submitted revisions to the New Mexico SIP for the City of Albuquerque-Bernalillo County. We have determined that the submitted revisions were developed in accordance with the CAA and EPA's regulations, policy and guidance for minor NSR permitting. Additionally, we propose to find that the January 18, 2018 submittal satisfies New Mexico's obligation under the March 10, 2017 (82 FR 13270) conditional approval, and to convert the June 29, 2017 (82 FR 29421) rulemaking to full approval. Therefore, under section 110 of the Act, the EPA proposes approval of the following revisions to the New Mexico SIP for the City of Albuquerque-Bernalillo County:

• 20.11.41.13 NMAC, Application for Permit;

• 20.11.41.14 NMAC, Public Notice by Department—Public Participation;

• 20.11.41.15 NMAC, Public Information Hearing (PIH);

• 20.11.41.28 NMAC, Administrative and Technical Permit Revisions; and

• 20.11.41.32 NMAC, Accelerated Review of Application.

In this action, we are proposing to include in a final rule regulatory text that includes incorporation by reference. In accordance with the requirements of 1 CFR 51.5, we are proposing to incorporate by reference of the revisions to the New Mexico's regulations, as described in the Proposed Action Section above. The EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and in hard copy at the EPA Region 6 office.

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

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

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

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

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

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

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

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

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

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

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

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

Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.

This proposed rule will revise the Department of the Interior Acquisition Regulation (DIAR) in order to update references to other Federal and Departmental directives, remove obsolete material and remove obsolete references.

On November 24th, 2015, the DOI Office of Acquisition and Property Management (PAM) issued a class deviation to DIAR 1419.2, to revise the content in 1419.201 and 1419.202. This proposed rule intends to update the DIAR with changes from the deviation and rescind the class deviation.

The content of DIAR 1419.201 related to setting goals for small business contracting, the role of the Office of Small and Disadvantaged Business Utilization (OSDBU) and the appointment of Small Business Specialists and was out of date and inconsistent with statutory requirements and the Federal Acquisition Regulation (FAR). The deviation ensured that DOI manages our small business goals in full compliance with SBA's procedures and adhered to FAR requirements regarding the role of the OSDBU and Small Business Specialists. This proposed rule ensures that the role of the Director of the OSDBU is consistent with the Small Business Act 15 U.S.C. 644(k).

The proposed rule simplifies DIAR 1419.202 to allow the OSDBU Director responsibility for issuing policy on the use and content of the Form DI-1886 “Acquisition Screening and Review Form”.

The proposed rule further intends to remove the following from DIAR 1419:

Remove DIAR 1419.505, “Rejecting Small Business Administration recommendations.” The Department has determined that the procedures in FAR 19.505 are sufficient for documenting the rejection of Small Business Administration's recommendation and that further supplemental guidance in the DIAR is duplicative and redundant;

Remove DIAR 1419.506, “Withdrawing or modifying small business set-asides.” The Department has determined that the procedures in FAR 19.506 are sufficient for withdrawing or modifying small business set-asides and that further supplemental guidance in the DIAR is duplicative and redundant;

Remove DIAR 1419.7, “The Small Business Subcontracting Program”, in its entirety. The DOI has determined that the procedures in FAR 19.7 are sufficient for managing the DOI's small business subcontracting program;

Remove DIAR 1419.803, Selecting acquisitions for the 8(a) program;

Remove DIAR 1419.9, “Contracting Opportunities for Women-Owned Small Businesses”, in its entirety. The Executive Order 12138 supporting the regulation has been superseded by the Women Owned Small Business program established under 15 U.S.C 637(m);

Remove DIAR 1419.10, “Small Business Competitiveness Demonstration Program”, in its entirety. FAR 19.10 was established to meet the requirements of the Business Opportunity Development Reform Act of 1988 (Pub. L. 100-656). Section 1335 of the Small Business Jobs Act of 2010 (Pub. L. 111-240) amended the Business Opportunity Development Reform Act of 1988 and repealed the Small Business Competitiveness Demonstration Program.

1. Regulatory Planning and Review (Executive Orders 12866 and 13563). Executive Order (E.O.) 12866 provides that the Office of Information and Regulatory Affairs (OIRA) will review all significant rules. OIRA has determined that this proposed rule is not significant.

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

2. Regulatory Flexibility Act. The Secretary certifies that the adoption of 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 et seq. ). Therefore, under 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

3. Small Business Regulatory Enforcement Fairness Act. This proposed rule is not a major rule under the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 804(2)). This proposed rule does not have an annual effect on the economy of $100 million or more. This proposed rule will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. This proposed rule does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

4. Unfunded Mandates Reform Act. This proposed rule does not impose an unfunded mandate on State, local, or tribal governments or the private sector of more than $100 million per year. The rule does not have a significant or unique effect on State, local, or tribal governments, or the private sector nor does the rule impose requirements on State, local, or tribal governments. A statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq. ) is not required.

5. Takings (E.O. 12630). This proposed rule does not affect a taking of private property or otherwise have taking implications under Executive Order 12630. A takings implication assessment is not required.

6. Federalism (E.O. 13132). Under the criteria in section 1 of E.O. 13132, this proposed rule does not have sufficient Federalism implications to warrant the preparation of a Federalism summary impact statement. It would not substantially and directly affect the relationship between the Federal and state governments. A Federalism summary impact statement is not required.

7. Civil Justice Reform (E.O. 12988). This proposed rule complies with the requirements of E.O. 12988. Specifically, this rule (1) meets the criteria of section 3(a) of this E.O. requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and (2) meets the criteria of section 3(b)(2) of this E.O. requiring that all regulations be written in clear language and contain clear legal standards.

8. Consultation with Indian tribes (E.O. 13175). The Department strives to strengthen its government-to-government relationship with Indian tribes through a commitment to consultation and recognition of their right to self-governance and tribal sovereignty. We have evaluated this rule under the Department's consultation policy and under the criteria in E.O. 13175 and have determined that it has no substantial direct effect on Federally recognized Indian tribes and that consultation under the Department's tribal consultation policy is not required. This rule does not apply to tribal awards made in accordance with the Indian Self-Determination and Education Assistance Act (Pub. L. 93-638, 88 Stat. 2204), as amended.

9. Paperwork Reduction Act, 44 U.S.C. 3501, et seq. This proposed rule does not contain information collection requirements, and a submission to the Office of Management and Budget under the Paperwork Reduction Act (PRA) is not required.

10. National Environmental Policy Act. This proposed rule does not constitute a major Federal action significantly affecting the quality of the human environment. A detailed statement under the National Environmental Policy Act of 1969 (NEPA) is not required because the rule is covered by the categorical exclusion listed in 43 CFR 46.210(c). We have also determined that the rule does not involve any of the extraordinary circumstances listed in 43 CFR 46.215 that would require further analysis under NEPA.

11. Effects on the Energy Supply (E.O. 13211) This proposed rule is not a significant energy action under the definition in E.O. 13211. A Statement of Energy Effects is not required.

12. Clarity of this Regulation. We are required by Executive Orders 12866 (section 1(b)(12)), and 12988 (section 3(b)(1)(B)), and 13563 (section 1(a)), and the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means that each rule we publish must (1) be logically organized; (2) use the active voice to address readers directly; (3) use common, everyday words and clear language rather than jargon; (4) be divided into short sections and sentences; and (5) use lists and tables wherever possible.

If you feel that we have not met these requirements, send us comments by one of the methods listed in the FOR FURTHER INFORMATION CONTACT section. To better help us revise the rule, your comments should be as specific as possible. For example, you should tell us the number of section or paragraphs that you find unclear, which section or sentences are too long, the sections where you feel lists or tables would be useful, etc.

13. Public availability of comments. Before including your address, phone number, email address, or other personal identifying information in your comment, you should be aware that your entire comment—including your personal identifying information—may be publically available at any time. While you can ask us in your comment to withhold your personal identifying information from public review, we cannot guarantee that we will be able to do so.

For the reasons set out in the preamble, DOI proposes to revise 48 CFR, chapter 7, part 1419 to read as follows: