On May 13, 2016, the Air Transport Association of America filed suit against the Animal and Plant Health Inspection Service (APHIS), claiming APHIS' 2015, final rule (80 FR 66748-66779, Docket No. APHIS-2013-0021, effective December 28, 2015) setting fee structures for its Agricultural Quarantine Inspection (AQI) program violated the Administrative Procedure Act. In its March 28, 2018, Order, the U.S. District Court for the District of Columbia affirmed APHIS' cost methodology and the sufficiency of its data. The Court remanded to APHIS the reserve portion of the final rule updating user fees for the AQI program. The Court expressly did not vacate the rule pending further explanation by the agency. See Air Transport Ass'n of Am. v. U.S. Dep't of Agric, 317 F. Supp. 3d 385, 392 (D.D.C. 2018).

In its memorandum opinion accompanying that order, the Court stated that the agency unreasonably relied on the “reasonable balance” allowance in 21 U.S.C. 136a(a)(1)(C) of the Food, Agriculture, Conservation, and Trade (FACT) Act of 1990, 21 U.S.C. 136a, to justify its continued fee collection to maintain a reserve, as that allowance expired after fiscal year 2002. The Court did not rule on whether APHIS had authority for continued fee collection to maintain a reserve under any other subsection of the FACT Act and, therefore, remanded to the Agency for “reconsideration of its authority to charge a surcharge for the reserve account.” See Air Transport Ass'n, 303 F. Supp. 3d at 57. The Court expressly declined to consider APHIS' explanation in its legal filings that, consistent with its past explanations and practice, APHIS justified its authority to collect such fees under other of subsections of 21 U.S.C. 136a(a)(1). Air Transport Ass'n of Am., Inc. 303 F. Supp. 3d at 51; see, e.g., User Fees for Agricultural Quarantine & Inspection Services, 71 FR 49984 (August 24, 2006). The Court did “not evaluate or rule on the agency's . . . argument that it had authority to fund a reserve under” a different part of the statute, and instead remanded the rule to the agency without vacating for further consideration of the agency's authority. Id. In this clarification to the final rule, APHIS restates its longstanding practice and authority under 21 U.S.C. 136a(a)(1)(A) and (B) provide for its continued collection of user fees to maintain a reserve in the AQI User Fee Account.

The FACT Act authorizes APHIS to collect user fees to fully fund its AQI Program. These user fees must be sufficient to cover the costs of:

• Providing AQI services to commercial vessels, commercial trucks, commercial railroad cars, commercial aircraft, and international passengers in connection with the arrival, at a port in the customs territory of the United States (21 U.S.C. 136a(a)(1)(A));

• Providing preclearance or preinspection at a site outside the customs territory of the United States to international passengers, commercial vessels, commercial trucks, commercial railroad cars, and commercial aircraft (21 U.S.C. 136a(a)(1)(A)); and

• Administering the AQI Program (21 U.S.C. 136a(a)(1)(B)).

In the April 25, 2014, Federal Register (79 FR 22895), we issued a proposal to update the methodology by which APHIS would calculate user fees across user fee classes. Such a change was necessary to address historic underfunding for the AQI Program and to create a system whereby future adjustments to the user fee schedule could be easily made to more accurately reflect actual costs. In the 2015 final rule (80 FR 66748), we applied an activity-based-costing methodology to determine the appropriate user fee for each user fee group in a manner that accurately reflects individual user fee costs and protects users against cross-subsidization across user fee groups.

The 2014 proposed rule cited APHIS's authority to maintain a “reasonable reserve,” without specifically articulating which subsection of the FACT Act granted it authority to do so; however, the 2015 final rule used the phrase “reasonable balance.” While not explicitly citing 21 U.S.C. 136a(a)(1)(C) to justify continued collection with respect to the AQI Reserve, APHIS acknowledges the unexplained change in nomenclature could lead to an interpretation of the rule to mean that APHIS was, in fact, relying on that subsection, which states that the Secretary of Agriculture may prescribe and collect fees sufficient, “through fiscal year 2002, to maintain a reasonable balance in the Agricultural Quarantine Inspection User Fee Account established under paragraph (5)” 21 U.S.C. 136a(a)(1)(C) (emphasis added).

In light of the Court's remand, and after further review, APHIS is clarifying that subsections 136a(a)(1)(A) and (B) of the FACT Act provide adequate authority to continue setting user fees in amounts to maintain the AQI Reserve. This conclusion is consistent with APHIS' longstanding practice, which has been explained to the public through multiple rulemaking proceedings, beginning in 2002.

In a November 16, 1999, final rule, APHIS amended the regulations but inadvertently indicated that the fees would only remain in effect through September 30, 2002. See 64 FR 62089. To remedy the oversight, APHIS published an interim rule and request for comments on September 3, 2002. See 67 FR 56217. In this interim rule, APHIS stated that its authority to maintain a reasonable balance expired on September 30, 2002. See id. Still, APHIS reiterated that it had authority to collect user fees for “providing AQI services in connection with the arrival at a port in the customs territory of the United States” and for “ administering the user fee program[.]” Id. (emphasis added). APHIS stated further that, “[t]his interim rule will extend existing user fee rates and continue to allow the collection of the fees beyond September 30, 2002. Collection of these fees is necessary for the continuance of specific border inspection activities that are essential to protect U.S. agriculture from plant and animal disease and pest threats.” Id. (emphasis added). The existing fees included the cost of maintaining the reserve, which was in place at this time. Id. On January 24, 2003, this interim rule became final without revision after no comments were received.

On December 9, 2004, APHIS revised its user fee regulations in another interim rule and request for comments. See 69 FR 71660. In this rule, APHIS did not mention its ability to maintain a reasonable reserve balance in its background section; however, it did state that the Act gives it the authority to collect user fees for “providing AQI services in connection with the arrival at a port in the customs territory of the United States” and for “ administering the user fee program[.]” Id. (emphasis added). To explain its rationale for wanting a reserve balance equal to 25 percent of annual operating costs for APHIS and CBP AQI activities in the AQI account, APHIS stated:

In the final rule, published August 24, 2006, APHIS responded (71 FR 49985) to comments regarding the need to maintain a 25 percent reserve fund. In our response, we explained that a 25 percent reserve is needed to ensure continuity of AQI services in cases of fluctuations in activity volumes. Without this reserve, a significant drop in international passenger travel, such as occurred post 9/11, would be catastrophic to the program. Full-time personnel would have to be furloughed and services would have to be reduced. As travel volumes returned to normal, the AQI program would need to recruit, replace, and/or rehire the furloughed employees. This disruptive and costly process would increase the cost of AQI services and, consequently, necessitate higher user fees going forward. Moreover, during this time, there would be a drastically increased risk of the introduction of harmful plant pests in the United States. Conversely, the 25 percent reserve also allows for growth in the AQI program should APHIS find it necessary to supplement inspection services due to, for example, a sudden increase in demand.

Finally, a 25 percent reserve is needed to account for the lag in AQI user fee collections. Payments are made into AQI user fee accounts for commercial aircraft and international airline passengers on a quarterly basis, with monies not remitted to APHIS until 1 month after the end of the quarter in which they were collected. Since the fourth quarter fees are not due, and therefore not received, until after the fiscal year is over, we are not able to use those funds to pay for providing AQI services for commercial airlines and international air passengers in the fiscal year in which they are earned.

So, while not explicitly stated, APHIS had ceased relying on 21 U.S.C. 136a(1)(C) to justify its collection for the reserve in favor of reliance on sections (1)(A) and (1)(B). That same reasoning holds true today.

Title 21 U.S.C. 136a(a)(1)(A) permits the Secretary of Agriculture to prescribe and collect fees sufficient to “cover the cost of providing agricultural quarantine and inspection services in connection with the arrival at a port in the customs territory of the United States, or the preclearance or preinspection at a site outside the customs territory of the United States, of an international passenger, commercial vessel, commercial aircraft, commercial truck, or railroad car” (emphasis added). Title 21 U.S.C. 136a(a)(1)(B), extends this authority to “cover the cost of administering” the AQI Program as well. As noted in both the 2014 proposed rule and the 2015 final rule, APHIS sets fees based on Federal guidance found in Office of Management and Budget Circular A-25 and Federal Accounting Standards Advisory Board Statement of Accounting Standards Number 4, which states that fees shall recover the full cost incurred by the government.

Congress has been made expressly aware of the fact that the agency has been setting fees at a level to maintain a reasonable balance in the account since at least FY 2002. Each year since FY 2002, Congress asked APHIS to submit information on AQI user fee collections, including the balance in the reserve, and each year, APHIS has advised that its collections have resulted in a positive reserve balance. Additionally, on several occasions, the U.S. Government Accountability Office (GAO) has reported to Congress on APHIS' maintenance of the reserve. See GAO, Federal User Fees: A Design Guide, GAO-08-386SP (May 2008) noting that “the AQI fee statute gives APHIS permanent authority to use the collected fees and APHIS maintains a reserve in case of emergency”; GAO, Agricultural Quarantine Inspection Fees: Major Changes Needed to Align Fee Revenues with Program Costs, GAO-13-268 (March 2013) discussing maintenance of AQI reserve; GAO, Federal User Fees: Fee Design Options and Implications for Managing Revenue Instability, GAO-13-820 (September 2013) discussing same; GAO, Federal User Fees: Key Considerations for Designing and Implementing Regulatory Fees, GAO-15-718 (September 2015) discussing same.

APHIS has consistently explained in past rules that the reserve fund provides “a means to ensure the continuity of AQI services in cases of fluctuations in activity volumes, bad debt, carrier insolvency, or other unforeseen events, such as those of September 11, 2001, which . . . resulted in substantial cost increases for AQI programs and lower-than-anticipated revenues.” See, e.g., 69 FR 71660-71664. At various times since AQI user fees were established, as a result of service demands, APHIS has had to rely on the AQI reserve fund to maintain its operations, nearly draining the reserve on at least one occasion. See 64 FR 62090. In December 2004, APHIS reported in an interim rulemaking that it was close to running out of money altogether. See 69 FR 71661. The reserve fund allows the program to ensure the continuity of services even under these service constraints, and therefore constitutes a cost of providing the services, as permitted by subsection 136a(a)(1)(A).

Even when user fees are set at a level that keeps pace with current costs, the 3-month temporal lag between the end of the fiscal year and the conclusion of the calendar year inherently results in a significant delay in fee remittances. See 64 FR 43106. Because of cash management issues inherent in the program, the bulk of users remit their payments on a quarterly basis “with monies not remitted to APHIS until 1 month after the end of the quarter in which they were collected,” which is long after APHIS and U.S. Customs and Border Protection (CBP) have performed their necessary services in connection with the AQI program. See 71 FR 49984. This remittance process was developed to offset some of the burden on the users for collecting fees on the government's behalf, such as with the airline passenger fee, by allowing them to retain any interest paid on collections they hold in trust. Collecting fees to cover these costs required to run the AQI program, which may go over and beyond the specific operational costs of a particular inspection but nonetheless fall within the scope of operating the program, reasonably constitutes “the costs of administering this subsection” within the meaning of 21 U.S.C. 136a(a)(1)(B).

Because Congress has not provided specific guidance to APHIS on how to interpret 21 U.S.C. 136a(a)(1)(A) and (B), we construe these sections as providing authority to continue funding a reserve in order to ensure continuity of services as well as to protect the program from instability resulting from funding flow uncertainty, bad debt, and non-recurring financial obligations. Section (1)(A) provides congressional authority to set and collect fees to cover the cost of providing AQI services “in connection” with the arrival at a port in the customs territory of the United States. See 21 U.S.C. 136a(1)(A). Certain costs, such as upgrading facilities and replacing broken equipment, are not reoccurring costs and are therefore impossible to account for as line items in the court-approved ABC methodology for setting user fees. These onetime costs are still incurred “in connection” with the AQI program and must be factored into the overall user fees, as the statute demands full cost recovery. As such, there is no way to fund these obligations other than by accessing the AQI reserve.

Additionally, section (1)(B) demands that APHIS “cover the cost of administering [the AQI program].” See 21 U.S.C. 136a(a)(1)(B). As stated above, there is a significant temporal lag between the rendering of services by APHIS and CBP and the collection of fees to cover these services. Sometimes, fees are not collected at all even though the services have already been performed. For instance, bad debt may result from a commercial airline filing for bankruptcy. See 71 FR 49985. Administratively, if a bad debt arises, the Act requires APHIS to cover it since the services have already been performed and the costs have already been incurred. Therefore, a reserve is essential to prevent the AQI program from running a deficit, which could result in personnel furloughs or interruptions in service. Such interruptions would significantly increase the risk that the United States could be exposed to animal and plant pests from foreign countries.

The Court affirmed APHIS' cost methodology and the sufficiency of its data, and expressly did not vacate any portion of the existing rule. This interpretative rule relates only to the legal authority for the reserve component of the AQI User Fee Program. The final rule, which took effect in 2015, 80 FR 66748, remains in force, Air Transport Ass'n, 317 F. Supp. 3d at 392. Accordingly, this interpretive rule does not affect, inter alia, the user fee calculation with respect to the AQI Reserve.

The FAA has determined, in accordance with 5 U.S. Code §§ 553(b)(3)(B) and 553(d)(3), that notice and opportunity for prior public comment hereon are unnecessary because substantially identical special conditions have been subject to the public comment process in several prior instances such that the FAA is satisfied that new comments are unlikely. For the same reason, the FAA finds that good cause exists for making these special conditions effective upon issuance. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment.

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change these special conditions based on the comments we receive.

On February 28, 2018, Costruzioni Aeronautiche Tecnam S.P.A. (Tecnam) applied for FAA validation of its type certificate for its new Model P2012 airplane. The Model P2012 is a normal category, metallic, non-pressurized, high wing, monoplane that will seat nine passengers and two flightcrew. Two wing mounted Lycoming piston engines driving four bladed variable pitch constant speed MT-Propeller Entwicklung GmbH Model MTV-14-B-C-F/CF195-30b propellers power the airplane. The airplane has fixed tricycle landing gear, a Garmin G1000 NXi avionics suite, and a maximum takeoff weight of 7,937 pounds.

The Model P2012 is equipped with two Lycoming Model TEO-540-C1A engines, each using an electronic engine control (EEC) system, commonly referred to as a full authority digital engine control (FADEC), instead of a traditional mechanical control system. Although the EEC is certificated with the engine, the installation of an EEC requires evaluation due to critical environmental effects and possible effects on or by other airplane systems such as; indirect effects of lightning, radio interference with other airplane electronic systems, and shared engine, airplane data, and power sources.

The regulatory requirements in Title 14, Code of Federal Regulations (CFR) part 23 for evaluating the installation of complex systems, including electronic systems and critical environmental effects, are contained in §§ 23.1306, 23.1308, and 23.1309. However, when § 23.1309 was published, the use of EECs for engines was not envisioned. The integral nature of these systems makes it necessary to ensure proper evaluation of the airplane functions, which may be included in the EEC, and that the installation does not degrade the EEC reliability approved under part 33 during engine type certification. Sections 23.1306(a) and 23.1308(a) apply to the EEC to ensure it remains equivalent to a mechanical only system, which is not generally susceptible to the High Intensity Radiated Fields (HIRF) and lightning environments.

In some cases, the airplane in which the engine is installed determines a higher classification than the engine controls are certificated for, requiring the EEC systems be analyzed at a higher classification. As of November 2005, EEC special conditions mandated the § 23.1309 classification for loss of EEC control as catastrophic for any airplane. This is not to imply an engine failure is classified as catastrophic, but that the EEC must provide an equivalent reliability to mechanical engine controls. In addition, §§ 23.1141(e) and 25.901(b)(2) provide the fault tolerant design requirements of turbine engine mechanical controls to the EEC and ensure adequate inspection and maintenance interval for the EEC.

Part 23 did not envision the use of full authority EECs and lacks the specific regulatory requirements necessary to provide an adequate level of safety. Therefore, special conditions are necessary.

Under the provisions of 14 CFR 21.17, Tecnam must show that the Model P2012 airplane meets the applicable provisions of part 23, as amended by amendment 23-1 through 23-62 thereto.

If the Administrator finds that the applicable airworthiness regulations in part 23 do not contain adequate or appropriate safety standards for the Model P2012 airplane because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

In addition to the applicable airworthiness regulations and special conditions, the Model P2012 must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36; and the FAA must issue a finding of regulatory adequacy under § 611 of Public Law 92-574, the “Noise Control Act of 1972.”

The FAA issues special conditions, as defined in § 11.19, under § 11.38 and they become part of the type certification basis under § 21.17(a)(2).

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, the FAA would apply these special conditions to the other model.

The Model P2012 airplane will incorporate the following novel or unusual design features: The installation of an Electronic Engine Control (EEC) system. The EEC system is the generic family of electrical/electronic engine control systems, including full authority digital engine controls, supervisory controls, and derivatives of these.

This airplane makes use of an electronic engine control system in addition to a traditional mechanical control system, which is a novel design for this type of airplane. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. Mandating a structured assessment to determine potential installation issues mitigate the concerns that the addition of an electronic engine control does not produce a failure condition not previously considered.

These special conditions are applicable to the Model P2012 airplane. Should Tecnam apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, the FAA would apply these special conditions to that model as well.

This action affects only a certain novel or unusual design feature on the Model P2012 airplane. It is not a rule of general applicability.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Tecnam Model P2012 airplane.

a. For electronic engine control (EEC) system installations, it must be established that no single failure or malfunction or probable combinations of failures of EEC system components will have an effect on the system, as installed in the airplane, that causes the Loss of Power Control (LOPC) probability of the system to exceed those allowed in part 33 certification.

b. Electronic engine control system installations must be evaluated for environmental and atmospheric conditions, including lightning and High Intensity Radiated Fields (HIRF). The EEC system lightning and HIRF effects that result in LOPC should be considered catastrophic.

c. The components of the installation must be constructed, arranged, and installed to ensure their continued safe operation between normal inspections or overhauls.

d. Functions incorporated into any electronic engine control that make it part of any equipment, systems or installation whose functions are beyond that of basic engine control, and which may also introduce system failures and malfunctions, are not exempt from § 23.1309 and must be shown to meet part 23 levels of safety as derived from § 23.1309. Part 33 certification data, if applicable, may be used to show compliance with any part 23 requirements. If part 33 data is used to substantiate compliance with part 23 requirements, then the part 23 applicant must be able to provide this data for its showing of compliance.

The FAA has determined, in accordance with 5 U.S. Code §§ 553(b)(3)(B) and 553(d)(3), that notice and opportunity for prior public comment are unnecessary because substantially identical special conditions have been subjected to the public comment process in several prior instances such that the FAA is satisfied that new comments are unlikely. For the same reason, the FAA finds that good cause exists for making these special conditions effective upon issuance. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment.

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change these special conditions based on the comments we receive.

On March 13, 2018, Costruzioni Aeronautiche Tecnam S.P.A. (Tecnam) applied for FAA validation of its type certificate for its new Model P2012 airplane. The airplane is a normal category, metallic, non-pressurized, high wing, monoplane that will seat nine passengers and two flightcrew. Two wing mounted Lycoming Model TEO-540-C1A piston engines driving four blade variable pitch constant speed MT-Propellers USA, Inc. Model MTV-14-B-C-F/CF195-30b propellers power the airplane. The airplane has fixed tricycle landing gear, a Garmin G1000 NXi avionics suite, and a maximum takeoff weight of 7,937 pounds. The Model P2012 has rechargeable lithium batteries installed for higher energy density instead of the nickel-cadmium (Ni-Cd) or lead-acid rechargeable batteries.

The current regulatory requirements for part 23 airplanes do not contain adequate requirements for use of rechargeable lithium batteries in airborne applications. This type of battery possesses certain failure and operational characteristics with maintenance requirements that differ significantly from that of the nickel-cadmium (Ni-Cd) and lead-acid rechargeable batteries approved in § 23.1553, amendment 23-62 or earlier, for other normal, utility, acrobatic, and commuter category airplanes. Therefore, the FAA is issuing this special condition to address—

• All characteristics of the rechargeable lithium batteries and their installation that could affect safe operation of the Model P2012 airplane; and

• Appropriate Instructions for Continued Airworthiness (ICA) that include maintenance requirements to ensure the availability of electrical power from the batteries when needed.

Under the provisions of § 21.17, Tecnam must show that the Model P2012 airplane meets the applicable provisions of part 23, as amended by amendment 23-1 through 23-62 thereto.

If the Administrator finds that the applicable airworthiness regulations ( i.e., 14 CFR part 23) do not contain adequate or appropriate safety standards for the Model P2012 airplane because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

In addition to the applicable airworthiness regulations and special conditions, the Model P2012 airplane must comply with the fuel vent and exhaust emission requirements of 14 CFR part 34 and the noise certification requirements of 14 CFR part 36; and the FAA must issue a finding of regulatory adequacy under § 611 of Public Law 92-574, the “Noise Control Act of 1972.”

The FAA issues special conditions, as defined in § 11.19, under § 11.38 and they become part of the type certification basis under § 21.17(a)(2).

Special conditions are initially applicable to the models for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, the FAA would apply these special conditions to the other model.

The Model P2012 airplane will incorporate the following novel or unusual design features: The installation of a rechargeable lithium battery—intended as energy storage for the airplane—will power the essential load for continued safe flight and landing if the electrical generating system fails.

The applicable regulations governing the installation of batteries in general aviation airplanes were derived from Civil Air Regulations (CAR) 3 as part of the recodification that established 14 CFR part 23. The battery requirements identified in § 23.1353 were a rewording of the CAR requirements. Subsequent rulemaking activities—resulting from increased incidents of Ni-Cd battery fire or failures—added § 23.1353(f) and (g), amendments 23-20 and 23-21, respectively. The FAA did not envision the introduction of lithium battery installations when these regulations were published.

The proposed use of rechargeable lithium batteries prompted the FAA to review the adequacy of these existing regulations. We determined the existing regulations do not adequately address the safety of lithium battery installations.

Current experience with rechargeable lithium batteries in commercial or general aviation is limited. However, other users of this technology—ranging from personal computers, to wireless telephone manufacturers, to the electric vehicle industry—have noted safety problems with rechargeable lithium batteries. These problems, as described in the following paragraphs, include overcharging, over-discharging, flammability of cell components, cell internal defects, and hazards resulting from exposure to extreme temperatures.

1. Overcharging. In general, rechargeable lithium batteries are significantly more susceptible than their Ni-Cd or lead-acid counterparts to thermal runaway, which is an internal failure that can result in self-sustaining increases in temperature and pressure. This is especially true for overcharging, which causes heating and destabilization of the components of the cell, leading to the formation (by plating) of highly unstable metallic lithium. The metallic lithium can ignite, resulting in a self-sustaining fire or explosion. Finally, the severity of thermal runaway due to overcharging increases with increasing battery capacity due to the higher amount of electrolyte in large batteries.

2. Over-discharging. Discharge of some types of rechargeable lithium battery cells beyond the manufacturer's recommended specification can cause corrosion of the electrodes of the cell, resulting in loss of battery capacity that cannot be reversed by recharging. This loss of capacity may not be detected by the simple voltage measurements commonly available to flight crews as a means of checking battery status—a problem shared with Ni-Cd batteries. In addition, over-discharging has the potential to lead to an unsafe condition (creation of dendrites that could result in internal short circuit during the recharging cycle).

3. Flammability of Cell Components. Unlike Ni-Cd and lead-acid batteries, some types of rechargeable lithium batteries use liquid electrolytes that are flammable. The electrolyte can serve as a source of fuel for an external fire, if there is a breach of the battery container.

4. Cell Internal Defects. The rechargeable lithium batteries and rechargeable battery systems have a history of undetected cell internal defects. These defects may or may not be detected during normal operational evaluation, test, and validation. This may lead to an unsafe condition during in-service operation.

5. Extreme Temperatures. Exposure to an extreme temperature environment has the potential to create major hazards. Care must be taken to ensure that the lithium battery remains within the manufacturer's recommended specification.

As discussed above, these special conditions are applicable to the Model P2012 airplane. Should Tecnam apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, the FAA would apply these special conditions to that model as well.

This action affects only certain novel or unusual design features on the Model P2012 airplane. It is not a rule of general applicability.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued, in lieu of the requirements in § 23.1353 (a), (b), (c), (d), and (e), amendment 23-62, as part of the type certification basis for the Tecnam Model P2012 airplane.

Lithium battery installations must be designed and installed as follows:

(1) Safe cell temperatures and pressures must be maintained during—

i. Normal operations;

ii. Any probable failure conditions of charging or discharging or battery monitoring system; and

iii. Any failure of the charging or battery monitoring system shown to not be extremely remote.

(2) The rechargeable lithium battery installation must be designed to preclude explosion and fire in the event of a failure under (1)(ii) and (1)(iii) above.

(3) Design of the rechargeable lithium batteries must preclude the occurrence of self-sustaining, uncontrolled increases in temperature or pressure.

(4) No explosive or toxic gasses emitted by any rechargeable lithium battery in normal operation or as the result of any failure of the battery charging system, monitoring system, or battery installation, which is shown to not be extremely remote, may accumulate in hazardous quantities within the airplane.

(5) Installations of rechargeable lithium batteries must meet the requirements of § 23.863(a) through (d), amendment 23-34.

(6) No corrosive fluids or gases that may escape from any rechargeable lithium battery may damage surrounding structure or any adjacent systems, equipment, electrical wiring, or the airplane in such a way as to cause a major or more severe failure condition, in accordance with § 23.1309, amendment 23-62.

(7) Each rechargeable lithium battery installation must have provisions to prevent any hazardous effect on structure or essential systems that may be caused by the maximum amount of heat the battery can generate during a short circuit of the battery or of its individual cells.

(8) Rechargeable lithium battery installations must have a system to automatically control the charging rate of the battery to prevent battery overheating and overcharging, and either:

i. A battery temperature sensing and over-temperature warning system with a means for automatically disconnecting the battery from its charging source in the event of an over-temperature condition; or

ii. A battery failure sensing and warning system with a means for automatically disconnecting the battery from its charging source in the event of battery failure.

(9) Any rechargeable lithium battery installation, the function of which is required for safe operation of the aircraft, must incorporate a monitoring and warning feature that will provide an indication to the appropriate flight crewmembers whenever the state of charge of the batteries has fallen below levels considered acceptable for dispatch of the aircraft.

(10) The Instructions for Continued Airworthiness (ICA) required by § 23.1529 must contain maintenance requirements to ensure that the battery has been sufficiently charged at appropriate intervals specified by the battery manufacturer and the equipment manufacturer that contain the rechargeable lithium battery or rechargeable lithium battery system. The lithium rechargeable batteries and lithium rechargeable battery systems must not degrade below specified ampere-hour levels sufficient to power the aircraft system. The ICA must also contain procedures for the maintenance of replacement batteries to prevent the installation of batteries that have degraded charge retention ability or other damage due to prolonged storage at a low state of charge. Replacement batteries must be of the same manufacturer and part number as approved by the FAA.

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends Class E airspace extending upward from 700 feet above the surface at Mettel Field Airport, Connersville, IN, and Richmond Municipal Airport, Richmond, IN, to support IFR operations at these airports.

The FAA published a notice of proposed rulemaking in the Federal Register (84 FR 5014; February 20, 2019) for Docket No. FAA-2019-0039 to amend Class E airspace extending upward from 700 feet above the surface at Mettel Field Airport, Connersville, IN, and Richmond Municipal Airport, Richmond, IN. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. One comment was received, and the FAA provides the following response.

Class E airspace extending from 700 feet above the surface of an airport is provided for transition to and from the terminal or en route environment within the National Airspace System. The size and design of this airspace is determined by FAA Order 7400.2M, Procedures for Handling Airspace Matters, and takes both instrument and visual flight rules approach and departure procedures at the airports into consideration. The design of the airspace provides the transitional airspace required without absorbing more of the Class G airspace than is required. In the cases of Mettel Field Airport, Connersville, IN, and Richmond Municipal Airport, Richmond, IN, Class E airspace extending upward from 700 feet above the surface already exists at both airports and no additional airspace is included in the proposal. The airspace radius at these airports is being reduced by 1 mile and 0.5 miles, respectively, due to changes at the airports and in the approach and departure procedures at each airport in compliance with FAA Order 7400.2M while taking the approach and departure procedures at each airport into consideration.

The comment regarding problems in scheduling landings at these airports is not an issue that can be addressed by airspace design but with airport management, and should be addressed with the appropriate airport authority.

Additionally, subsequent to publication, the FAA discovered a typographic error in the geographic coordinates for Reid Municipal Heliport contained within the Richmond, IN, airspace legal description. That error is corrected in this action.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11C, dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by:

Modifying the Class E airspace extending upward from 700 feet above the surface to within a 6.6-mile radius (reduced from a 7.6-mile radius) of Mettel Field Airport, Connersville, IN; updating the geographic coordinates of the airport to coincide with the FAA's aeronautic database; and removing the city from the airport name and the exclusion verbiage to comply with FAA Order 7400.2M, Procedures for Handling Airspace Matters; and

Modifying the Class E airspace extending upward from 700 feet above the surface to within a 6.5-mile radius (reduced from a 7-mile radius) of Richmond Municipal Airport, Richmond, IN; updating the geographic coordinates of Richmond Municipal Airport and Reid Hospital Heliport, Richmond, IN, to coincide with the FAA's aeronautic database; and correcting the typographic error for the geographic coordinates for Reid Hospital Heliport.

This action is the result of an airspace review caused by the decommissioning of the Richmond VOR, which provided navigation information for the instrument procedures at these airports, as part of the VOR MON Program.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5.a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it amends Class E airspace extending upward from 700 feet above the surface at Butler County Regional Airport-Hogan Field, Hamilton, OH, to support IFR operations at this airport.

The FAA published a notice of proposed rulemaking in the Federal Register (84 FR 5019; February 20, 2019) for Docket No. FAA-2019-0040 to amend Class E airspace extending upward from 700 feet above the surface at Butler County Regional Airport-Hogan Field, Hamilton, OH. Interested parties were invited to participate in this rulemaking effort by submitting written comments on the proposal to the FAA. No comments were received.

Class E airspace designations are published in paragraph 6005 of FAA Order 7400.11C, dated August 13, 2018, and effective September 15, 2018, which is incorporated by reference in 14 CFR 71.1. The Class E airspace designations listed in this document will be published subsequently in the Order.

This document amends FAA Order 7400.11C, Airspace Designations and Reporting Points, dated August 13, 2018, and effective September 15, 2018. FAA Order 7400.11C is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.11C lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

This amendment to Title 14 Code of Federal Regulations (14 CFR) part 71 by modifying the Class E airspace extending upward from 700 feet above the surface to within a 6.5-mile radius (reduced from a 6.9-mile radius) of Butler County Regional Airport-Hogan Field, Hamilton, OH.

This action is necessary due to an airspace review caused by the decommissioning of the Richmond VOR, which provided navigation information for the instrument procedures at this airport, as part of the VOR MON Program.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current, is non-controversial and unlikely to result in adverse or negative comments. It, therefore: (1) Is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, “Environmental Impacts: Policies and Procedures,” paragraph 5-6.5.a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exist that warrant preparation of an environmental assessment.

In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

Table of Contents     Paragraph

1. On July 18, 2018, the Commission issued a final rule  1 (Order No. 849) adopting procedures for determining which jurisdictional natural gas pipelines may be collecting unjust and unreasonable rates in light of the income tax reductions provided by the Tax Cuts and Jobs Act  2 and the Commission's Revised Policy Statement  3 and precedent  4 concerning tax allowances to address the double recovery issue identified by United Airlines, Inc. v. FERC . 5 These procedures also allow interstate natural gas pipelines to voluntarily reduce their rates.

2. As discussed below, we deny the requests for rehearing and reaffirm the Commission's determinations in Order No. 849.

3. Order No. 849 established a requirement, pursuant to sections 10 and 14(a) of the Natural Gas Act (NGA), 6 that all interstate natural gas companies with cost-based stated rates that filed a 2017 FERC Form No. 2 or 2-A must file the FERC Form No. 501-G informational filing for the purpose of evaluating the impact of the Tax Cuts and Jobs Act and the United Airlines Issuances on interstate natural gas pipelines' revenue requirements. In addition to the FERC Form No. 501-G filing requirement, the Commission provided four options for each interstate natural gas pipeline to make a filing to address the changes to the pipeline's recovery of tax costs or explain why no action is needed: (1) A limited NGA section 4  7 rate reduction filing (Option 1), (2) a commitment to file a general section 4 rate case or prepackaged settlement in the near future (Option 2), (3) an explanation why no rate change is needed (Option 3), and (4) no action (Option 4). These procedures were intended to encourage natural gas pipelines to voluntarily reduce their rates to the extent the tax changes result in their over-recovering their cost of service, while also providing the Commission and stakeholders information necessary to take targeted actions under NGA section 5  8 where necessary to achieve just and reasonable rates.

4. In Order No. 849, the Commission identified 129 interstate natural gas pipelines with cost-based rates that were required to file the FERC Form No. 501-G. As of the date of this order, the Commission has received 129 interstate natural gas pipeline filings. One pipeline still has an extension of time and eight have been granted a waiver of filing the FERC Form No. 501-G. Of the remaining 120 pipelines, nine pipelines filed limited NGA section 4 rate reduction filings under Option 1, 9 22 pipelines filed general NGA section 4 cases or prepackaged settlements revising their rates under Option 2, 84 pipelines filed statements as to why no change in their rates is necessary under Option 3, and five pipelines filed the FERC Form No. 501-G without taking any other action under Option 4. Additionally, the Commission has initiated six NGA section 5 rate investigations.

5. The following entities filed timely requests for rehearing of Order No. 849: Process Gas Consumers Group and American Forest and Paper Association (Process Gas); Enable Mississippi River Transmission, LLC and Enable Gas Transmission, LLC (together, Enable); and the Kinder Morgan Entities, 10 Spectra Energy Partners, LP, and Enable (collectively, Pipeline Group). We deny rehearing, as discussed below.

6. As stated above, the final rule established a requirement, pursuant to sections 10 and 14(a) of the NGA, that all interstate natural gas companies, with cost-based stated rates, that filed a 2017 FERC Form No. 2 or 2-A must file the FERC Form No. 501-G informational filing for the purpose of evaluating the impact of the Tax Cuts and Jobs Act and the United Airlines Issuances on interstate natural gas pipelines' revenue requirements. 11 Using the data in the pipelines' 2017 FERC Form Nos. 2 and 2-A, these studies estimate (1) the percentage reduction in the pipeline's cost of service resulting from the Tax Cuts and Jobs Act and the Revised Policy Statement, and (2) the pipeline's current Returns on Equity (ROE) before and after the reduction in corporate income taxes and the elimination of income tax allowances for master limited partnership (MLP) pipelines. Recognizing that the 2017 calendar year data reported in the pipeline's FERC Form No. 2 or 2-A may not be fully representative of the pipeline's current situation when it files the FERC Form No. 501-G, the Commission provided pipelines the opportunity to file an Addendum to the FERC Form No. 501-G. 12 The Commission emphasized the informational nature of the FERC Form No. 501-G filing and explained that “the [f]inal [r]ule contains no requirement that an interstate pipeline make any form of rate filing.”  13 Regarding the Addendum to the FERC Form No. 501-G, the Commission stated that the filing of such an Addendum is “purely voluntary.”  14

7. The final rule also permitted pipelines to use the indicated cost of service reduction calculated in the FERC Form No. 501-G as the basis for the limited NGA section 4 rate reduction filings, which the final rule allowed pipelines to make to reduce their maximum rates to reflect the reduced corporate income tax rates provided by the Tax Cuts and Jobs Act or the elimination of MLP tax allowances by the Revised Policy Statement. However, the final rule also clarified that a pipeline could base the rate reduction on the reduction calculated in its Addendum. 15

8. The final rule found that NGA sections 10 and 14(a) provided the Commission authority to require pipelines to file the FERC Form No. 501-G. The Commission stated that it routinely initiates NGA section 5 investigations “based upon our review of publicly available information on file with the Commission”  16 and that the primary purpose of the FERC Form No. 501-G is to “provide information relevant to determining whether the Commission should exercise its discretion to initiate an investigation under NGA section 5.”  17 The Commission rejected the argument that the court's decision in Consumers Energy v. FERC reversing a Commission order requiring Hinshaw pipelines to file a petition for rate change prohibited the Commission from requiring pipelines to file the FERC Form No. 501-G. The Commission found that, to the contrary, Consumers Energy v. FERC condoned information collection as long as the Commission acts “ `with clarity and precision' so as to ensure that any directive for the pipeline to make `informational filings' is just that, and not an NGA section 4 filing to `justify its current rate.' ”  18 The Commission also found in the final rule that providing pipelines with the option to submit an Addendum, which may require the pipeline to exercise some degree of judgment, does not transform the proceeding into an NGA section 4 rate filing or improperly shift to the pipeline the burden of justifying its existing rates in violation of NGA section 5. 19 The Commission explained that the D.C. Circuit rejected a similar contention in INGAA v. FERC and found that the Commission “has authority . . . under [NGA section] 10 and [NGA section] 14 to require pipelines to submit needed information for making its [NGA section] 5 decisions.”  20

9. Pipeline Group argues that the Commission exceeded its statutory authority under NGA sections 10 and 14 and disregarded the requirements of NGA sections 4 and 5 by requiring pipelines to complete and file the FERC Form No. 501-G. 21 Pipeline Group argues that the rate assumptions pipelines are required to make in the FERC Form No. 501-G are not merely informational and are in fact rate determinations that produce a distorted view as to whether the pipelines' rates remain just and reasonable and generate an indicated rate reduction, which the Commission later referred to as an “indicated cost of service reduction” in the final rule. Pipeline Group argues that the indicated cost of service reduction generated by the FERC Form No. 501-G is an implied rate and that only a pipeline is empowered to propose such a change in its rates, under its own terms, pursuant to NGA section 4. 22 Pipeline Group argues that the Commission may only propose such a reduction in a pipeline's cost of service and resulting rates pursuant to NGA section 5. Pipeline Group also argues that the Commission is shifting the burden of proof by requiring pipelines to file a form that compels a statement of an indicated rate reduction that “can be used as evidence to the exact same extent that any other Commission form can be used as evidence.”  23 Pipeline Group contends that the courts have been vigilant in maintaining the boundary between NGA sections 4 and 5  24 and that, to comply with the NGA, the Commission should abandon or substantially amend the FERC Form No. 501-G requirement. Pipeline Group also points out that the Commission already collects information through FERC Form Nos. 2  25 and 3-Q, 26 which Pipeline Group argues is evidence that the FERC Form No. 501-G is not merely an information collection requirement. Additionally, Pipeline Group argues that the option of providing an addendum to the FERC Form No. 501-G forces a pipeline to defend an existing just and reasonable rate, which is a step reserved to pipelines in an NGA section 4 or 5 proceeding.

10. Pipeline Group argues that the Commission's comparison of the final rule to Order No. 637's requirements that pipelines provide information concerning the operational feasibility of segmentation is misplaced. 27 Pipeline Group contends that the Order No. 637 informational requirement concerned pipeline operational matters, not rate matters. Pipeline Group argues that the INGAA v. FERC   28 court agreed that the Commission has authority under NGA sections 10 and 14 to require a pipeline to submit needed information for making its NGA section 5 decisions but that this agreement was limited to the specific issues of Order No. 637. Pipeline Group also argues that the comparison of the FERC Form No. 501-G to reporting requirements of Hinshaw pipelines is inaccurate. 29 Pipeline Group contends that, because the FERC Form No. 501-G runs data through a formula that produces an indicated cost of service reduction among other things, FERC Form No. 501-G is akin to the Commission's required petition for rate approval for Hinshaw pipelines that was invalidated the Sixth Circuit in Consumers Energy v. FERC . 30

11. We disagree with Pipeline Group's characterization of the FERC Form No. 501-G. We find that the requirement to file the FERC Form No. 501-G is a permissible collection of information pursuant to NGA sections 10 and 14(a), rather than an impermissible requirement that pipelines file a rate pursuant to NGA section 4, as argued by Pipeline Group.

12. As the Commission stated in the final rule, the FERC Form No. 501-G serves two purposes. The first purpose is to provide information relevant to determining whether the Commission should exercise its discretion to initiate an investigation under NGA section 5 as to whether the subject interstate natural gas pipeline may be collecting unjust and unreasonable rates in light of the recent reduction in the corporate income tax rate and change in the Commission's income tax allowance policies. The second purpose is to support any limited NGA section 4 filings pipelines may choose to make to reduce their maximum rates to reflect the Tax Cuts and Jobs Act or the United Airlines Issuances. The Commission's authority to require information for both these purposes is provided in NGA sections 10(a) and 14(a). 31

13. With regard to the first purpose, the D.C. Circuit expressly held in INGAA v. FERC that “[t]he Commission has authority under [section] 5 of the NGA to order hearings to determine whether a given pipeline is in compliance with FERC's rules, . . . and under [NGA section] 10 and [section] 14 to require pipelines to submit needed information for making its [section] 5 decisions .”  32 In INGAA v. FERC, the court affirmed the Commission's exercise of this authority to direct each pipeline to file pro forma tariff sheets showing how it intended to comply with a regulation requiring pipelines to permit segmentation  33 or to explain why its system's configuration justified not acting under NGA section 5 to require full segmentation rights. In affirming this requirement, the court stated, “As to the Commission's determination to extract information from pipelines relevant to the practical issues, we see no violation of the NGA.”  34

14. The FERC Form No. 501-G requires pipelines to calculate their “Total Estimated ROE (excluding fuel)” before and after the reduction in corporate income taxes and the elimination of income tax allowances for MLP pipelines. 35 The final rule found that information concerning the pipeline's ROE was relevant to the issue of whether the Commission should exercise its discretion to initiate an investigation of the pipeline's rate pursuant to NGA section 5, and therefore the court's decision in INGAA v. FERC supported the Commission's authority to collect this information.

15. Pipeline Group suggests that the court's holding in INGAA v. FERC was limited to providing information on operational issues of the type at issue in that case, rather than rate issues. We disagree. NGA section 10 expressly provides that the Commission may require pipelines to report information relevant to rates including “among other things, full information as to assets and liabilities, capitalization, investment and reduction thereof, gross receipts, interest due and paid, depreciation, amortization, and other reserves, cost of facilities, cost of maintenance and operation of facilities for the [. . .] transportation [. . .] of natural gas, cost of renewal and replacement of such facilities, transportation, delivery, uses, and sale of natural gas.” This is exactly the type of cost and revenue information the FERC Form No. 501-G collects in order to calculate the pipeline's total estimated ROE for purposes of deciding whether to initiate a NGA section 5 investigation.

16. The FERC Form No. 501-G also calculates an “Indicated Cost of Service Reduction”  36 for use in conjunction with the limited NGA section 4 rate reduction filings that pipelines can elect to file under Option 1 of the final rule. Pipeline Group contends that the requirement to calculate an Indicated Cost of Service Reduction effectively requires the pipeline to make a NGA section 4 rate filing. This contention is wrong. Although Pipeline Group is correct that the form includes equations that calculate certain values, including the indicated cost of service reduction, the inclusion of these equations and calculated values does not transform the informational filing into a NGA section 4 rate filing. The FERC Form No. 501-G is limited to requesting cost and revenue information as permitted by NGA sections 10 and 14(a). It does not require pipelines to file any change in their existing rate schedules as is contemplated by NGA section 4. It is true that the final rule gives pipelines the option to submit a separate limited NGA section 4 filing reducing their maximum rates based on the indicated cost of service reduction calculated in the FERC Form No. 501-G. However, that is simply one option among the four options the final rule provides pipelines, including the option to take no action at all other than filing the FERC Form No. 501-G. There is no requirement that pipelines make any such limited NGA section 4 rate reduction filing, and if a pipeline does make such a filing it may base the rate reduction on data in its Addendum rather than the indicated cost of service reduction calculated in the FERC Form No. 501-G. 37 In fact, only 11 of the 129 pipelines subject to the requirement to file a FERC Form No. 501-G have thus far chosen the option of filing a limited NGA section 4 rate reduction pursuant to § 154.404 adopted pursuant to the final rule, 38 thereby demonstrating the voluntary nature of this option. This rulemaking proceeding is thus unlike New York PSC, 39 relied on by Pipeline Group, in which the Commission ordered a pipeline to file an actual NGA section 4 rate case every three years, with revised rate schedules setting forth proposed rates for each customer class.

17. Additionally, the Commission's decision to allow pipelines to include an addendum to their FERC Form No. 501-G does not transform the proceeding into an NGA section 4 proceeding. The Commission understood that the standardized FERC Form No. 501-G may not provide a complete cost and revenue profile for each pipeline and provided an opportunity for pipelines to voluntarily submit additional information to the Commission. The Commission did not determine in the final rule that the information provided in the FERC Form No. 501-G, with or without an addendum, would constitute a rate filing.

18. In both Consumers Energy v. FERC and INGAA v. FERC, the courts considered the Commission's intent when deciding whether an information collection requirement constituted an impermissible requirement for a pipeline to justify its existing rates under NGA section 4, i.e., was the Commission's intent (1) only to collect information for use in satisfying its burdens under NGA section 5 or (2) instead to require the pipeline to modify its rates under NGA section 4. Thus, in Consumers Energy v. FERC, reversing a Commission information collection requirement, the court stated, “If all FERC had really wanted to do was require Consumers to make periodic `informational filings,' then it is difficult to understand why, for example, FERC's initial order provides that . . . Consumers shall file ` a petition for rate approval to justify its current rate or to establish a new maximum rate.' ”  40 The court also pointed to the fact that the Commission did not use the term “informational filings” nor any obvious synonym to describe the petition in either of its orders. 41 By contrast, in INGAA v. FERC, the court affirmed an information collection requirement, finding that “the orders contain some express language supporting the position of the Commission's counsel at oral argument that FERC will indeed shoulder the burden under [section] 5 of the NGA to show the requisite operational feasibility,”  42 and the court cited, among other things, the Commission's statement in Order No. 637-B that the Commission “will be acting under section 5 to implement changes.”  43

19. Consistent with the Commission orders at issue in INGAA v. FERC, and contrary to the orders at issue in Consumers Energy v. FERC, the final rule consistently treats the FERC Form No. 501-G as simply an informational filing, and the final rule recognizes that the Commission must proceed under NGA section 5 in order to require any pipeline to reduce its rates to reflect the income tax reduction in the Tax Cuts and Jobs Act or the elimination of the MLP tax allowance in the Revised Policy Statement. For example, the final rule states, “The primary purpose of the One-time Report . . . is to provide information relevant to determining whether the Commission should exercise its discretion to initiate an investigation under NGA section 5 as to whether the subject interstate natural gas pipeline may be collecting unjust and unreasonable rates in light of the recent reduction in the corporate income tax rate and change in the Commission's income tax allowance policies.”  44 The final rule also expressly states that “[i]f we decide based on the information in the One-time Report to initiate a section 5 investigation, we will, as in the Order No. 637 compliance filings addressed in INGAA, `shoulder the burden under [section] 5 of the NGA.' ”  45 Moreover, unlike the Commission orders addressed in Consumers Energy v. FERC, the final rule consistently described the FERC Form No. 501-G as an “informational filing.”  46

20. Pipeline Group points out that, on remand of the court's decision in Consumers Energy v. FERC, the Commission established a policy of requiring Hinshaw Pipelines to make periodic informational filings in the form specified by § 154.313 of the Commission's regulations for minor rate changes, instead of requiring them to file a petition for rate change. 47 Pipeline Group asserts that, although NGA sections 10 and 14(a) may permit the Commission to require pipelines to file the information contained in § 154.313, the FERC Form No. 501-G is different from § 154.313. Pipeline Group asserts that the FERC Form No. 501-G does not simply require pipelines to file the data listed in § 154.313, but instead it runs the data through a formula that produces an indicated cost of service reduction, among other things. Therefore, Pipeline Group argues, the FERC Form No. 501-G is akin to the impermissible requirement to file a petition for rate change invalidated by Consumers Energy v. FERC, “because it produces an output, requiring the pipeline to justify whether its rates remain just and unreasonable.”  48

21. We disagree. First, Pipeline Group's attempt to distinguish the FERC Form No. 501-G from § 154.313 is factually incorrect. For example, § 154.313(b) requires the pipeline to file the Statements I-1 through I-4 and Statement J required by § 154.312. Statement I-1 through I-4 require the pipeline to functionalize, classify, and allocate its cost of service and provide the formulae used in the allocation of the cost of service. Schedule J requires the pipeline to compare total revenue by rate schedule to the allocated cost of service, and Schedule J-2 requires the pipeline to show the derivation of each rate component of each rate schedule. Thus, § 154.313, similar to the FERC Form No. 501-G, requires the pipeline to run data through formulas that produce “an output.” Moreover, in the case of § 154.313, the “output” is not simply an overall indicated reduction in cost of service, but specific rates for each rate schedule. Thus, § 154.313 requires the pipeline to provide substantially more detailed information concerning its costs, revenues, and rates than the five-page FERC Form No. 501-G, which does not require any allocation of costs among rate schedules or derivation of rates for each service.

22. In any event, as discussed above, the key question in determining whether the FERC Form No. 501-G is a permissible information collection requirement is whether the Commission intended only to collect information for use in satisfying its burdens under NGA section 5 or whether the FERC Form No. 501-G actually requires the pipeline to modify its rates. As with our requirement for Hinshaw pipelines to file a cost and revenue study consistent with § 154.313, our intent in requiring the FERC Form No. 501-G is only to collect information for use in satisfying our burdens under NGA section 5. Aside from the express language in Order No. 849 summarized above stating this intent, the Commission has in fact used the FERC Form No. 501-G in precisely the manner it said it would—to determine whether to exercise its discretion to initiate an NGA section 5 rate investigation of each pipeline.

23. A common outcome following the filing of the FERC Form No. 501-G has been a Commission order explaining that the Commission has determined not to exercise its discretion to initiate a NGA section 5 rate investigation and the closure of the docket without further Commission action. 49 In the cases in which the Commission has initiated an NGA section 5 investigation and established a hearing, it has done so based upon the FERC Form No. 501-G, comments to the form, and publicly available information on file with the Commission, 50 and has expressly recognized that the pipeline does not have an NGA section 4 burden to justify its existing rates. 51 Moreover, the Commission has required the pipeline to submit a cost and revenue study based on the latest 12-month period available, and authorized use of an abbreviated six-month adjustment period following the 12-month base period used in the cost and revenue study. 52 Thus, any rate change that may be required in the NGA section 5 proceeding is likely to be based on cost and revenue data from 2018 and early 2019, rather than the 2017 Form Nos. 2 and 2-A data reflected in the FERC Form No. 501-G or the indicated cost of service reduction calculated based on that data.

24. In summary, contrary to Pipeline Group's arguments, requiring the informational FERC Form No. 501-G filing is squarely within the Commission's authority and it has not served as a rate filing. Pipeline Group suggests that the Commission may only propose a reduction in a pipeline's cost of service and resulting rates pursuant to NGA section 5, and that is in fact what has occurred following the final rule. The FERC Form No. 501-G is not an NGA section 4 filing and the pipeline is not required to show that its rates are just and reasonable. The pipeline need only provide accurate information in its FERC Form No. 501-G filing, as required by NGA section 10(a). 53 Pipeline Group is also incorrect in its assertion that, because the Commission already collects information through FERC Form Nos. 2 and 3-Q, the FERC Form No. 501-G is somehow more than an information collection requirement. The FERC Form No. 501-G collects information that is not required in FERC Form Nos. 2 and 3-Q, specifically the effect of the recent reduction in the corporate income tax rate and change in the Commission's income tax allowance policies on a pipeline's cost of service. Pursuant to NGA sections 10(a) and 14(a), the Commission is permitted to collect information to assist in the proper administration of the NGA, and the Commission is not limited to the information required in FERC Form Nos. 2 and 3-Q.

25. In the final rule, the Commission required that each pipeline's FERC Form No. 501-G be completed using an indicative ROE of 10.55 percent, consistent with the ROE determined in El Paso, 54 the last rate case where that issue was fully litigated. 55 The final rule also revised the originally proposed FERC Form No. 501-G to ask respondents a series of factual questions about their actual capital structure in order to elicit the information necessary to apply the Commission's capital structure policy set forth in Transcontinental Gas Pipe Line Corp. 56 Under that policy, a pipeline may use its own capital structure, if its debt is issued in its own name and publicly traded, the debt is rated by a rating agency, and the equity portion of the capital structure is not excessive. 57 If the pipeline's own debt does not satisfy these standards, it can use its parent's capital structure, if the parent satisfies the same standards. Otherwise, the pipeline must use a hypothetical capital structure. Based on the FERC Form No. 501-G's questions as to whether the pipeline or its parent satisfies these standards, the form automatically uses either the reported capital structure of the pipeline or its parent or a hypothetical capital structure. 58 The final rule also held that, if a hypothetical capital structure was used, it would be 57 percent equity and 43 percent debt, consistent with the average capital structures of the proxy companies used to determine the 10.55 percent ROE in El Paso . 59

26. Pipeline Group argues that the inputs to the FERC Form No. 501-G, such as the Indicative ROE and the Hypothetical Capital Structure, are not supported by the record or justified, and are arbitrary and capricious. 60 Pipeline Group contends that the Commission did not sufficiently respond to its comments to the Notice of Proposed Rulemaking that the criteria pipelines are directed to utilize in the FERC Form No. 501-G (such as the Indicative ROE of 10.55 percent and the specified Hypothetical Capital Structure) are misplaced, unlawful, and should be deleted from the form and left for each individual pipeline to determine. Pipeline Group argues that the Commission made no showing that the proxy group in the El Paso proceeding used to calculate the 10.55 percent indicative ROE in the FERC Form No. 501-G would produce the same ROE six years later. Pipeline Group argues that the Commission did not make a showing pursuant to NGA section 5 that such an ROE is appropriate for a different pipeline serving different markets.

27. Pipeline Group also argues that the Commission departed from prior practice in its review of pipeline Form Nos. 2 and 2-A reports for purposes of deciding whether to initiate NGA section 5 rate investigations when it required pipelines to propose a capital structure and make a legal determination as to whether that proposed structure and debt cost meets the requirements of Opinion No. 414. Pipeline Group asserts that the Commission has not previously imposed such a requirement on pipelines. 61

28. Additionally, Pipeline Group argues that pipelines' current rates may be established pursuant to settlements of NGA section 4 or 5 proceedings on a “black box” basis without specifying individual components used to calculate rates including ROE and capital structure. Pipeline Group contends that, by requiring certain ROE and capital structure inputs, the Commission is expanding the review of pipeline's existing rates from reductions in light of the Tax Cuts and Jobs Act to the overall costs and revenues of the pipeline akin to a traditional NGA section 5 proceeding.

29. The Commission addressed many of the same arguments in the final rule that Pipeline Group raises on rehearing. As explained in the final rule, a cost and revenue study requires an indicative ROE and, consistent with Commission practice in other contexts, the final rule used the last litigated ROE determined by Commission. For example, the Commission has used the last litigated ROE in developing initial rates for existing facilities being acquired by a new pipeline. 62 Here, the last litigated ROE was in El Paso wherein the Commission adopted an ROE of 10.55 percent.

30. The Commission recognized that the 10.55 percent ROE determined in El Paso was based on financial data from 2011. However, no commenter provided any updated ROE analysis using current financial data that the Commission could use in the FERC Form No. 501-G. The Commission considered pipeline commenters' suggestion that they be permitted to use their own ROEs or ROEs derived in a rate proceeding or established pursuant to approved settlements, but the Commission determined that the last rate cases of many pipelines occurred as long ago as, or even before, the El Paso rate case. The Commission also determined that many settlements are “black box” settlements that do not have an ROE and, therefore, using the El Paso 10.55 percent ROE as the indicative ROE in all pipelines' FERC Form No. 501-G is preferable to pipelines' using a variety of ROEs, which in almost all cases were not fully litigated. 63

31. The Commission also rejects Pipeline Group's contention that the Commission failed to support the hypothetical capital structure mandated by the FERC Form No. 501-G where the capital structure of the pipeline or its parent is deemed unacceptable for ratemaking purposes. Pipeline Group argues that the Commission has not previously in its NGA section 5 rate investigations required a pipeline to propose a capital structure and make a legal determination as to whether that capital structure satisfies the Transco requirements. As the final rule explained, the Commission modified the FERC Form No. 501-G so that it would not require a pipeline to make a legal determination as to whether its capital structure is consistent with Commission policy or propose a capital structure. Rather, the FERC Form No. 501-G requires the pipeline to answer three questions concerning facts relevant to determining what capital structure should be used to determine the pipeline's rates. 64 Then, based on the pipeline's answers to these questions, the FERC Form No. 501-G automatically chooses a capital structure consistent with the pipeline's answers to the questions. Thus, the pipeline is not asked to make any legal determination concerning what capital structure is consistent with Commission policy.

32. The use of an indicative ROE and stated capital structure in FERC Form No. 501-G is necessary to estimate a pipeline's return on equity and achieve the Commission's goal of developing a form that serves two purposes: (1) To help determine whether to initiate NGA section 5 investigations of interstate natural gas pipelines' rates and (2) provide support for limited NGA section 4 filings pipelines may choose to make to reduce their rates to reflect the Tax Cuts and Jobs Act or the United Airlines Issuances. As stated in the final rule, for purposes of helping determine whether to initiate NGA section 5 investigations of interstate natural gas pipelines' rates, the FERC Form No. 501-G is only intended to produce a rough estimate of the pipeline's ROE before and after the Tax Cuts and Jobs Act or the United Airlines Issuances. Pipeline Group contends that the Commission has not met its NGA section 5 burden to show that a pipeline's existing ROE is unjust and unreasonable or that the El Paso 10.55 percent ROE or hypothetical capital structure would be just and reasonable for a different pipeline today. However, as explained in the final rule, the Commission is not using the FERC Form No. 501-G, including its indicative ROE and capital structure, to satisfy its burden under NGA section 5 to show that any pipeline's existing rates are unjust and unreasonable. Rather, the FERC Form No. 501-G is simply intended to provide a rough estimate of the pipeline's current return on equity for purposes of deciding whether the Commission should exercise its discretion to initiate a rate investigation pursuant to NGA section 5. The data in the FERC Form No. 501-G will not be used to actually establish rates in any NGA section 5 investigation that the Commission may initiate. If the Commission does initiate an investigation pursuant to NGA section 5, any rates determined in that proceeding, including the capital structure and ROE, will be based on the record developed in the hearing, and in such a hearing, the Commission will have the burden of persuasion under NGA section 5 on all issues, including ROE. Indeed, in our orders establishing NGA rate investigations based on the information in a pipeline's FERC Form No. 501-G, the Commission has stated that it makes no finding as to what would constitute a just and reasonable ROE for the company and, if the FERC Form No. 501-G required a hypothetical capital structure, the Commission has also stated that it makes no finding as to a just and reasonable capital structure. Those are among the issues set for hearing. 65

33. Regarding the second purpose of the FERC Form No. 501-G (providing support for limited NGA section 4 filings pipelines may choose to make to reduce their rates), the Commission explained that a pipeline may submit an Addendum with its FERC Form No. 501-G setting forth an alternative ROE, along with full support for its proposed ROE, and use that ROE in calculating its proposed percentage rate reduction in its limited NGA section 4 rate filing. Similarly, pipelines are permitted to use a capital structure other than those used in its FERC Form No. 501-G in its limited NGA section 4 rate filing by submitting an Addendum to their FERC Form No. 501-G if they believe that the form inaccurately represents their financial situation. But, as previously stated, the limited NGA section 4 filing is voluntary and a pipeline is not required to submit additional information regarding its capital structure in an Addendum.

34. Finally, Pipeline Group contends that by requiring an indicative ROE and capital structure the Commission is expanding its review of pipeline rates from reductions in light of the Tax Cuts and Jobs Act to the overall costs and revenue of the pipeline—a review traditionally done in an NGA section 5 proceeding. The Commission is properly considering all the pipelines' cost and revenues in deciding whether to initiate NGA section 5 rate investigations. As explained in the final rule, 66 despite the reduction in the corporate income tax and the change in policy concerning MLP tax allowances, a rate reduction may not be justified for a significant number of pipelines, because the pipeline's existing rates may not fully recover its cost of service. The Commission must consider all the pipeline's costs and revenues to determine whether this is true. By the same token, the FERC Form No. 501-G may suggest that a pipeline is over-recovering its cost of service for reasons that go beyond the Tax Cuts and Jobs Act and the revised MLP tax allowance policy. It is consistent with our responsibilities under the NGA to investigate those possible cost over-recoveries as well.

35. In the final rule, the Commission granted in part commenters' request for a moratorium on NGA section 5 investigations in the event a pipeline chooses the limited NGA section 4 option. The Commission determined that it is “reasonable to provide pipelines an incentive to make [] limited NGA section 4 rate reduction filings” in the form of a three-year moratorium on NGA section 5 investigations, noting that such a filing is an “efficient and expeditious method of passing along to ratepayers the benefit of the reduction in the corporate income tax rate or the elimination of the MLP income tax allowance, without the need for the costly and time-consuming litigation entailed in an NGA section 5 rate investigation.”  67 Recognizing that a pipeline could make a limited NGA section 4 rate reduction filing and yet still have a significantly excessive ROE, the Commission outlined the following requirements to qualify for the three-year moratorium on NGA section 5 rate investigations: (1) The Commission accepts the pipeline's limited NGA section 4 filing and (2) the pipeline's Total Estimated ROE after the filing, as calculated on page 3, line 26, column (E) of its FERC Form No. 501-G, is 12 percent or less. 68

36. Pipeline Group argues that the 12 percent ROE test to qualify for the rate moratorium for limited NGA section 4 filings is not supported by the record or justified, and is arbitrary and capricious. 69 Pipeline Group states that it supports a rate moratorium for pipelines voluntarily participating in the limited NGA section 4 process but that establishing an arbitrary threshold to qualify for such moratorium limits any incentive that the Commission intended to provide pipelines and expands the terms of a limited NGA section 4 proceeding that the Commission intended to be limited. Pipeline Group argues the voluntary reduction alone should be sufficient to entitle the pipeline to a moratorium. Pipeline Group argues that the Commission did not provide the reasoned decision making required to justify the Commission's 12 percent threshold policy. Pipeline Group contends that the Commission has not attempted to tie the 12 percent ROE threshold to evidence in the record or to show that the threshold is representative of an appropriate ROE for pipelines across the country that operate in different markets and face differing risks. Pipeline Group claims that, over the last five years, the average ROE estimated by the Commission when instituting NGA section 5 proceedings was 18.6 percent and the lowest ROE estimated by the Commission was 15.7 percent. Pipeline Group argues that the Commission “must supply a reasoned analysis indicating that prior policies standards are being deliberately changed, not casually ignored” when it departs from an established policy, precedent, or standard. 70

37. We reject Pipeline Group's argument that the 12 percent ROE test to qualify for the three-year rate moratorium for limited NGA section 4 filings is not supported by the record or justified, and is arbitrary and capricious. The terms the Commission established for qualifying for the three-year moratorium on rate investigations are a reasonable exercise of the Commission's discretion in deciding whether to initiate an NGA section 5 investigation. 71 Pipeline Group is correct that the threshold to qualify for the moratorium limits the incentive provided by the moratorium, but only for pipelines that still may have a significantly excessive ROE even after choosing the limited NGA section 4 filing option. Based on comments and other record evidence, the Commission chose a threshold that would create an appropriate balance between incentivizing the limited NGA section 4 filing and preventing a pipeline that may have a significantly excessive ROE from shielding its rate from Commission scrutiny.

38. While Pipeline Group points out that the Commission has not initiated an NGA section 5 investigation against a pipeline with an estimated ROE below 15.7 percent in the last five years, our discretion to initiate such investigations is not restricted to pipelines with ROEs that exceed any particular level of ROE. In any event, Pipeline Group inappropriately conflates the Commission's past decisions concerning when to exercise its discretion to initiate an NGA section 5 investigation with the final rule's moratorium incentive to make the limited NGA section 4 filing. In establishing the 12 percent ROE threshold for qualifying for the moratorium, the Commission has not departed from an established policy as Pipeline Group claims. The final rule addressed a new situation not previously faced by the Commission: Whether and how to modify the stated rates of natural gas pipelines as a result of the substantial reduction in the corporate income tax by the Tax Cuts and Jobs Act and the elimination of MLP tax allowances by the United Airlines Issuances. Among other things, the Commission adopted a new rule permitting pipelines to reduce their rates to reflect these actions in limited NGA section 4 rate filings as an exception to the Commission's general policy prohibiting such limited NGA section rate reductions. In conjunction with this action, the Commission chose to agree to a three-year moratorium on rate investigations if the pipeline's ROE as calculated in the FERC Form No. 501-G was reduced to 12 percent or less. The Commission has not previously provided any such moratorium on NGA section 5 rate investigations. Thus, the Commission was adopting a new policy to address a new situation—there was no established policy from which to depart. Instead, the moratorium described in the final rule is an incentive created by the Commission to encourage pipelines to make a limited NGA section 4 filing, and the moratorium incentive is specific to that rulemaking.

39. As the Commission explained in the final rule, Accumulated Deferred Income Taxes (ADIT) balances are accumulated on the regulated books and records of interstate natural gas pipelines based on the requirements of the Commission's Uniform System of Accounts. 72 ADIT balances arise from differences between the method of computing taxable income for reporting to the Internal Revenue Service (IRS) and the method of computing income for regulatory accounting purposes. The Commission's regulatory accounting requirements then serve to inform the development of a natural gas pipeline's rates, including the depreciation and ADIT ratemaking components. The Commission stated that ADIT generally affects regulated natural gas pipelines' ratemaking either by decreasing rate base, in the case of an ADIT liability, or increasing rate base, in the case of an ADIT asset. As a result of the reduction in the federal corporate income tax rate, taxes that have been previously deferred and reflected in ADIT will be owed to the IRS based on the 21 percent tax rate, rather than the 35 percent tax rate used to recognize the ADIT initially. The difference between the already recognized ADIT based on a 35 percent tax rate and the recomputed deferred taxes, which will actually be owed to the IRS, at a 21 percent tax rate requires an adjustment to ADIT balances for the excess or deficiency. 73

40. The Commission explained that the FERC Form No. 501-G would require pipelines to use calendar year 2017 ADIT balances as reported in their 2017 FERC Form Nos. 2 and 2-A in calculating rate base. The Commission stated that FERC Form No. 501-G would also require the pipelines to reduce their income tax allowance by an amount reflecting the first year's amortization of excess ADIT resulting from the reduced income tax rates under the Tax Cuts and Jobs Act. The Commission also set forth a policy concerning the treatment of ADIT when the tax allowances of pass-through pipelines (including MLP pipelines) are eliminated. The Commission modified FERC Form No. 501-G so that, if a pass-through entity states that it does not pay taxes, the form would not only eliminate its income tax allowance, but would also eliminate ADIT. 74 The Commission noted that the modification only applies to the FERC Form No. 501-G (and the optional limited NGA section 4 filings pursuant to § 154.404(a)) of the Commission's regulations, and that it does not establish a broader rule. 75

41. Process Gas argues that the Commission erred by allowing the elimination of ADIT balances for pass-through pipelines without a reduction to the pipeline's rate base contrary to the Commission's normalization policy. 76 Process Gas contends that the Commission's normalization policy, as affirmed by the D.C. Circuit, 77 allows all ratepayers who take service from a utility throughout its depreciable life to receive the benefit of a tax deduction that the utility enjoys in the early years of operation. Process Gas states that, as a result of normalization, the pipeline's rates include a higher tax allowance in the early years than what the utility actually pays and a lower tax allowance in the later years than what it actually pays. Process Gas argues that the Commission's elimination of ADIT for pass-through pipelines that remove the allowance for income taxes from current rates without adjusting rate base violated the principle that normalization will not result in any permanent tax savings by the pipeline that are not reversed in subsequent periods. Process Gas also argues that, contrary to the D.C. Circuit's finding regarding Order No. 144, 78 the benefits of the deferred taxes will accrue to the utility's stockholders because they will retain the benefits that ADIT represents under normalization and will not be required to pass them on to future ratepayers through lower rates.

42. Process Gas also argues that the Commission incorrectly relied upon Public Utilities Commission of State of California v. FERC   79 for the proposition that continuing to deduct ADIT from rate base would constitute retroactive ratemaking. 80 Process Gas contends that an important aspect of the Court's reasoning that the Commission had no legal right to adjust rates to reflect ADIT in CPUC was the removal of transportation assets from the pass-through entity's rate base. Process Gas argues that CPUC is inapposite because the Commission only asserts that the pipeline's double recovery of tax costs associated with those assets has been removed, not the actual transportation assets. Process Gas also contends that the removal of the tax allowance from an MLP pipeline's cost of service is not a change from cost-based rate regulation to non-cost based rate regulation, as was the case in CPUC . Additionally, Process Gas argues that, unlike CPUC, the pipeline assets to which ADIT directly relates have not been removed from the pipelines' jurisdictional rates.

43. Process Gas also contends that the Commission's failure to apply ADIT as a credit retroactively increases the pipeline's returns in violation of the rule against retroactive ratemaking. 81 Process Gas argues that, while the rule against retroactive ratemaking prohibits the Commission from adjusting current rates to make up for a utility's over-collection or under-collection in prior periods, the rule does not apply when the parties are on notice that the rates may be changed. 82 Process Gas argues that, in allowing normalization, the Commission placed parties on notice that any tax savings in the early years of a pipeline's useful life would be offset by reductions to rate base in subsequent years. Process Gas also argues that parties were on notice that the account balances for the timing differences are expected to offset costs reflected in rate charges to customers in future periods and that the balance of the account is not to be transferred to earnings. Process Gas notes that ADIT is booked under the Commission's accounting regulations in Account Nos. 281 and 282, which both indicate that “[t]he utility is restricted in its use of this account to the purposes set forth above. It shall not transfer the balance in this account or any portion thereof to retained earnings or make any use thereof except as provided in the text of this account without the prior approval of the Commission.”  83 Process Gas also argues that the Commission has previously found that disregarding prior treatment of specific expenses over the life of the facilities is unjust and unreasonable  84 and that there are no retroactive ratemaking concerns with requiring a pipeline to continue to account for prepaid costs on a going forward basis. 85

44. Process Gas also argues that the Commission misconstrued prior precedent regarding whether deferred taxes can be analogized to a loan. 86 Process Gas contends that the Commission held in Order No. 849 that deferred taxes are not loans from customers and, thus, customers have no right to future rate reductions relying on its determinations in Order No. 144. Process Gas argues that, in fact, the Commission held in Order No. 144 that the loan analogy was illustrative and rejected the proposition that today's customers pay tomorrow's customer's tax costs under normalization. Process Gas argues that the Commission made clear that each generation of customers pays its own costs, and that the flow-through method gives current customers tax benefits that belong to future customers. Therefore, Process Gas argues, the Commission's determination in Order No. 849 takes away the future tax benefits from future period customers and gives them to the pipeline, which is inconsistent with Order No. 144 and its finding that deferred taxes represent a benefit owed to future customers.

45. We reject Process Gas' argument that Order No. 849 erred by requiring that pass-through entities that eliminate the income tax allowance also eliminate ADIT on the FERC Form No. 501-G. Rather, the treatment of ADIT in Order No. 849 is consistent with both Commission policy  87 and relevant court precedent. While the Commission can make changes to rates on a prospective basis, if an income tax allowance is removed from cost of service, continuing to deduct ADIT from rate base or crediting ratepayers the excess ADIT balance would constitute impermissible retroactive ratemaking. 88 We conclude that this precedent compels the approach adopted by the Commission in Order No. 849.

46. Contrary to Process Gas' arguments, the elimination of ADIT does not violate the Commission's normalization policy. 89 As the Commission explained in Order No. 849, the Commission's normalization policies only apply to entities with an income tax allowance component in their regulated cost-of-service rates. 90 In contrast, where a pipeline's income tax allowance is eliminated on the FERC Form No. 501-G under the Commission's post- United Airlines policy, there is no rationale for requiring the pipeline to record current or deferred income taxes. The Commission in Order No. 849 explained that the purpose of normalization is matching the pipeline's cost-of-service expenses in rates with the tax effects of those same cost-of-service expenses. 91 If there is no income tax allowance in Commission rates, there is no basis for the matching function of normalization and no liability for the deferred taxes reflected in ADIT.

47. We also reject Process Gas' argument that Order No. 849 deprives future customers of the benefit of deferred taxes that they are owed. Process Gas concedes that under normalization “each generation of customers pays its own [income tax] costs.”  92 As such, future customers have no equitable right to the sums accumulated in ADIT that were paid by prior customers for prior period service. 93 ADIT is not money owed to past or future ratepayers, but rather deferred taxes that are ultimately owed to the government. 94 Moreover, because future customers are not paying tax costs in rates where a pass-through pipeline's income tax allowance has been eliminated, such customers are not owed the associated “benefits” resulting from deferred taxes under the Commission's normalization policy.

48. Similarly, contrary to Process Gas' arguments, we reaffirm that it comports with retroactive ratemaking principles to require pipelines that eliminate the income tax allowance on FERC Form No. 501-G to also eliminate ADIT on the FERC Form No. 501-G. 95 As Process Gas recognizes, normalization merely requires customers to pay their properly allocated share of the pipeline's tax expenses for the period of their service. 96

49. As the Commission explained in Order No. 849, requiring pipelines to return ADIT amounts collected in prior rates for this prior period service would constitute impermissible retroactive ratemaking. 97 Although Process Gas attempts to distinguish the CPUC decision discussed in Order No. 849, in both CPUC and the scenario addressed by Order No. 849 where a pipeline's income tax is eliminated pursuant to the Commission's post- United Airlines policy, the income tax allowance is removed from cost of service and, accordingly, the basis for tax normalization in a pipeline's cost-of-service rates is no longer applicable. 98 Therefore, notwithstanding the various arguments raised by Process Gas, we continue to find that the D.C. Circuit's holding in CPUC is controlling here. As the D.C. Circuit stated, ADIT “is composed entirely of rate revenue that [the pipeline] has already collected. Refund of such property, or its earnings, would effectively force [the pipeline] to return a portion of rates approved by FERC, and collected by [the pipeline].”  99 The D.C. Circuit elaborated that, to the extent any basis for requiring the pipeline to credit ratepayers for earnings on previously accumulated ADIT sums rested on the view that the pipeline's prior cost-of- service rates were “in retrospect too high” or “unjust and unreasonable,” then the credit violated the rule against retroactive ratemaking. 100 In sum, we find that Order No. 849 correctly applied the D.C. Circuit's reasoning in CPUC in determining that requiring a pass-through pipeline whose income tax allowance has been eliminated to apply ADIT as a credit to rate base on the Form No. 501-G would be inconsistent with the rule against retroactive ratemaking. 101

50. We also reject Process Gas' argument that applying ADIT as a credit to rate base on the FERC Form No. 501-G does not constitute retroactive ratemaking because pipelines were on notice based on the Commission's normalization regulations. As explained above, the Commission's normalization policy does not apply in the context of a complete elimination of a pipeline's income tax allowance from cost of service. 102

51. We also dismiss Process Gas' argument that this case is analogous to BP Pipelines Alaska, where the Commission found that requiring a pipeline to account for prepaid costs for Dismantlement Removal and Restoration (DR&R) on a going-forward basis did not constitute retroactive ratemaking. 103 In that case, the DR&R continued to be recoverable in rates, but had merely been over-collected. In contrast, the adjustment to the FERC Form No. 501-G to remove ADIT reflects a situation where a pass-through entity's income tax allowance has been removed from cost of service, and there is thus no justification for tax normalization in going-forward rates. In these circumstances, the Commission has “no legal right to reduce [the pipeline's going forward] rates . . . below levels found to be just and reasonable” as this would constitute “in substance a retroactive adjustment of prior rates based on normalization.”  104

52. Finally, to the extent Process Gas or any other entity objects to the treatment of ADIT for purposes of the FERC Form 501-G, as set forth in Order No. 849, we reiterate that the treatment of a pass-through entity's ADIT for purposes of the FERC Form No. 501-G does not establish a broader rule, nor does Order No. 849 itself preclude shippers and pipelines from advocating for a different treatment of ADIT in any future rate litigation. 105 Rather, as explained elsewhere in this order, the FERC Form No. 501-G serves a limited informational purpose to assist the Commission in determining whether to exercise its discretion to initiate NGA section 5 investigations of interstate natural gas pipelines' rates. 106 In Order No. 849, the Commission determined that the informational FERC Form No. 501-G is likely to be the most useful if it removes ADIT whenever the income tax allowance is eliminated. 107 However, if Process Gas or another entity seeks to take a different position in a litigated rate proceeding, Order No. 849 does not preclude them from doing so.

53. For purposes of FERC Form No. 501-G, if a pipeline states that it is not a taxpaying entity, the form will automatically enter a federal and state income tax of zero. 108 The Commission stated in the final rule that a natural gas company organized as a pass-through entity, all of whose income or losses are consolidated on the federal income tax return of its corporate parent, is considered to be subject to the federal corporate income tax, and is thus eligible for a tax allowance for purposes of the final rule. 109 The Commission reasoned that an income tax allowance is appropriate in the cost of service of a pass-through subsidiary of a corporation “when such a subsidiary does not itself incur a tax liability but generates one that might appear on a consolidated return of the corporate group.”  110

54. Process Gas contends that the Commission erred by assuming that all subsidiaries of corporations that appear on the consolidated parent's tax return are generating actual income taxes for the corporation. 111 Process Gas also contends that the Commission eliminated the burden of proof for a pass-through entity claiming such a tax allowance. Process Gas argues that the determination in Order No. 849 that a natural gas company organized as a pass-through entity whose income or losses are consolidated on the federal income tax return of its corporate parent is considered to be subject to federal income taxes for the purpose of filing the limited NGA section 4 filing is not supported by the precedent cited by the Commission. 112 Process Gas argues that the BP West Coast Products, LLC precedent can be distinguished because the court appeared to require proof that a subsidiary actually generated a tax liability for the parent corporation to justify an allowance for income tax for a corporate subsidiary. Process Gas contends that the Commission may be awarding an income tax allowance based upon phantom taxes.

55. Enable argues that the Commission erred in determining that a pipeline with an MLP in its organizational structure that is owned in part indirectly by corporate unitholders should not receive an income tax allowance, yet a pass-through entity that is a wholly owned subsidiary of a corporation should be eligible for an income tax allowance. 113 Enable contends that the Commission failed to explain the purported distinction between the two pass-through structures and that the distinction is not supported by precedent. Enable argues that the Commission has inverted the logic of BP West Coast Products, LLC, and asserts that the case actually criticizes the Commission for limiting an income tax allowance to corporate unitholders (not just those consolidating on a federal return the entirety of income from an affiliate in which the corporation owed an interest). Enable also argues that the Commission ignored the fact that United Airlines did not validate a distinction between a pass-through entity wholly owned by corporate unitholders and an MLP owned in part by corporate unitholders for purposes of assessing income tax allowance eligibility.

28 CFR part 0 provides for the organization of the Department of Justice. As part of that regulation, 28 CFR 0.22, subpart D-1, Executive Office for U.S. Attorneys, describes the general functions of EOUSA. The current regulation provides that EOUSA shall publish and maintain a U.S. Attorneys' Manual. Recently, however, the name of the U.S. Attorneys' Manual was changed to the Justice Manual. This final rule makes ministerial revisions to 28 CFR 0.22 to reflect that name change. It also makes minor revisions to reflect the current functions of EOUSA's Office of Legal Education. The proposed changes are ministerial in nature rather than substantive.

This rule relates to a matter of agency management or personnel, is a rule of agency organization, procedure, or practice, and is not a substantive rule. As such, this rule is exempt from the usual requirements for prior notice and comment and a 30-day delay in effective date. See 5 U.S.C. 553(b) & (d).

This rule will not have an impact on small entities because it pertains to agency personnel and administrative matters and, therefore, is not subject to the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. A Regulatory Flexibility Act analysis is not required for this final rule because the Department was not required to publish a general notice of proposed rulemaking for this matter. See 5 U.S.C. 603(a).

This rule has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), The Principles of Regulation, and Executive Order 13563, “Improving Regulation and Regulatory Review,” section 1, General Principles of Regulation.

This action is “limited to agency organization, management, or personnel matters” and thus is not a “rule” for purposes of review by the Office of Management and Budget. See Executive Order 12866, “Regulatory Planning and Review,” section 3(d)(3).

This rule is not a regulatory action under Executive Order 13771 because this rule imposes no costs and is not a significant regulatory action under Executive Order 12866.

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

This rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132, the Department has determined that this rule does not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.

This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted for inflation) in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1501 et seq.

This action is not a major rule as defined by the Congressional Review Act. See 5 U.S.C. 804. This action pertains to agency management, personnel, and organization and does not substantially affect the rights or obligations of non-agency parties and, accordingly, is not a “rule” as that term is defined by the Congressional Review Act. Therefore, the reporting requirement of 5 U.S.C. 801 does not apply.

Accordingly, by virtue of the authority vested in me as Attorney General, including 5 U.S.C. 301 and 28 U.S.C. 509 and 510, part 0 of title 28 of the Code of Federal Regulations is amended as follows:

On January 19, 2019, Super Boat International Productions (SBIP) notified the Coast Guard that it would be conducting the Kenner Super Boat Grand Prix boat race from 10 a.m. to 5 p.m. on June 23, 2019. In response, on March 1, 2019, the Coast Guard published a notice of proposed rulemaking (NPRM) titled “Special Local Regulation; Lake Pontchartrain, New Orleans, LA” (89 FR 6989). There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to this special local regulation. During the comment period that ended April 1, 2019, we received no comments.

The Coast Guard is issuing this rule under authority in 46 U.S.C. 70041(a). The Captain of the Port New Orleans (COTP) has determined that potential hazards associated with the boat race will be a safety concern for anyone within the established race zone. The race zone would cover all navigable waters within the following coordinates on Lake Pontchartrain in New Orleans, LA: 30°03.056′ N/090°15.489′ W to 30°02.500′ N/090°13.547′ W to 30°02.717′ N/090°13.460′ W to 30°03.252′ N/090°15.374′ W. The purpose of this rule is to ensure safety of vessels and the navigable waters in the safety zone before, during, and after the scheduled event.

As noted above, we received no comments on our NPRM published March 1, 2019. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM.

This rule establishes a temporary special regulation in the specified area from 10 a.m. to 5 p.m. on June 23, 2019. The race zone would cover all navigable waters within the following coordinates on Lake Pontchartrain in New Orleans, LA: 30°03.056′ N/090°15.489′ W to 30°02.500′ N/090°13.547′ W to 30°02.717′ N/090°13.460′ W to 30°03.252′ N/090°15.374′ W. The duration of the area is intended to ensure the safety of vessels and these navigable waters before, during, and after the scheduled marine event. Only predesignated vessel(s) or person(s) would be permitted within the safety zone. The sponsor would designate a spectator zone on the north side of the race zone, as defined by the aforementioned coordinates, for vessels. No additional vessel(s) or person(s) would be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative. A designated representative is a commissioned, warrant, or petty officer of the U.S. Coast Guard assigned to units under the operational control of USCG Sector New Orleans. Vessels requiring entry into this regulated area must request permission from the COTP or a designated representative. They may be contacted on VHF-FM Channel 16 or 67 or by telephone at (504) 365-2200. Persons and vessels permitted to enter this regulated area must transit at their slowest safe speed and comply with all lawful directions issued by the COTP or the designated representative. No spectator vessel would be allowed to anchor, block, loiter, or impede the through transit of participants or a designated patrol vessel in the regulated area during the effective dates and times, unless cleared for entry by the COTP or the designated representative. Any spectator vessel may anchor outside the regulated area. Spectator vessels might be moored to a waterfront facility within the regulated area in such a way that they would not interfere with the progress of the event. Such mooring would have to be complete at least 30 minutes prior to the establishment of the regulated area and remain moored through the duration of the event.

The COTP or a designated representative might forbid and control the movement of all vessels in the regulated area. When hailed or signaled by a designated patrol vessel, a vessel would come to an immediate stop and comply with the directions given. Failure to do so might result in expulsion from the area, citation for failure to comply, or both. The COTP or a designated representative might terminate the event or the operation of any vessel at any time it is deemed necessary for the protection of life or property. The COTP or a designated representative would terminate enforcement of the special local regulations at the conclusion of the event.

The COTP or a designated representative would inform the public of the effective period for the safety zone as well as any changes in the dates and times of enforcement through Local Notice to Mariners (LNMs), Broadcast Notices to Mariners (BNMs), and/or Marine Safety Information Bulletins (MSIBs) as appropriate.

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

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

This regulatory action determination is based on the size and duration of the temporary special local regulation. The regulated area would cover a small area of the navigable waters within the following coordinates on Lake Pontchartrain in New Orleans, LA: 30°03.056′ N/090°15.489′ W to 30°02.500′ N/090°13.547′ W to 30°02.717′ N/090°13.460′ W to 30°03.252′ N/090°15.374′ W. The duration of the regulated area would be seven hours on one day and would not be expected to significantly affect the vessel traffic on Lake Pontchartrain. The COTP would allow entry into the area on a case-by-case basis. Moreover, the Coast Guard would issue a Local Notice to Mariners (LNM), Marine Safety Information Bulletins (MSIBs), and/or Broadcast Notice to Mariners (BNM) via VHF-FM marine channel 16 about the zone. This would allow waterway users to plan accordingly for transits during this restriction.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard received 00 comments from the Small Business Administration on this rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

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

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

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

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

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

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

We have analyzed this rule under Department of Homeland Security Directive 023-01 and Commandant Instruction M16475.1D, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a temporary specially regulated area lasting seven hours that would prohibit entry into the area within the following coordinates: 30°03.056′ N/090°15.489′ W to 30°02.500′ N/090°13.547′ W to 30°02.717′ N/090°13.460′ W to 30°03.252′ N/090°15.374′ W. This action is categorically excluded from further review under L61 of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Record of Environmental Consideration supporting this determination is available in the docket where indicated under ADDRESSES .

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

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:

The Coast Guard will enforce the safety zones for the annual Pittsburgh Pirates Fireworks listed in 33 CFR 165.801, Table 1, line 1 from 8 p.m. through 11:59 p.m. on May 4, 2019. Should inclement weather require rescheduling, the safety zone will be effective following the game on a rain date to occur within 48 hours of the scheduled date. Entry into the safety zone is prohibited to all vessels not registered with the sponsor as participants or official patrol vessels, unless authorized by the Captain of the Port Marine Safety Unit Pittsburgh (COTP) or a designated representative. Persons or vessels desiring to enter into or pass through the safety zone must request permission from the COTP or a designated representative. If permission is granted, all persons and vessels shall comply with the instructions of the COTP or designated representative.

This notice of enforcement is issued under authority of 33 CFR 165.801 and 5 U.S.C. 552(a). In addition to this notice of enforcement in the Federal Register , the Coast Guard will provide the maritime community with advance notification of these enforcement periods via Local Notice to Mariners and updates via Marine Information Broadcasts.

The reader can find regulations governing fishing activity in the Northern Gulf of Maine (NGOM) Scallop Management Area in 50 CFR 648.54 and 648.62. These regulations authorize vessels issued a valid federal scallop permit to fish in the NGOM Scallop Management Area under specific conditions, including a total allowable catch (TAC) of 137,500 lb (62,369 kg) for the Limited Access General Category (LAGC) fleet for the 2019 fishing year, and a State Waters Exemption Program for the State of Maine and Commonwealth of Massachusetts. Section 648.62(b)(2) requires the NGOM Scallop Management Area to be closed to scallop vessels issued federal LAGC scallop permits, except as provided below, for the remainder of the fishing year once the NMFS Greater Atlantic Regional Administrator determines that the LAGC TAC for the fishing year is projected to be harvested. Any vessel that holds a federal NGOM (category LAGC B) or Individual Fishing Quota (IFQ) (LAGC A) permit may continue to fish in the Maine or Massachusetts state waters portion of the NGOM Scallop Management Area under the State Waters Exemption Program found in § 648.54 provided it has a valid Maine or Massachusetts state scallop permit and fishes only in that state's respective waters.

Based on trip declarations by federally permitted LAGC scallop vessels fishing in the NGOM Scallop Management Area and analysis of fishing effort, we project that the 2019 LAGC TAC will be harvested as of April 25, 2019. Therefore, in accordance with § 648.62(b)(2), the NGOM Scallop Management Area is closed to all federally permitted LAGC scallop vessels as of April 25, 2019. As of this date, no vessel issued a federal LAGC scallop permit may fish for, possess, or land scallops in or from the NGOM Scallop Management Area after 0001 local time, April 25, 2019, unless the vessel is fishing exclusively in state waters and is participating in an approved state waters exemption program as specified in § 648.54. Any federally permitted LAGC scallop vessel that has declared into the NGOM Scallop Management Area, complied with all trip notification and observer requirements, and crossed the VMS demarcation line on the way to the area before 0001, April 25, 2019, may complete its trip and land scallops. This closure is in effect until the end of the 2019 scallop fishing year, through March 31, 2020. This closure does not apply to the Limited Access (LA) scallop fleet, which was allocated a separate TAC of 67,500 lb (30,617 kg) for the 2019 fishing year under Framework Adjustment 30 to the Atlantic Sea Scallop Fishery Management Plan. Vessels that are participating in the 2019 scallop Research Set-Aside Program and have been issued letters of authorization to conduct compensation fishing activities will harvest the 2019 LA TAC.

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

The Assistant Administrator for fisheries, NOAA, finds good cause pursuant to 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment because it would be contrary to the public interest and impracticable. NMFS also finds, pursuant to 5 U.S.C. 553(d)(3), good cause to waive the 30-day delayed effectiveness period for the reasons noted below. The NGOM Scallop Management Area opened for the 2019 fishing year on April 1, 2019. The regulations at § 648.60(b)(2) require this closure to ensure that federally permitted scallop vessels do not harvest more than the allocated LAGC TAC for the NGOM Scallop Management Area. NMFS can only make projections for the NGOM closure date as trips into the area occur on a real-time basis and as activity trends appear. As a result, NMFS can typically make an accurate projection only shortly before the TAC is harvested. A rapid harvest rate, that has occurred in the last 2 weeks, makes it more difficult to project a closure well in advance. To allow federally permitted LAGC scallop vessels to continue to take trips in the NGOM Scallop Management Area during the period necessary to publish and receive comments on a proposed rule would result in vessels harvesting more than the 2019 LAGC TAC for the NGOM Scallop Management Area. This would result in excessive fishing effort in the area thereby undermining conservation objectives of the Atlantic Sea Scallop Fishery Management Plan and requiring more restrictive future management measures to make up for the excessive harvest. Also, the public had prior notice and full opportunity to comment on this closure process when we put the NGOM management provisions in place on March 27, 2019 (84 FR 11436).