While most DOE facilities are run by contractors, and DOE contractor employees far outnumber DOE employees, the Whistleblower Protection Act only protects federal employees. Therefore, in order to ensure safe, well-managed workplaces at its facilities, DOE enacted a whistleblower protection program for contractor employees in 1992, the DOE Contractor Employee Protection Program, now codified at 10 CFR part 708. 57 FR 7533 (March 3, 1992). The program underwent a previous revision in 1999.

The OHA proposes the following revisions. All section numbers reference the section numbers in the revised regulation.

The OHA proposes to update Part 708's section headings for clarity, so that readers will be able to more quickly pinpoint the location of the information they seek. The updated headings may also offer guidance when the scope, purpose, or meaning of a section's content is unclear.

1. The OHA proposes moving the definition of “Administrative Judge” so that the definitions are in alphabetical order. The OHA also proposes updating this definition to reflect the role Administrative Judges will play in Part 708 proceedings under the revised rule.

2. The OHA proposes adding a definition of “Alternative Dispute Resolution”. OHA believes that this definition better highlights the flexibility and scope of DOE's conflict management and resolution resources.

3. The OHA proposes discontinuing the use of the word “you” in Part 708 to describe employees of contractors. Regulated parties include contractors as well as employees and the use of “you” makes it difficult to distinguish between them. Accordingly, third person titles and pronouns are used throughout the part and the definition of “you” has been removed.

4. For clarity and inclusivity, the OHA proposes to add a clause stating that the use of the singular includes the plural and that the male pronoun is gender neutral. Such a clause reduces ambiguity and allows for more concise language in the regulation.

5. The OHA proposes to add a definition of “complainant.”

The OHA proposes that revisions to Part 708 will apply to cases filed on or after the effective date of the finalized revisions.

1. Currently, the word “filed” is defined separately from the filing instructions, which are contained in a subpart with a specific, limited scope. The OHA proposes to combine these sections in the introductory subpart. This will clarify that the definition and instructions apply generally throughout Part 708.

2. The OHA proposes to mandate that all documents filed with the OHA be filed electronically, except when permission is granted to file in another manner. Electronic filing is faster, more reliable, and more cost-efficient than paper filing. It also coordinates with DOE electronic records retention policy. However, not everyone can file electronically and some materials are better mailed or faxed for logistical reasons. Accordingly, any person wishing to file via non-electronic means may contact the OHA—whether by phone, email, U.S. Mail, or another service—and request permission. The OHA will consider granting such requests in circumstances where good cause has been shown why the document cannot or should not be filed electronically. This section does not affect parties' ability to file documents by any other method with any other DOE element.

3. The OHA proposes to specify that a complaint may be withdrawn by the complainant at any time. This codifies the OHA's longstanding practice.

Currently, references to Alternative Dispute Resolution are scattered throughout the part. The OHA proposes to consolidate most of these references into one section, located in the introductory subpart to signal its general applicability. The section reflects DOE's policy encouraging the use of Alternative Dispute Resolution and underscores the voluntary nature of the process. It also allows for Alternative Dispute Resolution at any time during the Part 708 process, but advises that the process will not be stayed for Alternative Dispute Resolution. Finally, the section describes to whom the parties must submit written resolutions reached through Alternative Dispute Resolution.

1. In a recent decision, the OHA required the office that initially received the complaint, in that case the Employee Concerns Program, to provide the complainant with the employer's response to the complaint and to allow the complainant an opportunity to submit additional comments thereafter. In the Matter of Charles K. MacLeod, Case No. WBU-16-0005 (2016) (Reconsideration). The OHA proposes to codify that requirement in Part 708. The section will also require that the complainant's additional comments be provided to the employer. Such codification allows for a more transparent process.

2. Codification also allows the OHA to stipulate time limits for responses and additional comments. The OHA proposes to extend the time for employers to file a response to 15 days. The time period proposed for the complainant to submit additional comments is 10 days from receipt of the employee's response.

1. The OHA proposes to require that decisions dismissing a complaint for lack of jurisdiction or other good cause include the contact information for OHA's Alternative Dispute Resolution Office (ADR Office). Even when a Part 708 complaint is dismissed, the underlying workplace conflict often remains. DOE encourages the use of Alternative Dispute Resolution to resolve conflict at the lowest level, as quickly as possible. Inclusion of the Alternative Dispute Resolution Office's contact information in dismissals may encourage the parties to continue seeking a resolution to their conflict even after their involvement with Part 708 ends.

2. The OHA proposes to extend the time frame for issuance of a decision to dismiss a complaint from 15 to 20 days, in order to accommodate the submission of the employer's response and the complainant's additional comments, pursuant to proposed § 708.17.

1. The OHA proposes changing the title of this section to specify that it applies to appeals of dismissals by EC Directors or Heads of Field Elements. This will differentiate it from appeals of dismissals by Administrative Judges. The difference is that dismissals by Administrative Judges are initial agency decisions, while dismissals by EC Directors of Heads of Field Elements are not.

2. The OHA proposes adding an appellate standard of review to the section describing its procedures for an appeal of an ECP Director or Head of Field Element dismissal. Standards of review have long been included in other sections of Part 708 and the addition of an appellate standard enhances consistency and fairness. The OHA proposes using the common appellate standard of review of reviewing findings of fact for clear error and reviewing conclusions of law de novo.

3. The OHA proposes to formally specify that appeals are not available concerning decisions not to dismiss a complaint. This has been the OHA's longstanding policy. Adding this language to Part 708 codifies this policy.

4. The OHA proposes to specify that the OHA Director has the powers necessary to adjudicate the appeal proceeding. For example, the OHA Director may order briefing or oral argument from the parties if he deems it necessary. The OHA proposes to add this language to § 708.33 for the same reason.

The OHA proposes to formally specify that Secretarial review is not available concerning appellate decisions to reverse a dismissal of a complaint. This has been the OHA's longstanding policy. Adding this language to Part 708 codifies the policy.

1. The OHA proposes eliminating the option to have a hearing without an investigation. Over the years, OHA has observed that investigations are crucial to help refine and clarify the issues for hearing. Moreover, the selection of a hearing without an investigation by complainants has been rare. From time to time, a complainant has requested a hearing without an investigation, usually in an effort to obtain a decision more quickly. In such cases, the hearings typically became far more wide-ranging, unfocused, and inefficient. Without the clarifying work of the investigation, the complainant usually suffers a significant disadvantage, and the task of rendering a decision by the Administrative Judge becomes more complicated as a result, particularly when the complainant lacks legal representation. Accordingly, the benefits of requiring an investigation prior to hearing far outweigh the benefits of maintaining the option for a hearing without an investigation.

2. The OHA proposes to move information regarding the conduct and obligations of OHA personnel and the rights and obligations of parties to § 708.21. These provisions are currently included in § 708.28. However, as they are applicable to appellate proceedings before the OHA, the provisions are properly placed at the beginning of Subpart C to indicate their general applicability.

1. The OHA proposes to remove provisions relating to hearings without an investigation, pursuant to revisions to § 708.21.

2. The OHA proposes to amend § 708.22(a) to state that investigators may not participate or advise in a case after the investigation is completed. This revision allows for the elimination of pre-revision § 708.25(b), which stated the same with similar language.

3. The OHA proposes to allow for dismissal of complaints prior to the completion of the investigation. The OHA believes this change will improve the efficiency of the Part 708 process, while still fully protecting the parties' rights. Occasionally, it becomes immediately clear after the investigation starts that the complaint lacks merit or that the OHA lacks jurisdiction. In such cases, it could be a waste of the parties' and the OHA's time and resources to continue with a full investigation. Allowing for dismissal prior to the completion of the investigation—while still providing an opportunity for appellate review if dismissal is believed to be in error—will help to eliminate this waste and streamline the process.

Under the proposed revision, in the event that a complaint, upon preliminary investigation, is believed by the investigator to be clearly without merit or to lack a jurisdictional basis, the investigator may request that the OHA Director appoint an Administrative Judge to make a formal determination regarding whether dismissal is appropriate. The investigator will provide a written statement to the Administrative Judge that will outline the factual and legal reasons the investigator has for referring the complaint for dismissal. If the Administrative Judge does decide to dismiss the complaint, he will issue a decision containing the factual and legal bases for dismissal, and serve the decision on all the parties, along with the investigator's written statement. If the Administrative Judge decides not to dismiss the complaint, he will issue a written statement to be served all the parties and order the investigation to continue. The Administrative Judge may ask the OHA Director to appoint a new investigator.

Under the proposed revision, for an investigator to refer a complaint for dismissal, he must believe that there is no genuine dispute of material fact and the complainant's claims are wholly without merit, or that the complaint warrants dismissal for one of the reasons listed in § 708.18(c). A dismissal for lack of merit prior to the completion of an investigation will seldom occur, as the applicable standard is quite difficult to meet. First, there must appear to be no dispute among the parties as to the relevant facts. Second, in light of those undisputed facts, the complainant's claims must lack merit—i.e., fail to give rise to an entitlement to relief under Part 708. Under those circumstances, and only under those circumstances, may the investigator refer the complaint to an Administrative Judge for dismissal on the merits. The Administrative Judge may exercise all powers necessary, including requesting submissions from the parties, to evaluate whether dismissal is appropriate. If the Administrative Judge disagrees with the investigator's assessment and finds that the parties do not agree on all of the relevant facts or that the claims are not entirely without merit, he must decline to dismiss the complaint. If the Administrative Judge does dismiss the complaint, appeal to the OHA Director and, if that fails, Secretarial review are available to the complainant.

4. The OHA proposes that no report of investigation will be issued when a complaint is dismissed prior to the completion of the investigation. Without a full investigation, the report of investigation would be incomplete. However, the Administrative Judge will issue an initial agency decision that will include a summary of the factual findings available, which would normally be included in a report of investigation, as well as legal conclusions sufficient to support an initial agency decision. The Administrative Judge will serve the decision on all parties.

5. The OHA proposes that the procedures in §§ 708.32-708.35 apply to an appeal of a dismissal of a complaint before completion of the investigation. These sections govern appeals of all other initial agency decisions under Part 708. The OHA proposes amendments to those sections and others to accommodate appeals of initial agency decisions issued prior to completion of the investigation, such that all parties are afforded the same due process.

The OHA proposes to toll the time to issue a report of investigation pending an Administrative Judge's decision on whether to dismiss a case referred for such purpose by an investigator. OHA investigations are quite comprehensive and require significant time to complete. Tolling the time to issue the report of investigation is necessary to ensure that investigators do not lose valuable time while waiting for an Administrative Judge to issue a decision.

The OHA proposes to codify the option to conduct Part 708 hearings via video teleconference. While this option is already available, adding it to the regulation increases transparency and informs litigants of this option. Video teleconferencing preserves Department resources while maintaining the integrity of the proceedings. The OHA currently conducts nearly 90 percent of its personnel security hearings via video teleconference and has been successful in maintaining the benefits of an in-person hearing while reducing the OHA's travel costs to a fraction of their previous levels.

The OHA proposes to amend the language of § 708.27 to clarify the section's purpose. Prior to these revisions, many readers interpreted the language of this section as an endorsement of Alternative Dispute Resolution similar to others already in the regulation. However, the purpose of § 708.27 is to prohibit an Administrative Judge from requiring participation in Alternative Dispute Resolution. Unlike many state and federal court systems where Alternative Dispute Resolution may be ordered, DOE is committed to maintaining a voluntary Alternative Dispute Resolution process. Accordingly, Alternative Dispute Resolution is widely encouraged, but may not be required for litigants of Part 708 complaints.

The OHA proposes to clarify that Administrative Judges issue rulings that might result in termination of the proceeding before completion of the hearing. This is permitted under the current regulation, however the proposed language is clearer and less vulnerable to ambiguity.

The OHA proposes to separate the timing of issuing an initial agency decision from the procedures for issuing such.

The OHA proposes to consolidate the procedures for issuing an initial agency decision and the procedures for issuing an initial agency decision if no hearing was conducted. The procedures are identical and separating the standards is redundant. The OHA has also moved procedural provisions from § 708.30 to § 708.31, creating separate sections for timing and procedure.

The OHA proposes adding an appellate standard of review to the section describing its procedures for an appeal of an initial agency decision. Standards of review have long been included in other sections of Part 708 and the addition of an appellate standard lends itself to consistency and fairness. The OHA proposes using the common appellate standard of review of reviewing findings of fact for clear error and reviewing conclusions of law de novo. Under the current regulations, the appellate procedure allows the OHA Director to initiate an investigation and to consider new facts and evidence discovered in the appeal decision. This practice is at odds with the proposed appellate standard and subverts the deference to be owed to the Administrative Judge's fact finding. Accordingly, the OHA proposes to remove this provision.

2. The OHA proposes to specify that the OHA Director has the powers necessary to adjudicate the appeal proceeding. For example, the OHA Director may order briefing or oral argument from the parties if he deems it necessary. The OHA proposes to add this language to § 708.19 for the same reason.

1. The OHA proposes to specify two additional ways in which the OHA Director may rule on an appeal of an initial agency decision. These additional types of rulings are tailored for those situations where the complainant is appealing the dismissal of his complaint prior to completion of the investigation. Specifically, if the OHA Director determines that the complaint was properly dismissed by the Administrative Judge, he will deny the appeal. If he determines the complaint should not have been dismissed, he will vacate the initial agency decision and order further processing of the complaint.

2. The OHA proposes to specify that an appeal decision to reverse dismissal of a complaint is not a final agency action and is not subject to a petition for Secretarial review. This has been the OHA's longstanding policy. Adding this language to Part 708 codifies the policy.

The OHA proposes that employers covered by Part 708 be required to post the telephone number and website or email address of the DOE office at which employees may file complaints. This will be in addition to the existing requirement that employers post the name and address of such DOE office. Paperless communication is encouraged at DOE and the new contact information provided will further the Department's effort to increase the usage of paperless communication.

The OHA proposes to limit remedies available where OHA has not met Part 708's timing requirements. A decision should not be vulnerable to reversal simply because the OHA or other DOE component does not issue it in a timely manner. Specifically, failure by the DOE to comply with timing requirements does not create a substantive right for any party to overturn a DOE decision on a complaint. The OHA and all DOE components will continue to strive to meet all requirements and deadlines.

Interested persons are invited to participate in this rulemaking proceeding by submitting data, views, or arguments. Written comments should be submitted to the address, and in the form, indicated in the ADDRESSES section of this notice of proposed rulemaking. To help DOE's review of the comments, interested persons are asked to refer to specific proposed rule provisions, if possible.

The OHA would like to specifically request comment on two elements of the proposed rule:

1. The procedure by which complaints may be dismissed during investigations; and

2. Whether the OHA should be required by the regulation to appoint a new investigator in the event that a case is not dismissed after being referred for dismissal during an investigation.

If you submit information that you believe to be exempt by law from public disclosure, you should submit one complete copy, as well as one copy from which the information requested to be exempt by law from public disclosure has been redacted. DOE is responsible for the final determination regarding disclosure or nondisclosure of the information, and for treating information accordingly under the Freedom of Information Act and DOE implementing regulations at 10 CFR part 1004.

It was determined that this action is not a significant regulatory action subject to review under Executive Order 12866, “Regulatory Planning and Review,” 58 FR 51735 (Oct. 4, 1993) by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB).

On January 30, 2017, the President issued Executive Order 13771, “Reducing Regulation and Controlling Regulatory Costs.” That Order stated the policy of the executive branch is to be prudent and financially responsible in the expenditure of funds, from both public and private sources. The Order stated it is essential to manage the costs associated with the governmental imposition of private expenditures required to comply with Federal regulations.

Additionally, on February 24, 2017, the President issued Executive Order 13777, “Enforcing the Regulatory Reform Agenda.” The Order required the head of each agency designate an agency official as its Regulatory Reform Officer (RRO). Each RRO oversees the implementation of regulatory reform initiatives and policies to ensure that agencies effectively carry out regulatory reforms, consistent with applicable law. Further, E.O. 13777 requires the establishment of a regulatory task force at each agency. The regulatory task force is required to make recommendations to the agency head regarding the repeal, replacement, or modification of existing regulations, consistent with applicable law. At a minimum, each regulatory reform task force must attempt to identify regulations that:

(i) Eliminate jobs, or inhibit job creation;

(ii) Are outdated, unnecessary, or ineffective;

(iii) Impose costs that exceed benefits;

(iv) Create a serious inconsistency or otherwise interfere with regulatory reform initiatives and policies;

(v) Are inconsistent with the requirements of Information Quality Act, or the guidance issued pursuant to that Act, in particular those regulations that rely in whole or in part on data, information, or methods that are not publicly available or that are insufficiently transparent to meet the standard for reproducibility; or

(vi) Derive from or implement Executive Orders or other Presidential directives that have been subsequently rescinded or substantially modified.

Pursuant to OMB's Guidance Implementing Executive Order 13771, Titled “Reducing Regulation and Controlling Regulatory Costs (April 5, 2017), this action does not constitute an “E.O. 13771 regulatory action” because it does not meet the E.O. 12866 definition of a significant regulatory action. DOE determined, however, that this action furthers the policy goals outlined in Executive Order 13777, “Enforcing the Regulatory Reform Agenda,” which encourages the repeal, replacement, or modification of existing regulations that, among other things, are outdated, unnecessary, or ineffective. Prior to this action, Part 708 was outdated and, in some sections, inefficient. This action clarifies the regulation and streamlines the proceedings, which should result in increased time and resource savings for litigants and DOE.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires preparation of an initial regulatory flexibility analysis for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the rulemaking process (68 FR 7990). DOE has made its procedures and policies available on the Office of General Counsel's website: http://www.gc.doe.gov.

DOE has reviewed this proposed rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. This proposed rule would alter procedural rules primarily for the OHA, with little impact on the conduct of or burdens on litigants. DOE has determined that the proposed rule, if adopted, would not result in a significant economic impact on a substantial number of small entities because few small entities are involved in Part 708 proceedings and because the proposed rule contains few changes in the obligations of the litigants.

DOE will provide its certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the Small Business Administration for review under 5 U.S.C. 605(b).

Proposed Part 708 does not contain information collection requirements subject to review and approval by OMB under the Paperwork Reduction Act.

The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally requires Federal agencies to examine closely the impacts of regulatory actions on State, local, and tribal governments. Section 101(5) of title I of that law defines a Federal intergovernmental mandate to include any regulation that would impose upon State, local, or tribal governments an enforceable duty, except a condition of Federal assistance or a duty arising from participating in a voluntary Federal program. Title II of that law requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and tribal governments, in the aggregate, or to the private sector, other than to the extent such actions merely incorporate requirements specifically set forth in a statute. Section 202 of that title requires a Federal agency to perform a detailed assessment of the anticipated costs and benefits of any rule that includes a Federal mandate which may result in costs to State, local, or tribal governments, or to the private sector, of $100 million or more in any one year (adjusted annually for inflation). 2 U.S.C. 1532(a) and (b). Section 204 of that title requires each agency that proposes a rule containing a significant Federal intergovernmental mandate to develop an effective process for obtaining meaningful and timely input from elected officers of State, local, and tribal governments. 2 U.S.C. 1534.

The proposed 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 in any one year. Accordingly, no assessment or analysis is required under the Unfunded Mandates Reform Act of 1995.

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

Executive Order 13132, “Federalism,” 64 FR 43255 (Aug. 4, 1999) imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have federalism implications. Agencies are required to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and carefully assess the necessity for such actions. DOE has examined this proposed rule and has determined that it will not preempt State law and will not have a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. No further action is required by Executive Order 13132.

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

The Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB.

OMB's guidelines were published at 67 FR 8452 (Feb. 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this proposed rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

All DOE delegation orders may be accessed at https://www.directives.doe.gov /.

The Secretary of Energy has approved publication of this notice of proposed rulemaking.

For the reasons set out in the preamble, the DOE proposes to revise part 708 of title 10, Code of Federal Regulations to read as follows:

This proposal would implement section 402 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (section 402). 1 Section 402 directs the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC) (together, the agencies) to amend the capital rule  2 to exclude from the supplementary leverage ratio certain central bank deposits of custodial banks. Section 402 defines a custodial bank as any depository institution holding company predominantly engaged in custody, safekeeping, and asset servicing activities, including any insured depository institution (IDI) subsidiary of such a holding company. 3

Under the proposal, a depository institution holding company would be considered predominantly engaged in custody, safekeeping, and asset servicing activities if the U.S. top-tier depository institution holding company in the organization has a ratio of assets under custody (AUC)-to-total assets of at least 30:1. The proposal would define such a depository institution holding company, together with any subsidiary depository institution, as a “custodial banking organization.”  4 Under the proposal, a custodial banking organization would exclude deposits placed at a “qualifying central bank” from the denominator of the supplementary leverage ratio. For purposes of the proposal, a qualifying central bank would mean a Federal Reserve Bank, the European Central Bank, or a central bank of a member country of the Organisation for Economic Co-operation and Development (OECD)  5 if the country's sovereign exposures qualify for a zero percent risk weight under section 32 of the capital rule and the sovereign debt of such member country is not in default or has not been in default during the previous five years. The amount of central bank deposits that could be excluded from the denominator of the supplementary leverage ratio would be limited by the amount of deposit liabilities on the consolidated balance sheet of the custodial banking organization that are linked to fiduciary or custody and safekeeping accounts.

Leverage requirements under the capital rule increase in stringency based on the size and complexity of a banking organization. 6 All banking organizations must meet a minimum leverage ratio of 4 percent, measured as the ratio of tier 1 capital to average total consolidated assets. 7 Advanced approaches banking organizations  8 also must maintain a supplementary leverage ratio of 3 percent. 9 The supplementary leverage ratio measures tier 1 capital relative to total leverage exposure, which includes on-balance sheet assets (including deposits at central banks) and certain off-balance sheet exposures. 10 In addition, the largest and most interconnected U.S. bank holding companies are subject to an enhanced supplementary leverage ratio (eSLR) standard whereby they must maintain a supplementary leverage ratio above 5 percent (comprised of the 3 percent minimum supplementary leverage ratio requirement and a leverage capital buffer requirement of 2 percent) to avoid limitations on capital distributions and certain discretionary bonus payments. 11 An IDI subsidiary of a bank holding company subject to the eSLR standard must have a supplementary leverage ratio of at least 6 percent to be considered “well capitalized” under the agencies' prompt corrective action framework. 12

Unlike risk-based capital requirements, leverage capital requirements do not differentiate the amount of regulatory capital that must be maintained for an exposure based on the risk it presents to a banking organization. This distinction allows a leverage ratio to serve as a complement to risk-based capital requirements by establishing a simple and transparent constraint on a banking organization's leverage and mitigating any potential underestimation of risk by either banking organizations or risk-based capital requirements. 13

Certain banking organizations engage in fiduciary, custody, safekeeping and asset servicing activities. Custody, safekeeping and asset servicing activities generally involve holding securities or other assets on behalf of clients, as well as activities such as transaction settlement, income processing, and related record keeping and operational services. A banking organization may also act as a fiduciary by, for example, acting as trustee or executor, or by having discretion over the management of client assets. Banking organizations typically provide custody, safekeeping, and asset servicing to their fiduciary accounts. While many banking organizations offer some or all of these services, certain banking organizations specialize in these activities, and often do not provide the same range or scale of traditional commercial or retail banking products as are provided by other banking organizations. 14

Fiduciary and custody clients often maintain cash deposits at the banking organization in connection with these services. Specifically, clients typically maintain cash positions consisting of funds awaiting investment or distribution that are often in the form of deposits placed in the banking organization. These cash deposits help facilitate the administration of the custody account. Under U.S. generally accepted accounting principles (U.S. GAAP), cash deposits at a banking organization are a deposit liability and thus appear on the banking organization's balance sheet.

Cash deposits that are linked to custody and fiduciary accounts at banking organizations fluctuate depending on the activities of the banking organization's custodial clients. For example, cash deposit balances of such banking organizations generally increase during periods when clients liquidate securities, such as during times of stress. To assist in managing these cash fluctuations, banking organizations may maintain significant cash deposits at central banks. Central bank deposits can be used as an asset-liability management strategy to facilitate these banking organizations' ability to support custodial clients' cash-related needs. Under U.S. GAAP, central bank deposits placed by the banking organization are on-balance sheet assets of the banking organization.

Section 402 requires the agencies to amend the supplementary leverage ratio to not take into account funds of a custodial bank that are deposited with certain central banks, provided that “any amount that exceeds the value of deposits of the custodial bank that are linked to fiduciary or custodial and safekeeping accounts shall be taken into account when calculating the supplementary leverage ratio as applied to the custodial bank.”  15 Under section 402, central bank deposits that qualify for the exclusion include deposits of custodial banks placed with (1) the Federal Reserve System, (2) the European Central Bank, and (3) central banks of member countries of the OECD, if the member country has been assigned a zero percent risk weight under the agencies' capital rule and the sovereign debt of such member country is not in default or has not been in default during the previous five years. 16 As noted above, section 402 defines a custodial bank as “any depository institution holding company predominantly engaged in custody, safekeeping, and asset servicing activities, including any insured depository institution subsidiary of such a holding company.”  17

As discussed below, the proposal would implement section 402 by defining the scope of banking organizations considered to be predominantly engaged in custody, safekeeping, and asset servicing activities, and revising the supplementary leverage ratio to exclude any qualifying central bank deposits of such banking organizations from total leverage exposure, subject to the limit described in section 402(b)(2).

The proposal would define a depository institution holding company predominantly engaged in custody, safekeeping, and asset servicing activities, together with any subsidiary depository institution, as a “custodial banking organization.”  18 The phrase “predominantly engaged in custodial, safekeeping, and asset servicing activities” suggests that the banking organization's business model is primarily focused on custody, safekeeping, and asset servicing activities, as compared to its other commercial lending, investment banking, or other banking activities. 19

The agencies considered various measures that they could use to identify and define a custodial banking organization. Specifically, the agencies considered both an AUC-to-total assets measure and an income-based measure. AUC-to-total assets would provide a measure of a banking organization's custodial and safekeeping business relative to its other businesses. An income-based measure would show the percentage of a banking organization's income that it derives from custodial, safekeeping, and asset servicing activities.

Under the AUC-to-total assets measure, among The Bank of New York Mellon Corporation, Northern Trust Corporation, and State Street Corporation, the lowest AUC-to-total assets ratio observed during the period from the second quarter of 2016 through the third quarter of 2018 was approximately 52:1. 20 This means that the banking organization had approximately $52 in AUC for every $1 recognized in their total on-balance sheet assets. In comparison, among the other depository institution holding companies subject to the supplementary leverage ratio, the highest AUC-to-total assets ratio observed during that same period was approximately 9:1. For the income-based measure, the agencies analyzed fiduciary and custody and safekeeping income as a percentage of income. 21 This analysis also indicated a clear separation between The Bank of New York Mellon Corporation, Northern Trust Corporation, and State Street Corporation, and the other depository institution holding companies subject to the supplementary leverage ratio. 22 The agencies' analysis revealed a significant positive correlation between the AUC-to-total asset measure and the income-based measure. 23 The legislative history of section 402 suggests that members of Congress recognized the three institutions identified under either test as custodial banking organizations. 24

The agencies propose to use the AUC-to-total assets measure to define a custodial banking organization because it provides a measure of the size of a banking organization's custodial, safekeeping, and asset servicing business as compared with its other activities, is objective and publicly reported, and is subject to review by regulators, banking organizations, and the public. In addition, because AUC is often comprised of marketable securities or other assets with widely-quoted market values, banking organizations typically exercise little or no valuation discretion when measuring AUC. A banking organization's total assets reflect the size and scope of all the businesses in which the banking organization is engaged and provides a useful point of comparison to AUC. Accordingly, AUC-to-total assets provides a measure of the extent to which a banking organization is predominantly engaged in custody, safekeeping, and asset servicing activities.

The agencies are not proposing to use an income-based measure because such an approach would increase reporting burden for banking organizations subject to the supplementary leverage ratio. Consistent with section 402, a custodial banking organization is defined with respect to its custodial, safekeeping, and asset servicing activities. Banking organizations do not currently report income from custodial, safekeeping, and asset servicing activities separately from income derived from fiduciary activities. 25

The agencies also considered using absolute amount measures. The agencies do not believe that defining custodial banking organizations by reference to an absolute amount measure (such as AUC of at least a specified amount) would be consistent with section 402. Such a measure would only take the scale of a banking organization's custodial, safekeeping, and asset servicing activities into account, rather than considering the predominance of these activities relative to the banking organization's other activities.

The agencies recognize that the ratio of AUC-to-total assets may fluctuate significantly during a stress environment as client securities decline in value or as clients liquidate custodial securities and deposit the cash with the banking organization (thus increasing the banking organization's total assets). To ensure the ratio of AUC-to-total assets under this proposal is appropriately calibrated to take into consideration a range of conditions, the agencies evaluated the quarterly AUC-to-total assets ratios of advanced approaches banking organizations from the first quarter of 2004 through the third quarter of 2018. 26 This period includes the 2007-2009 financial crisis. During the observed period, the lowest AUC-to-total assets ratio among The Bank of New York Mellon Corporation, Northern Trust Corporation, and State Street Corporation was approximately 35:1. Using a four-quarter average, the lowest observed average AUC-to-average total assets ratio among those banking organizations was approximately 39:1. The highest observed AUC-to-total assets ratio for all other advanced approaches banking organizations over the same period was approximately 13:1. Consistent with the analysis described above, this analysis demonstrated a clear separation between the lowest observed AUC-to-total assets ratios of The Bank of New York Mellon, Northern Trust Corporation, and State Street Corporation under stress conditions, and the highest observed AUC-to-total asset ratio among other advanced approaches banking organizations.

In view of the agencies' analysis, the agencies are proposing a standard of AUC-to-total assets of 30:1, calculated as an average over the prior four calendar quarters, to identify banking organizations predominantly engaged in custodial, safekeeping, and asset servicing activities. An AUC-to-total assets ratio of 30:1 is approximately equal to the midpoint of the range between the minimum observed for The Bank of New York Mellon, Northern Trust Corporation, and State Street Corporation (52:1) and the maximum observed for the other advanced approaches banking organizations (9:1), over the period from the second quarter of 2016 through the third quarter of 2018. An AUC-to-total asset ratio of 30:1 also is less than the minimum estimated ratio for The Bank of New York Mellon, Northern Trust Corporation, and State Street Corporation (35:1) over the period from the first quarter of 2004 through the third quarter of 2018, which includes the 2007-2009 financial crisis. The use of a four-quarter average further serves to minimize the impact of volatility in a banking organization's AUC-to-total assets ratio, which is a particular concern under stress conditions. The proposed measure also would limit the potential for a banking organization that does not predominantly engage in custody, safekeeping, and asset servicing activities, as compared to its other activities, to qualify as a custodial banking organization.

Accordingly, under the proposal, a custodial banking organization would be defined as a depository institution holding company that is predominantly engaged in custody, safekeeping, and asset servicing activities, as well as any subsidiary depository institution of such a holding company, which means a U.S. top-tier depository institution holding company that has AUC that are at least 30 times the amount of the depository institution holding company's total assets, or an AUC-to-total assets ratio of least 30:1. AUC would be equal to the average of a U.S. top-tier depository institution holding company's assets under custody for the four most recent calendar quarters and total assets would be equal to the average of the U.S. top-tier depository institution holding company's total consolidated assets for the four most recent calendar quarters. A U.S. top-tier depository institution holding company that has a reported AUC-to-total assets ratio of less than 30:1 would no longer qualify as a custodial banking organization and would therefore no longer be able to exclude deposits with a qualifying central bank from the supplementary leverage ratio as of that reporting period.

Under the proposal, any subsidiary depository institution of a U.S. top-tier depository institution holding company that qualifies as a custodial banking organization would exclude from total leverage exposure all deposits with a qualifying central bank that are recognized on its consolidated balance sheet in the same manner as its parent depository institution holding company. 27 The proposal therefore would not require such a subsidiary depository institution to satisfy separately a ratio of AUC-to-total assets to be able to make this exclusion. This approach is both simple and consistent with section 402, which defines a “custodial bank” based on the characteristics of the holding company and provides that such a subsidiary depository institution may also exclude deposits at qualifying central banks from its supplementary leverage ratio, to the extent that these deposits do not exceed deposit liabilities of the banking organization that are linked to fiduciary or custodial and safekeeping accounts.

Question 1: What alternative standard, if any, should be used to define a custodial banking organization instead of, or in conjunction with, an AUC-to-total asset ratio? What are the advantages or disadvantages of using an income-based ratio to define a custodial banking organization? What are commenters' views on the potential increased reporting burden of requiring new regulatory reporting line items to distinguish between income derived from custodial, safekeeping, and asset servicing activities and income derived from fiduciary activities, consistent with the requirements of section 402? The agencies encourage commenters to provide an empirical analysis to support the use of a different ratio or standard.

Question 2: What alternative calculation or calibration, if any, should be used in the calculation of AUC-to-total assets to account for a range of economic conditions? The agencies encourage commenters to provide an empirical analysis to support the use of a different calculation.

Question 3: Under the proposed rule, a custodial banking organization holding company and its subsidiary depository institutions would be immediately disqualified as a custodial banking organization holding company if the four quarter average of the holding company's AUC-to-total asset ratio falls below the 30:1 ratio and would no longer be permitted to adjust its supplementary leverage ratio under the proposed rule. The use of a four-quarter average of AUC-to-total assets measure should generally prevent an unforeseen disqualification of a custodial banking organization holding company and its subsidiary depository institutions. What would be the advantages and disadvantages of delaying the timing of a banking organization losing its status as a “custodial banking organization,” to minimize market disruptions during a stress environment? What would be an appropriate amount of time for such a delay?

Question 4: What changes, if any, should the agencies consider with respect to the proposed definition of “custodial banking organization”?

The agencies are contemplating applying this rule to a depository institution that is not controlled by a holding company (standalone depository institution) to permit such standalone depository institution to qualify as a custodial banking organization for purposes of the proposal. Extending the application of the proposal to standalone depository institutions would be consistent with the current scope of applicability of the agencies' capital rule. While section 402 does not apply to standalone depository institutions, it does not limit the agencies' authority  28 to otherwise tailor or adjust the supplementary leverage ratio. 29 Under such an approach, a standalone depository institution would similarly be able to exclude certain deposits placed at a “qualifying central bank” from the denominator of its supplementary leverage ratio, subject to a specified limit, if the standalone depository institution has an AUC-to-total assets ratio of at least 30:1. The agencies are seeking comment on all aspects of extending the proposal to standalone depository institutions.

Question 5: Should a standalone depository institution be permitted to qualify as a custodial banking organization and why? What would be the advantages and disadvantages of allowing such a standalone depository institution that has no depository institution holding company to qualify as a custodial banking organization under this proposed rule?

Question 6: The agencies note that depository institutions currently report information related to fiduciary or custodial and safekeeping accounts under Schedule RC-T of the Call Report and do not report FR Form Y-15. The agencies also note that the information captured on Schedule RC-T and AUC reported on FR Form Y-15 is similar but not identical. What would be the advantages and disadvantages of allowing a standalone depository institution to use existing bank level data currently reported under Schedule RC-T of the Call Report to determine AUC, with a possible adjustment to reconcile Schedule RC-T and Form Y-15?

Consistent with section 402, the amount of central bank deposits eligible for exclusion from the supplementary leverage ratio would equal the average daily balance over the reporting quarter of all deposits placed with a “qualifying central bank.” For purposes of the proposal, a qualifying central bank would mean a Federal Reserve Bank, the European Central Bank, or a central bank of a member country of the OECD if an exposure to the member country receives a zero percent risk weight under section 32 of the capital rule and the sovereign debt of such member country is not in default or has not been in default during the previous five years. 30

The agencies are proposing that the exclusion amount be calculated based on the average daily balance of deposits with a qualifying central bank over the reporting quarter to align with the calculation of on-balance sheet assets in total leverage exposure. 31 All deposits placed with a Federal Reserve Bank could qualify for the central bank deposit exclusion, including deposits in a master account, deposits in a term deposit account that offers an early withdrawal feature, and deposits in an excess balance account. Any deposits with a qualifying central bank that are denominated in a foreign currency would be measured in U.S. dollars to determine the amount of the deposits that could be excluded from total leverage exposure. Central bank deposits recognized on the consolidated balance sheet of a custodial banking organization may include cash placements with a central bank made by a foreign subsidiary. Although a foreign bank subsidiary would not itself be a custodial banking organization under this proposal, any qualifying central bank deposits of the foreign bank subsidiary could be excluded from total leverage exposure of the parent organization to the extent that the central bank deposits are consolidated on the balance sheet of the parent organization, and satisfy the requirements for a qualifying central bank deposit.

Question 7: What terms, if any, should the agencies define or more specifically describe to facilitate the calculation of the amount of central bank deposits eligible for exclusion from total leverage exposure?

The proposal would limit the amount of a custodial banking organization's deposits with a qualifying central bank that could be excluded from total leverage exposure. The amount of such deposits that could be excluded could not exceed an amount equal to the on-balance-sheet deposit liabilities of the custodial banking organization that are linked to fiduciary or custody and safekeeping accounts. Specifically, a custodial banking organization would be able to exclude from its total leverage exposure the lesser of (1) the amount of central bank deposits placed at qualifying central banks by the custodial banking organization (including deposits placed by consolidated subsidiaries), and (2) the amount of on-balance sheet deposit liabilities of the custodial banking organization (including consolidated subsidiaries) that are linked to fiduciary or custodial and safekeeping accounts. 32 Consistent with the calculation of on-balance sheet assets for purposes of the supplementary leverage ratio, a custodial banking organization would calculate the amount of deposit liabilities linked to a fiduciary or custody and safekeeping account as the average deposit liabilities for such accounts, calculated as of each day of the reporting quarter.

The proposal would define a fiduciary or custodial and safekeeping account as an account administered by a custodial banking organization for which the custodial banking organization provides fiduciary or custodial and safekeeping services, as authorized by applicable federal and state law. The agencies anticipate that the scope of the fiduciary or custodial and safekeeping accounts under the proposal would not deviate materially from the current scope of the fiduciary and custody and safekeeping accounts reported under Schedule RC-T of the Call Report.

Consistent with section 402, a custodial banking organization would include in total leverage exposure any amount of central bank deposits with a qualifying central bank that exceeds the value of funds deposited with the custodial banking organization that are linked to fiduciary or custodial and safekeeping accounts. The fact that a client has both a deposit account and a fiduciary or custody and safekeeping account at the same custodial banking organization, or an affiliate or subsidiary of such custodial banking organization, would not alone be sufficient for those accounts to be considered “linked” for purposes of the proposal. A deposit account would be considered linked to a fiduciary or custodial and safekeeping account if the deposit account is used to facilitate the administration of the fiduciary or custody and safekeeping account. For example, cash deposits may be used to facilitate processing transactions for the custody or fiduciary account, such as interest and dividend payments related to securities held in the custody or fiduciary account, cash transfers or distributions from the custody or fiduciary account, and the purchases and sale of securities for the account. These deposit balances correspond, and are reconciled, to the custodian's off-balance sheet books and records for each fiduciary and custody account. In times of stress when market conditions may lead to the liquidation of significant volumes of securities in a banking organization's fiduciary or custody and safekeeping accounts, these linked deposits may increase significantly. That is, during times of stress, custodial banking organizations may experience significant increases in custodial deposits. A custodial banking organization may have to hold additional capital to meet its supplementary leverage ratio requirement as a result of the increase in on balance sheet assets. Implementation of section 402 would mitigate this capital impact.

The asset exclusion limit for “custodial banks” provided under the FDIC's regulations for purposes of determining risk-based deposit insurance assessments (FDIC exclusion limit) also includes a concept of a “linked” deposit. 33 In contrast to the FDIC exclusion limit, this proposal would apply to both custodial banking organization holding companies and custodial banking organization subsidiary depository institutions, as well as foreign subsidiaries of such entities; would use a more restrictive standard to define a custodial banking organization; and would apply only to custodial banking organizations that are subject to the supplementary leverage ratio. The agencies believe that these differences are appropriate in light of the purpose served by section 402 ( i.e., prudential regulation of custodial banking organizations' regulatory capital) as compared to deposit insurance assessments, and because section 402 applies to a narrow set of the largest banking organizations ( i.e., advanced approaches banking organization that qualify as custodial banking organizations).

Question 8: What alternative definitions, if any, should the agencies consider to define a fiduciary or custodial and safekeeping account and why? The agencies note that depository institutions currently report information related to fiduciary or custodial and safekeeping accounts under Schedule RC-T of the Call Report. Should the proposed definition explicitly reference the reporting instructions for Schedule RC-T of the Call Report? What challenges would banking organizations anticipate in identifying fiduciary or custodial and safekeeping accounts under the proposed definition?

Question 9: What challenges would banking organizations face in applying the proposed standard for determining linkage between a deposit account and a fiduciary or custodial and safekeeping account; that is, that the deposit account is used to facilitate the administration of the fiduciary or custody and safekeeping account? How should this standard be broadened or narrowed to include or exclude particular types of deposits? What alternative standard should the agencies consider and why? What are the advantages and disadvantages of using the FDIC exclusion limit or the reporting instructions to Schedule RC-O of the Call Report, which collects information for the FDIC exclusion limit, for purposes of determining linkage between a deposit account and a fiduciary or custody and safekeeping account?

Question 10: Under the Board's total loss-absorbing capacity rule, a GSIB is subject to requirements that, in part, rely on the GSIB's total leverage exposure. 34 Because the Board's total loss-absorbing capacity rule relies on the definition of total leverage exposure in the Board's capital rule, the proposal could affect the amount of eligible external total loss-absorbing capacity required to be held by a GSIB that is also a custodial banking organization. What are the advantages and disadvantages of revising the definition of total leverage exposure for custodial banking organizations solely for purposes of the supplementary leverage ratio in the capital rule as compared to revising total leverage exposure for custodial banking organizations in other rules, such as in the Board's total loss-absorbing capacity rule?

Advanced approaches banking organizations currently report their supplementary leverage ratios on FFIEC Form 101, Schedule A and Form Y-9C, Schedule HC-R. The agencies expect to propose modifications to the regulatory reporting requirements for the supplementary leverage ratio in a separate publication in the Federal Register to reflect the implementation of the central bank deposit exclusion described in this proposal.

The top-tier U.S. depository institution holding companies that would qualify as custodial banking organizations under the proposal, as well as each of their depository institution subsidiaries, would be able to exclude central bank deposits from total leverage exposure. For custodial banking organization holding companies and their lead depository institution subsidiaries, the agencies estimate that central bank deposits eligible for exclusion represent between 21 and 30 percent of these firms' total assets and between 20 and 28 percent of their total leverage exposure. 35 Based on an exclusion of this amount from each of these firms' total leverage exposure, the proposal would result in a decrease in the amount of required tier 1 capital of approximately $8 billion in aggregate across these top-tier U.S. depository institution holding companies and approximately $8 billion in aggregate across their lead depository institution subsidiaries when measuring the supplementary leverage ratio requirement without consideration of other capital requirements. 36 However, the binding capital requirement for a given firm is the capital requirement that requires the highest amount of regulatory capital. 37 Although holding companies are subject to leverage, risk-based, and post-stress capital requirements, only one of those requirements binds an individual holding company at any given time. 38 Similarly, only one of the applicable leverage and risk-based capital requirements binds a depository institution at any given time. 39 The risk profile and the capital requirements for the activities and exposures of a banking organization determine which capital requirement is binding.

Thus, the proposal would reduce the amount of tier 1 capital that must be maintained by a custodial banking organization holding company only if the supplementary leverage ratio currently serves as the binding capital requirement for the banking organization. 40 Data from the third quarter of 2018 data suggests that top-tier U.S. depository institution holding companies that would qualify as custodial banking organizations currently are bound by other post-stress capital requirements. Therefore, the proposal is not expected to decrease the amount of tier 1 capital maintained by such holding companies.

In contrast, the supplementary leverage ratio currently serves as the binding constraint for two custodial banking organization depository institution subsidiaries. Accordingly, under the proposal, the amount of tier 1 capital required of those institutions would decrease by approximately $7 billion, which represents approximately 23 percent of the total amount of tier 1 capital that must be maintained by those institutions currently.

Regulatory capital supports a depository institution subsidiary's ability to absorb unexpected losses. The capital standards and other constraints applicable at the custodial banking organization holding company level are expected to limit the amount of capital that such a holding company could distribute or allocate for other purposes, thus limiting any safety and soundness or financial stability concerns for the holding company as a whole. In addition, the agencies have regulatory and supervisory tools to constrain the ability of a depository institution to make capital distributions.

Certain provisions of the proposed rule contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with the requirements of the PRA, the agencies may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently-valid Office of Management and Budget (OMB) control number. The OMB control number for the OCC is 1557-0318, Board is 7100-0313, and FDIC is 3064-0153. These information collections relate to the regulatory capital rules for each agency. However, the agencies expect that these information collections will not be affected by this proposed rule and therefore no submissions will be made under section 3507(d) of the PRA (44 U.S.C. 3507(d)) and section 1320.11 of the OMB's implementing regulations (5 CFR 1320) for each of the agencies' regulatory capital rules.

The proposed rule, once final, may require changes to the following reports: (1) Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices (FFIEC 031); (2) Consolidated Reports of Condition and Income for a Bank with Domestic Offices Only (FFIEC 041); (3) Consolidated Reports of Condition and Income for a Bank with Domestic Offices Only and Total Assets Less Than $1 Billion (FFIEC 051) (OMB Control Nos. 1557-0081 (OCC), 7100-0036 (Board), 3064-052 (FDIC)); (4) the Risk-Based Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101; OMB Control Nos. 1557-0239 (OCC), 7100-0319 (Board), and 3064-0159 (FDIC)); (5) and the Consolidated Financial Statements for Holding Companies (FR Y-9C; OMB Control Nos. 7100-0128 (Board)). Any changes to these information collections will be addressed in one or more separate Federal Register notices at the final rule stage.

OCC: The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., (RFA), requires an agency, in connection with a proposed rule, to prepare an Initial Regulatory Flexibility Analysis describing the impact of the rule on small entities (defined by the Small Business Administration (SBA) for purposes of the RFA to include commercial banks and savings institutions with total assets of $550 million or less and trust companies with total revenue of $38.5 million or less) or to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities. As of December 31, 2017, the OCC supervised 886 small entities. The rule would impose requirements on 4 OCC supervised entities that are subject to the advanced approaches risk-based capital rule, which typically have assets in excess of $250 billion, and therefore would not be small entities. Therefore, the OCC certifies that the proposed rule would not have a significant economic impact on a substantial number of OCC-supervised small entities.

Board: The Board is providing an initial regulatory flexibility analysis with respect to this proposed rule. The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., (RFA), requires an agency to consider whether the rule it proposes will have a significant economic impact on a substantial number of small entities. 41 In connection with a proposed rule, the RFA requires an agency to prepare an Initial Regulatory Flexibility Analysis describing the impact of the rule on small entities or to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities. An initial regulatory flexibility analysis must contain (1) a description of the reasons why action by the agency is being considered; (2) a succinct statement of the objectives of, and legal basis for, the proposed rule; (3) a description of, and, where feasible, an estimate of the number of small entities to which the proposed rule will apply; (4) a description of the projected reporting, recordkeeping, and other compliance requirements of the proposed rule, including an estimate of the classes of small entities that will be subject to the requirement and the type of professional skills necessary for preparation of the report or record; (5) an identification, to the extent practicable, of all relevant Federal rules which may duplicate, overlap with, or conflict with the proposed rule; and (6) a description of any significant alternatives to the proposed rule which accomplish its stated objectives.

The Board has considered the potential impact of the proposed rule on small entities in accordance with the RFA. Based on its analysis and for the reasons stated below, the Board believes that this proposed rule will not have a significant economic impact on a substantial number of small entities. Nevertheless, the Board is publishing and inviting comment on this initial regulatory flexibility analysis. A final regulatory flexibility analysis will be conducted after comments received during the public comment period have been considered. The proposal would also make corresponding changes to the Board's reporting forms.

As discussed in detail above, the proposed rule would amend the capital rule to provide an exclusion under the denominator of the supplementary leverage ratio for central bank deposits of a custodial banking organization, defined as a top-tier depository institution holding company domiciled in the United States that has assets under custody that are at least 30 times the amount of the depository institution holding company's total assets; or a subsidiary of such a depository institution holding company.

The Board has broad authority under the International Lending Supervision Act (ILSA)  42 and the PCA provisions of the Federal Deposit Insurance Act  43 to establish regulatory capital requirements for the institutions it regulates. For example, ILSA directs each Federal banking agency to cause banking institutions to achieve and maintain adequate capital by establishing minimum capital requirements as well as by other means that the agency deems appropriate. 44 The prompt corrective action (PCA) provisions of the Federal Deposit Insurance Act direct each Federal banking agency to specify, for each relevant capital measure, the level at which an IDI subsidiary is well capitalized, adequately capitalized, undercapitalized, and significantly undercapitalized. 45 In addition, the Board has broad authority to establish regulatory capital standards for bank holding companies, savings and loan holding companies, and U.S. intermediate holding companies of foreign banking organizations under the Bank Holding Company Act, the Home Owners' Loan Act, and the Dodd-Frank Reform and Consumer Protection Act (Dodd-Frank Act). 46

The proposed rule would apply only to advanced approaches banking organizations. Advanced approaches banking organizations include depository institutions, bank holding companies, savings and loan holding companies, or intermediate holding companies with at least $250 billion in total consolidated assets or has consolidated on-balance sheet foreign exposures of at least $10 billion, or a subsidiary of a depository institution, bank holding company, savings and loan holding company, or intermediate holding company that is an advanced approaches banking organization. The proposed rule therefore would not impose mandatory requirements on any small entities, unless the small entity was a subsidiary of an advanced approaches banking organization.

Further, as discussed previously in the Paperwork Reduction Act section, the proposed rule, once final, may require changes to the Risk-Based Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101; OMB No. 1557-0239 (OCC), 7100-0319 (Board), and 3064-0159 (FDIC)) and the Consolidated Financial Statements for Holding Companies (FR Y-9C; OMB No. 7100-0128 (Board)). In addition, the Board is aware of no other Federal rules that duplicate, overlap, or conflict with the proposed changes to the capital rule. Therefore, the Board believes that the proposed rule will not have a significant economic impact on small banking organizations supervised by the Board and therefore believes that there are no significant alternatives to the proposed rule that would reduce the economic impact on small banking organizations supervised by the Board.

The Board welcomes comment on all aspects of its analysis. In particular, the Board requests that commenters describe the nature of any impact on small entities and provide empirical data to illustrate and support the extent of the impact.

FDIC: The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., generally requires an agency, in connection with a proposed rule, to prepare and make available for public comment an initial regulatory flexibility analysis that describes the impact of a proposed rule on small entities. 47 However, a regulatory flexibility analysis is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. The Small Business Administration (SBA) has defined “small entities” to include banking organizations with total assets of less than or equal to $550 million if they are either independently owned and operated or owned by a holding company that also has less than $550 million in total assets. 48

As of September 30, 2018, there were 3,533 FDIC-supervised institutions, of which 2,726 are considered small entities for the purposes of RFA. These small entities hold $494 billion in assets, accounting for 16.5 percent of total assets held by FDIC-supervised institutions. 49

The proposed rule would apply to only three advanced approaches banking organizations, one of which has an IDI subsidiary that is FDIC-supervised and has less than $550 million in total assets. However, that institution is not a small entity for the purposes of RFA since it is owned by a holding company with over $550 million in total assets. Since this proposal does not affect any FDIC-supervised institutions that are defined as small entities for the purposes of the RFA, the FDIC certifies that the proposed rule will not have a significant economic impact on a substantial number of small entities.

The FDIC invites comments on all aspects of the supporting information provided in this RFA section. In particular, would this proposed rule have any significant effects on small entities that the FDIC has not identified?

Section 722 of the Gramm-Leach-Bliley Act  50 requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000. The agencies have sought to present the proposed rule in a simple and straightforward manner, and invite comment on the use of plain language. For example:

• Have the agencies organized the material to suit your needs? If not, how could they present the rule more clearly?

• Are the requirements in the rule clearly stated? If not, how could the rule be more clearly stated?

• Do the regulations contain technical language or jargon that is not clear? If so, which language requires clarification?

• Would a different format (grouping and order of sections, use of headings, paragraphing) make the regulation easier to understand? If so, what changes would achieve that?

• Is this section format adequate? If not, which of the sections should be changed and how?

• What other changes can the agencies incorporate to make the regulation easier to understand?

Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act (RCDRIA), 51 in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on IDIs, each Federal banking agency must consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and clients of depository institutions, as well as the benefits of such regulations. In addition, section 302(b) of RCDRIA requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on IDIs generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. 52

The agencies note that comment on these matters has been solicited in other sections of this Supplementary Information section, and that the requirements of RCDRIA will be considered as part of the overall rulemaking process. In addition, the agencies also invite any other comments that further will inform the agencies' consideration of RCDRIA.

The OCC has analyzed the proposed rule under the factors in the Unfunded Mandates Reform Act of 1995 (UMRA). 53 Under this analysis, the OCC considered whether the proposed rule includes a Federal mandate that may result in the expenditure by State local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted annually for inflation). The UMRA does not apply to regulations that incorporate requirements specifically set forth in law.

The OCC's estimated UMRA cost is near zero. Therefore, the OCC finds that the proposed rule does not trigger the UMRA cost threshold. Accordingly, the OCC has not prepared the written statement described in section 202 of the UMRA.

For the reasons set out in the joint preamble, the OCC proposes to amend 12 CFR part 3 as follows:

Throughout this document “we,” “us,” and “our” means EPA.

Below is a short discussion of background on the 2015 Ozone NAAQS addressed in this action. For more information, please see the Technical Support Document (TSD) in the docket for this action.

EPA has regulated Ozone since 1971, when we published the first NAAQS for Photochemical Oxidants (36 FR 8186, April 30, 1971). Most recently, following a periodic review of the 2008 NAAQS for O 3 , EPA revised the primary and secondary O 3 NAAQS to 0.070 ppm (82 FR 65291, October 26, 2015). 1 The primary NAAQS is designed to protect human health, and the secondary NAAQS is designed to protect the public welfare. 2

Each state must submit a SIP within three years after the promulgation of a new or revised NAAQS showing how it meets the elements of Section 110(a)(2) of the CAA. This section of Act includes a list of specific elements necessary for a States air quality program. We term this SIP an infrastructure SIP or i-SIP. On September 13, 2013, the EPA issued guidance addressing the i-SIP elements for NAAQS. 3 On August 17, 2018, the Chairman of the Texas Commission on Environmental Quality (TCEQ) made two submissions to address the 2015 NAAQS for O 3 . 4 One submittal addresses CAA sections 110(a)(2)(A) through (C) and (E) through (M), which we refer to as the infrastructure or “i-SIP” submittal and the other addresses CAA section 110(a)(2)(D), which we refer to as the “Transport” submittal.

We are proposing to approve the August 17, 2018 Texas i-SIP submittal for the 2015 ozone NAAQS in its entirety. We are also proposing to approve portions of the August 17, 2018 Texas Transport submittal for the 2015 ozone NAAQS. A copy of each of these submittals is in the docket for this proposed rulemaking.

Below is a summary of our evaluation of the August 17, 2018 Texas submittals for each element of 110(a)(2) that we are proposing to approve. 5

(A). Emission limits and other control measures: The SIP must include enforceable emission limits and other control measures, means or techniques, schedules for compliance and other related matters as needed to implement, maintain and enforce each of the NAAQS. 6

The Texas Clean Air Act (TCAA) provides the TCEQ, its Chairman, and its Executive Director with broad legal authority. They may adopt emission standards and compliance schedules applicable to regulated entities; emission standards and limitations and any other measures necessary for attainment and maintenance of national standards; and enforce applicable laws, regulations, standards and compliance schedules, and seek injunctive relief. This authority has been employed in the past to adopt and submit multiple revisions to the Texas SIP. The federally-approved SIP for Texas is documented at 40 CFR part 52.2270. TCEQ's air quality rules and standards are codified at Title 30, part 1 of the Texas Administrative Code (TAC). Numerous parts of the regulations codified into 30 TAC necessary for implementing and enforcing the NAAQS have been adopted into the SIP.

(B) Ambient air quality monitoring/data system: The SIP must provide for establishment and implementation of ambient air quality monitors, collection and analysis of ambient air quality data, and providing the data to EPA upon request.

The TCAA provides the authority allowing the TCEQ to collect air monitoring data, quality-assure the results, and report the data. TCEQ maintains and operates a monitoring network to measure levels of ozone, as well as other pollutants, in accordance with EPA regulations specifying siting and monitoring requirements. All monitoring data is measured using EPA-approved methods and subject to the EPA quality assurance requirements. TCEQ submits all required data to us, following the EPA regulations. The Texas statewide monitoring network was approved into the SIP on May 31, 1972 (37 FR 10842, 10895), was revised on March 7, 1978 (43 FR 9275), and it undergoes annual review by EPA. 7 In addition, TCEQ submits an assessment of its monitoring network every five years, as required by EPA rules. The most recent of these 5-year monitoring network assessments was submitted by TCEQ and approved by us in July of 2015. 8 The TCEQ website provides the monitor locations and posts past and current concentrations of criteria pollutants measured by the State's network of monitors. 9

(C) Program for enforcement of control measures: The SIP must include the following three elements: (1) A program providing for enforcement of the measures in CAA section 110(a)(2)(A); (2) a program for the regulation of the modification and construction of stationary sources as necessary to protect the applicable NAAQS ( i.e., state-wide permitting of minor sources); and (3) a permit program to meet the major source permitting requirements of the CAA (for areas designated as attainment or unclassifiable for the NAAQS in question). Each of these elements is described in more detail in the TSD for this action.

(1) Enforcement of SIP Measures. As noted earlier, the TCAA provides authority for the TCEQ, its Chairman, and its Executive Director to enforce the requirements of the TCAA, and any regulations, permits, or final compliance orders. These statutes also provide the TCEQ, its Chairman, and its Executive Director with general enforcement powers. Among other things, they can file lawsuits to compel compliance with the statutes and regulations; commence civil actions; issue field citations; conduct investigations of regulated entities; collect criminal and civil penalties; develop and enforce rules and standards related to protection of air quality; issue compliance orders; pursue criminal prosecutions; investigate, enter into remediation agreements; and issue emergency cease and desist orders. The TCAA also provides additional enforcement authorities and funding mechanisms.

(2) Minor New Source Review (NSR). The SIP is required to include measures to regulate construction and modification of stationary sources to protect the NAAQS. The Texas minor NSR permitting requirements are approved as part of the SIP. 10

(3) Prevention of Significant Deterioration (PSD) permit program. The Texas PSD portion of the SIP covers all NSR regulated pollutants as well as the requirements for the 2015 O 3 NAAQS and has been approved by EPA (79 FR 66626, November 10, 2014). 11

(D) Interstate and international transport: The requirements for interstate transport of O 3 emissions are that the SIP contain adequate provisions prohibiting O 3 emission transport to other states which will (1) contribute significantly to nonattainment of the NAAQS, (2) interfere with maintenance of the NAAQS, (3) interfere with measures required to prevent significant deterioration or (4) interfere with measures to protect visibility (CAA 110(a)(2)(D)(i)). In addition, states must comply with requirements to prevent transport of international air pollution (CAA section 110(a)(2)(D)(ii)). EPA often refers to these four requirements within CAA section 110(a)(2)(D)(i) as prongs or sub-elements. We are not evaluating sub-elements 1, 2, and 4 in this rulemaking action, but will address them in a separate action. However, we are proposing to approve sub-element 3 of CAA section 110(a)(2)(D)(i), pertaining to the prevention of significant deterioration in other states for O 3 . Texas has a SIP-approved PSD program that regulates all NSR pollutants, including greenhouse gases, and thus, prevents significant deterioration in nearby states. See the TSD for more detail.

Section 110(a)(2)(D)(ii) of the CAA requires SIPs to include adequate provisions to ensure compliance with sections 115 and 126 of the Act, relating to international and interstate pollution abatement. Section 115 of the Act addresses endangerment of public health or welfare in foreign countries from pollution emitted in the United States. There are no final findings by the EPA that Texas air emissions affect other countries. Section 126(a) of the Act requires new or modified sources to notify neighboring states of potential impacts from such sources. The Texas SIP requires that each major proposed new or modified source provide such notification. 12 The State also has no pending obligations under CAA section 126. See the TSD for more detail.

(E) Adequate authority, resources, implementation, and oversight: The SIP must provide for the following: (1) Necessary assurances that the state (and other entities within the state responsible for implementing the SIP) will have adequate personnel, funding, and authority under state or local law to implement the SIP, and that there are no legal impediments to such implementation; (2) requirements relating to state boards; and (3) necessary assurances that the state has responsibility for ensuring adequate implementation of any plan provision for which it relies on local governments or other entities to carry out that portion of the plan. Both elements (A) and (E) address the requirement that there is adequate authority to implement and enforce the SIP and that there are no legal impediments.

The i-SIP submission for the 2015 O 3 NAAQS describes the SIP regulations governing the various functions of personnel within the TCEQ, including the administrative, technical support, planning, enforcement, and permitting functions of the program.

With respect to funding, the TCAA requires TCEQ to establish an emissions fee schedule for sources to fund the reasonable costs of administering various air pollution control programs and authorizes TCEQ to collect additional fees necessary to cover reasonable costs associated with processing of air permit applications.

As required by the CAA, the Texas statutes and the SIP stipulate that any board or body, which approves permits or enforcement orders, must have a majority of members who represent the public interest and do not derive any “significant portion” of their income from persons subject to permits and enforcement orders or who appear before the board on issues related to the CAA or the TCAA. The members of the board or body, or the head of an agency with similar powers, are required to adequately disclose any potential conflicts of interest.

With respect to assurances that the State has responsibility to implement the SIP adequately when it authorizes local or other agencies to carry out portions of the plan, the Texas statutes and the SIP designate the TCEQ as the primary air pollution control agency and TCEQ maintains authority to ensure implementation of any applicable plan portion. More detail is provided in the TSD for this action.

(F) Stationary source monitoring system: The SIP must provide for the establishment of a system to monitor emissions from stationary sources and to submit periodic emission reports. It must require the installation, maintenance, and replacement of equipment, and the implementation of other necessary steps, by owners or operators of stationary sources, to monitor emissions from such sources. The SIP shall also require periodic reports on the nature and amounts of emissions and emissions-related data from such sources, and require that the state correlate the source reports with emission limitations or standards established under the CAA. These reports must be made available for public inspection at reasonable times.

The TCAA authorizes the TCEQ to require persons engaged in operations which result in air pollution to monitor or test emissions and to file reports containing information relating to the nature and amount of emissions. There also are SIP-approved state regulations pertaining to sampling and testing and requirements for reporting of emissions inventories. In addition, SIP-approved rules establish general requirements for maintaining records and reporting emissions.

The TCEQ uses this information, in addition to information obtained from other sources, to track progress towards maintaining the NAAQS, developing control and maintenance strategies, identifying sources and general emission levels, and determining compliance with SIP-approved regulations and additional EPA requirements. The SIP requires this information be made available to the public. Provisions concerning the handling of confidential data and proprietary business information are included in the SIP-approved regulations. These rules specifically exclude from confidential treatment any records concerning the nature and amount of emissions reported by sources. More detail and links to Texas emissions data are provided in the TSD for this action.

(G) Emergency authority: The SIP must provide for authority to address activities causing imminent and substantial endangerment to public health or welfare or the environment and to include contingency plans to implement such authorities as necessary.

The TCAA provides TCEQ with authority to address environmental emergencies, and TCEQ has contingency plans to implement emergency episode provisions. Upon a finding that any owner/operator is unreasonably affecting the public health, safety or welfare, or the health of animal or plant life, or property, the TCAA and 30 TAC chapters 35 and 118 authorize TCEQ to, after a reasonable attempt to give notice, declare a state of emergency and issue without hearing an emergency special order directing the owner/operator to cease such pollution immediately. The TCEQ may issue emergency orders, or issue or suspend air permits as required by an air pollution emergency.

The “Texas Air Quality Control Contingency Plan for Prevention of Air Pollution Episodes” is part of the Texas SIP. However, because 8-hour ozone concentrations in Texas are below 100 ppb, Texas is not required to have contingency plans to meet this i-SIP element for the 2015 O 3 NAAQS. 13 However, to provide additional protection, the State has general emergency powers to address any possible dangerous air pollution episode if necessary to protect the environment and public health.

(H) Future SIP revisions: States must have the authority to revise their SIPs in response to changes in the NAAQS, availability of improved methods for attaining the NAAQS, or in response to an EPA finding that the SIP is substantially inadequate to attain the NAAQS.

The TCAA authorizes the TCEQ to revise the Texas SIP, as necessary, to account for revisions of an existing NAAQS, establishment of a new NAAQS, to attain and maintain a NAAQS, to abate air pollution, to adopt more effective methods of attaining a NAAQS, and to respond to EPA SIP calls concerning NAAQS adoption or implementation.

(I) Nonattainment areas: The CAA section 110(a)(2)(I) requires that in the case of a plan or plan revision for areas designated as nonattainment, states must meet applicable requirements of part D of the CAA, relating to SIP requirements for designated nonattainment areas.

However, as noted earlier, EPA does not expect infrastructure SIP submissions to address CAA section 110(a)(2)(I). The specific SIP submissions for designated nonattainment areas, as required under CAA title I, part D, are subject to different submission schedules than those for section 110 infrastructure elements. Instead, EPA will act on any part D attainment plan SIP submissions through a separate rulemaking process governed by the requirements for nonattainment areas, as described in part D.

(J) Consultation with government officials, public notification, PSD and visibility protection: The SIP must meet the following three CAA requirements: (1) Section 121, relating to interagency consultation regarding certain CAA requirements; (2) section 127, relating to public notification of NAAQS exceedances and related issues; (3) prevention of significant deterioration of air quality; and (4) visibility protection.

(1) Interagency consultation: As required by the TCAA, there must be a public hearing before the adoption of any regulations or emission control requirements, and all interested persons are given a reasonable opportunity to review the action that is being proposed and to submit data or arguments, either orally or in writing, and to examine the testimony of witnesses from the hearing. In addition, the TCAA provides the TCEQ the power and duty to establish cooperative agreements with local authorities, and consult with other states, the federal government and other interested persons or groups in regard to matters of common interest in the field of air quality control. Furthermore, the Texas PSD SIP rules mandate that the TCEQ shall provide for public participation and notification regarding permitting applications to any other state or local air pollution control agencies, local government officials of the city or county where the source will be located, tribal authorities, and Federal Land Manager (FLMs) whose lands may be affected by emissions from the source or modification. Additionally, the State's PSD SIP rules require the TCEQ to consult with FLMs regarding permit applications for sources with the potential to impact Class I Federal Areas. The SIP also includes a commitment to consult continually with the FLMs on the review and implementation of the visibility program. The State recognizes the expertise of the FLMs in monitoring and new source review applicability analyses for visibility, and has agreed to notify the FLMs of any advance notification or early consultation with a new or modifying source prior to the submission of a permit application. Likewise, the State's Transportation Conformity SIP rules provide for interagency consultation, resolution of conflicts, and public notification.

(2) Public Notification: The i-SIP submission from Texas provides the SIP regulatory citations requiring the TCEQ to regularly notify the public of instances or areas in which any NAAQS are exceeded. Included in the SIP are the rules for TCEQ to advise the public of the health hazard associated with such exceedances; and enhance public awareness of measures that can prevent such exceedances and of ways in which the public can participate in the regulatory and other efforts to improve air quality. In addition, as discussed earlier for CAA section 110(a)(2)(B), the TCEQ air monitoring website provides quality data for each of the monitoring stations in Texas; this data is provided instantaneously for certain pollutants, such as ozone. The website also provides information on the health effects of lead, ozone, particulate matter, and other criteria pollutants.

(3) PSD: The PSD requirements for this element are the same as those addressed earlier under CAA section 110(a)(2)(C), Program for enforcement of control measures.

(4) Visibility Protection: The Texas SIP requirements relating to visibility protection are not affected when EPA establishes or revises a NAAQS. Therefore, EPA believes that there are no new visibility protection requirements due to the revision of the NAAQS, and consequently there are no newly applicable visibility protection obligations pursuant to CAA section 110(a)(2)(J).

(K) Air quality and modeling/data: The SIP must provide for performing air quality modeling, as prescribed by EPA, to predict the effects on ambient air quality of any emissions of any NAAQS pollutant, and for submission of such data to EPA upon request.

The TCEQ has the power and duty, under TCAA to develop facts and investigate providing for the functions of environmental air quality assessment. Past modeling and emissions reductions measures have been submitted by the State and approved into the SIP. Additionally, TCEQ has the ability to perform modeling for primary and secondary NAAQS on a case-by-case permit basis consistent with their SIP-approved PSD rules and with EPA guidance.

The TCAA authorizes and requires TCEQ to cooperate with the federal government and local authorities concerning matters of common interest in the field of air quality control, thereby allowing the agency to make such submissions to the EPA.

(L) Permitting Fees: The SIP must require each major stationary source to pay permitting fees to the permitting authority, as a condition of any permit required under the CAA, to cover the cost of reviewing and acting upon any application for such a permit, and, if the permit is issued, the costs of implementing and enforcing the terms of the permit. The fee requirement applies until a fee program established by the state pursuant to Title V of the CAA, relating to operating permits, is approved by EPA.

See the earlier discussion for CAA section 110(a)(2)(E) for the description of the mandatory collection of permitting fees outlined in the SIP.

(M) Consultation/participation by affected local entities: The SIP must provide for consultation and participation by local political subdivisions affected by the SIP.

See the earlier discussions for CAA sections 110(a)(2)(J), elements (1) and (2) for a description of the SIP's public participation process, the authority to advise and consult, and the PSD SIP's public participation requirements. Additionally, the TCAA also requires initiation of cooperative action between local authorities and the TCEQ, between one local authority and another, or among any combination of local authorities and the TCEQ for control of air pollution in areas having related air pollution problems that overlap the boundaries of political subdivisions, and entering into agreements and compacts with adjoining states and Indian tribes, where appropriate. The transportation conformity component of the Texas SIP requires that interagency consultation and opportunity for public involvement be provided before making transportation conformity determinations and before adopting applicable SIP revisions on transportation-related issues.

EPA is proposing to approve the August 17, 2018 Texas “i-SIP” submittal for the 2015 ozone NAAQS in its entirety. We are also proposing to approve portions of the August 17, 2018 Texas “Transport” submittal for the 2015 ozone NAAQS, as detailed in Table 1:

Based upon review of the State's infrastructure SIP submission and relevant statutory and regulatory authorities and provisions referenced in this submission or referenced in the EPA-approved Texas SIP, EPA believes that Texas has the infrastructure in place to address all applicable required elements of CAA sections 110(a)(1) and (2), except as noted here, to ensure that the 2015 O 3 NAAQS are implemented in the State.

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

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

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

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

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

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

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

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

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

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

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

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

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

This rulemaking addresses a submission from the WDNR dated November 26, 2018, which describes its infrastructure SIP for the 2012 annual PM 2.5 NAAQS (78 FR 3086, January 15, 2013). Specifically, this rulemaking addresses the portion of the submission dealing with interstate pollution transport under CAA section 110(a)(2)(D)(i), otherwise known as the “good neighbor” provision. The requirement for states to make a SIP submission of this type arises from section 110(a)(1) of the CAA, pursuant to which states must submit “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof),” a plan that provides for the “implementation, maintenance, and enforcement” of such NAAQS. Section 110(a)(2) of the CAA includes a list of specific elements that “each such plan” submission must address. EPA commonly refers to such state plans as “infrastructure SIPs.” State plans must address four requirements of the good neighbor provisions (commonly referred to as “prongs”), including:

— Prong 1: Prohibiting any source or other type of emissions activity in one state from contributing significantly to nonattainment of the NAAQS in another state;

— Prong 2: Prohibiting any source or other type of emissions activity in one state from interfering with maintenance of the NAAQS in another state;

— Prong 3: Prohibiting any source or other type of emissions activity in one state from interfering with measures required to prevent significant deterioration (PSD) of air quality in another state; and

— Prong 4: Protecting visibility in another state.

This rulemaking is evaluating whether Wisconsin's interstate transport provisions in its PM 2.5 infrastructure SIP meet prongs one and two of the good neighbor requirements of the CAA. Prongs three and four will be evaluated in a separate rulemaking.

EPA has developed a consistent framework for addressing the prong one and two interstate transport requirements with respect to the PM 2.5 NAAQS in several previous Federal rulemakings. The four basic steps of that framework include: (1) Identifying downwind receptors that are expected to have problems attaining or maintaining the NAAQS; (2) identifying which upwind states contribute to these identified problems in amounts sufficient to warrant further review and analysis; (3) for states identified as contributing to downwind air quality problems, identifying upwind emissions reductions necessary to prevent an upwind state from significantly contributing to nonattainment or interfering with maintenance of the NAAQS downwind; and (4) for states that are found to have emissions that significantly contribute to nonattainment or interfere with maintenance of the NAAQS downwind, reducing the identified upwind emissions through adoption of permanent and enforceable measures. This framework was most recently applied with respect to PM 2.5 in the August 8, 2011 Cross-State Air Pollution Rule (CSAPR) (76 FR 48208), designed to address both the 1997 and 2006 PM 2.5 standards, as well as the 1997 and 2008 ozone standards.

EPA highlighted the statutory requirement to submit infrastructure SIPs within three years of promulgation of a new NAAQS in an October 2, 2007 guidance document entitled “Guidance on SIP Elements Required Under Sections 110(a)(1) and (2) for the 1997 8-hour Ozone and PM 2.5 National Ambient Air Quality Standards.” EPA has issued additional guidance documents and memoranda, including a September 13, 2013 guidance document titled “Guidance on Infrastructure State Implementation Plan (SIP) Elements under Clean Air Act Sections 110(a)(1) and 110(a)(2).”

The most recent relevant document is a memorandum published on March 17, 2016, titled “Information on the Interstate Transport `Good Neighbor' Provision for the 2012 Fine Particulate Matter National Ambient Air Quality Standards under Clean Air Act Section 110(a)(2)(D)(i)(I)” (2016 memorandum). The 2016 memorandum describes EPA's consistent approach over the years to address interstate transport. In the 2016 memorandum, EPA reviewed relevant modeling data and provided EPA's air quality projections as they relate to the 2012 annual PM 2.5 NAAQS. The 2016 memorandum provides information relevant to EPA Regional office review of CAA section 110 (a)(2)(D)(i)(I) “good neighbor” provision in infrastructure SIPs with respect to the 2012 annual PM 2.5 NAAQS. WDNR's submittal and this rulemaking consider information provided in that memorandum.

The 2016 memorandum provides states and EPA Regional offices with future year annual PM 2.5 design values for monitors in the United States based on quality-assured and certified ambient monitoring data and air quality modeling. The 2016 memorandum further describes how these projected potential design values can be used to help determine which monitors should be further evaluated to potentially address whether emissions from other states significantly contribute to nonattainment or interfere with maintenance of the 2012 annual PM 2.5 NAAQS at those sites. The 2016 memorandum explains that, for purposes of addressing interstate transport for the 2012 PM 2.5 NAAQS, it may be appropriate to evaluate projected air quality in 2021, which is the attainment deadline for 2012 PM 2.5 NAAQS nonattainment areas classified as Moderate. Accordingly, because the available data includes 2017 and 2025 projected average and maximum PM 2.5 design values calculated through the CAMx photochemical model, the 2016 memorandum suggests approaches states might use to interpolate PM 2.5 values at sites in 2021. The 2016 memorandum indicates that it may be reasonable to assume receptors projected to have average and/or maximum design values above the NAAQS in both 2017 and 2025 are also likely to be either nonattainment or maintenance receptors in 2021. Similarly, the 2016 memorandum indicates that it may be reasonable to assume that receptors that are projected to attain the NAAQS in both 2017 and 2025 are also likely to be attainment receptors in 2021. However, where a potential receptor is projected to be nonattainment or maintenance in 2017, but projected to be attainment in 2025, the 2016 memorandum suggests that further analysis of the emissions and modeling may be needed to make a further judgement regarding the receptor status in 2021.

The 2016 memorandum indicates that for all but one monitoring site in the eastern United States, with complete and valid PM 2.5 design values from 2009 to 2013, the modeling data shows that monitors were expected to both attain and maintain the 2012 annual PM 2.5 NAAQS in both 2017 and 2025. The modeling results provided in the 2016 memorandum show that out of seven PM 2.5 monitors located in Allegheny County, Pennsylvania, one monitor is expected to be above the 2012 annual PM 2.5 NAAQS in 2017. Further, that monitor, the Liberty monitor (ID number 420030064), is projected to be above the NAAQS only under the model's maximum projected conditions (used in EPA's interstate transport framework to identify maintenance receptors) and is projected to both attain and maintain the NAAQS (along with all Allegheny County monitors) in 2025. The 2016 memorandum therefore indicates that under such a condition (where EPA's photochemical modeling indicates an area will maintain the 2012 annual PM 2.5 NAAQS in 2025 but not attain in 2017) further analysis of the site should be performed to determine if the site may be a nonattainment or maintenance receptor in 2021 (the attainment deadline for moderate PM 2.5 areas).

The 2016 memorandum also indicates that based on modeling projections, there are 17 potential nonattainment or maintenance receptors in California, located in the San Joaquin Valley and South Coast nonattainment areas, and one potential receptor in Shoshone County, Idaho.

The 2016 memorandum also indicates that for certain states with incomplete ambient monitoring data, additional information including the latest available data should be analyzed to determine whether there are potential downwind air quality problems that may be impacted by transported emissions. These states include all or portions of Florida, Illinois, Idaho (outside of Shoshone County), Tennessee, and Kentucky. Except for four counties in Florida, the data quality problems have been resolved for these areas, and these areas now have current design values below the 2012 annual PM 2.5 NAAQS and are expected to maintain the NAAQS due to downward emission trends for nitrogen oxides (NO X ) and sulfur dioxide (SO 2 ).

WDNR's submittal indicates that the State used data from the 2016 memorandum and supplied its own additional information in its analysis. EPA considered the analysis from WDNR, as well as additional analysis conducted by EPA, in its review of the WDNR submittal.

WDNR's submittal contains a technical analysis of its interstate transport of pollution relative to the 2012 annual PM 2.5 NAAQS. As reflected in the EPA's 2016 memorandum, the only receptor identified as nonattainment or maintenance on which Wisconsin was deemed to have potential significant impact is the Liberty monitor (42-003-0064) in Allegheny County, Pennsylvania located in southwest Pennsylvania. In its technical analysis, WDNR examined geographical, monitoring, and emission factors to evaluate impacts on the Allegheny monitor. As stated previously, WDNR's technical analysis considers CSAPR rule implementation and EPA guidance and memoranda. WDNR did not focus on potential contribution to other areas EPA identified as not attaining the 2012 annual PM 2.5 NAAQS based on monitor data in Alaska, California, Idaho, Nevada, or Hawaii. The distance between Wisconsin and these areas, coupled with the prevailing wind directions, leads WDNR to conclude that Wisconsin will not contribute significantly to any of the potential receptors in those states. Since the Allegheny County, Pennsylvania, receptor is the only location considered downwind of Wisconsin, this submission focuses on that single receptor. WDNR concluded that Wisconsin contributes no significant impacts to the maintenance and attainment of NAAQS for PM 2.5 in Allegheny County, Pennsylvania, and therefore existing measures satisfy Wisconsin's responsibilities under CAA section 110(a)(2)(D)(i)(I).

WDNR's submission discussed geographical factors that show Wisconsin does not contribute to the nonattainment issues at the Allegheny monitor. As stated in WDNR's submittal, Wisconsin's nearest point to the Allegheny monitor is about 500 miles away. At this large distance, PM 2.5 precursor emissions from Wisconsin are thoroughly dispersed in the atmosphere long before reaching Pennsylvania.

WDNR's submission evaluated monitored PM 2.5 concentrations in Wisconsin. WDNR found that PM 2.5 monitors in all regions of Wisconsin have measured a steady decrease in annual PM 2.5 concentrations over the past decade. PM 2.5 design values decreased by around 37% on average in most of the state between 2001-2003 and 2015 to 2017.

WDNR's submission also evaluated the Wisconsin emissions data from EPA's National Emissions Inventory (NEI) of NO X , SO 2 , and Volatile Organic Compounds (VOCs). Emissions of NO X and SO 2 have been steadily decreasing since the early 2000s due to state and Federal control requirements. The emissions of NO X and SO 2 in Wisconsin from all identified sources have decreased by 50% and 68%, respectively, since 2002. VOC emissions also decreased 50% over this period.

WDNR concludes that that no further measures are necessary to satisfy Wisconsin's responsibilities under CAA section 110(a)(2)(D)(i)(I), because Wisconsin does not contribute to projected nonattainment or maintenance issues at the Liberty monitor site. WDNR found that is has not historically contributed significantly to any of the areas projected to have nonattainment or maintenance concerns related to this NAAQS. In addition, emissions of PM 2.5 precursors and monitored PM 2.5 concentrations are both decreasing within the State. Therefore, the permanent and enforceable control measures already being implemented in Wisconsin are sufficient to ensure that emissions in the State will not significantly contribute to nonattainment, or interfere with maintenance, in any downwind state for this NAAQS.

The modeling information contained in EPA's 2016 memorandum shows that one monitor in Allegheny County, Pennsylvania (the Liberty monitor, 420030064) may have a maintenance issue in 2017, but is projected to both attain and maintain the NAAQS by 2025. Monitoring data from 2015-2017 show attainment county-wide, except for the Liberty-Clairton area. The Liberty monitor was exceeding standards in 2017 but is still projected to attain and maintain the NAAQS by 2025. A linear interpolation of the modeled design values to 2021 shows that the monitor is likely to both attain and maintain the standard by 2021. Emissions and air quality data trends help to corroborate this interpolation.

Over the last decade, local and regional emissions reductions of primary PM 2.5 , SO 2 , and NO X , have led to large reductions in annual PM 2.5 design values in Allegheny County, Pennsylvania. In 2007, all of Allegheny County's PM 2.5 monitors exceeded the level of the 2012 annual PM 2.5 NAAQS (the 2005-2007 annual average design values ranged from 12.9-19.8 micrograms per cubic meter (µg/m 3 ), as shown in Table 1). The 2015-2017 annual average PM 2.5 design values now show that only one monitor (Liberty, at 13.0 µg/m 3 ) exceeds the health-based annual PM 2.5 NAAQS of 12.0 µg/m 3 .

The Liberty monitor is already close to attaining the NAAQS and expected emissions reductions in the next three years will lead to additional reductions in measured PM 2.5 concentrations. There are both local and regional components to the measured PM 2.5 levels in Allegheny County and the greater Pittsburgh area. Previous CSAPR modeling showed that regional emissions from upwind states, particularly SO 2 and NO X emissions, contribute to PM 2.5 nonattainment at the Liberty monitor. In recent years, large SO 2 and NO X reductions from power plants have occurred in Pennsylvania and states upwind from the Greater Pittsburgh region. Based on existing CSAPR budgets, Pennsylvania's energy sector emissions of SO 2 will have decreased 166,000 tons between 2015-2017 because of CSAPR implementation. This is due to both the installation of emissions controls and retirements of electric generating units.

Between 2011 and 2016, 27.4 gigawatts of coal-fired electric generation units (EGUs) have retired in Pennsylvania and the closest upwind states (West Virginia, Ohio, Kentucky, Indiana, Illinois, and Michigan) according to the Energy Information Administration's Preliminary Monthly Electric Generator Inventory, April 2017 (form EIA-860M, at: https://www.eia.gov/electricity/data/eia860m/xls/april_generator2017.xlsx ). In addition, between 2017 and 2021, an additional 8.8 gigawatts of coal-fired EGUs are expected to retire in the same upwind states. This includes large EGUs such as JM Stuart in Ohio (2,308 megawatts [MW]), Killen Station in Ohio (600 MW), WH Sammis in Ohio (720 MW), Michigan City in Indiana (469 MW), Baldwin Energy Complex in Illinois (576 MW), Paradise in Kentucky (1,230 MW), and Baily in Indiana (480 MW). These regional coal unit retirements will lead to further emissions reductions which will help ensure that Alleghany County monitors will not have nonattainment or maintenance issues by 2021.

In addition to regional emissions reductions and plant closures noted above, additional local reductions in both direct PM 2.5 and SO 2 emissions are also expected to occur and should also contribute to further declines in Allegheny County's PM 2.5 monitor concentrations. For example, significant SO 2 reductions will occur at U.S. Steel's integrated steel mill facilities in southern Allegheny County due to reductions required via federally-enforceable permits issued by Allegheny County to support its attainment plan submitted to meet requirements in CAA section 172(c) for the 1-hr SO 2 NAAQS. Reductions occurred in October 2018 largely due to declining sulfur content in the Clairton Coke Work's coke oven gas (COG) due to upgraded controls. Because this COG is burned at U.S. Steel's Clairton Coke Works, Irvin Mill, and Edgar Thompson Steel Mill, these reductions in sulfur content contribute to much lower PM 2.5 formation from precursors after October 4, 2018 as SO 2 is a precursor to PM 2.5 . Additionally, the expected retirement of the Bruce Mansfield Power Plant by June 2021 should reduce precursor emissions from neighboring Beaver County, Pennsylvania. The Allegheny County and Beaver County SO 2 SIP submissions, which EPA is reviewing pursuant to CAA requirements, also discuss expected lower SO 2 emissions in the Allegheny County area resulting from reduced sulfur content requirements in vehicle fuels, reductions in general emissions due to declining population in the Greater Pittsburgh region, and several shutdowns of significant emitters of SO 2 in Allegheny County.

Projected power plant closures and additional emissions controls in Pennsylvania and upwind states will help further reduce both direct PM 2.5 and PM 2.5 precursors. Regional emission reductions will continue to occur from current on-the-books Federal and state regulations such as the Federal on-road and non-road vehicle programs, and various rules for major stationary emissions sources.

EPA modeling projections, the recent downward trend in local and upwind emissions reductions, the expected continued downward trend in emissions between 2018 and 2021, and the downward trend in monitored PM 2.5 concentrations all indicate that the Liberty monitor will attain and be able to maintain the 2012 annual PM 2.5 NAAQS by 2021.

With respect to Florida, in the CSAPR modeling analysis for the 1997 PM 2.5 NAAQS, Florida did not have any potential nonattainment or maintenance receptors identified for the 1997 or 2006 PM 2.5 NAAQS. At this time, EPA anticipates that this trend will continue; however, as there are ambient monitoring data gaps in the 2009-2013 data that could have been used to identify potential PM 2.5 nonattainment and maintenance receptors for Miami/Dade, Gilchrist, Broward and Alachua counties in Florida, the modeling analysis of potential receptors was not complete for these counties. However, the most recent ambient data (2015-2017) for these counties indicates design values well below the level of the 2012 annual PM 2.5 NAAQS. In addition, the highest value for these observed monitors is 8.0 µg/m 3 at the Hillsborough County monitor (12-057-3002), which is well below the NAAQS. This is also consistent with historical data: Complete and valid design values in the 2006-2008, 2007-2009 and/or 2008-2010 periods for these counties were all well below the 2012 annual PM 2.5 NAAQS. For these reasons, we find that none of the counties in Florida with monitoring gaps between 2009-2013 should be considered either nonattainment or maintenance receptors for the 2012 annual PM 2.5 NAAQS. Accordingly, we propose to find that emissions from Wisconsin will not significantly contribute to nonattainment or interfere with maintenance of the 2012 annual PM 2.5 NAAQS in Florida.

The conclusions of WDNR's analysis is consistent with EPA's expanded review of its submittal. The area (Allegheny County, Pennsylvania) to which Wisconsin's sources potentially contribute is expected to attain and maintain the 2012 annual PM 2.5 NAAQS, and as demonstrated in WDNR's submittal, Wisconsin will not contribute to projected nonattainment or maintenance issues at any sites in 2021. WDNR's analysis shows that through permanent and enforceable measures currently contained in its SIP and other emissions reductions occurring in Wisconsin, monitored PM 2.5 air quality in the identified area that Wisconsin sources may impact will continue to improve, and that no further measures are necessary to satisfy Wisconsin's responsibilities under CAA section 110(a)(2)(D)(i)(I). Therefore, EPA is proposing that prongs one and two of the interstate pollution transport element of Wisconsin's infrastructure SIP are approvable.

EPA is proposing to approve a portion of WDNR's November 26, 2018 submittal certifying that the current Wisconsin SIP is sufficient to meet the required infrastructure requirements under CAA section 110(a)(2)(D)(i)(I), specifically prongs one and two, as set forth above.

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

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

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

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

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

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

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

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

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

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

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

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

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

On June 22, 2010 (75 FR 35520), EPA published a revised primary SO 2 national ambient air quality standard (NAAQS) of 75 parts per billion (ppb), which is met at a monitoring site when the 3-year average of the annual 99th percentile of daily maximum 1-hour concentrations does not exceed 75 ppb. This NAAQS was codified at 40 CFR 50.4. On July 25, 2013 (78 FR 47191), EPA published its initial air quality designations for the SO 2 NAAQS based upon air quality monitoring data for calendar years 2009-2011. In that action, the Marion county area comprised of Perry and Wayne Townships was designated nonattainment for the SO 2 NAAQS (Indianapolis nonattainment area).

Indiana was required to submit a nonattainment State Implementation Plan (SIP) that meets the requirements of sections 172(c) and 191-192 of the Clean Air Act (CAA) and provide for attainment of the SO 2 NAAQS as expeditiously as practicable, but no later than April 4, 2015, which represents five years after the area was originally designated as nonattainment under the 2010 SO 2 NAAQS. SO 2 emissions from all sources within the nonattainment area totaled 24,021 tons in 2011, and 15,312 tons in 2015. Due to a variety of factors, there has been a significant, permanent and enforceable reduction in SO 2 emissions within the Indianapolis area. In addition, the area's SO 2 monitors' 3-year SO 2 design values  1 for 2014-2016 had fallen below the SO 2 NAAQS. Consequently, the Indiana Department of Environmental Management (IDEM) submitted a redesignation request on July 10, 2017. For the reasons set forth in this document, EPA is proposing to redesignate the area to attainment.

Under CAA section 107(d)(3)(E), there are five criteria which must be met before a nonattainment area may be redesignated to attainment.

1. EPA has determined that the relevant NAAQS has been attained in the area.

2. The applicable implementation plan has been fully approved by EPA under section 110(k).

3. EPA has determined that improvement in air quality is due to permanent and enforceable reductions in emissions resulting from the SIP, Federal regulations, and other permanent and enforceable reductions.

4. EPA has fully approved a maintenance plan, including a contingency plan, for the area under section 175A of the CAA.

5. The State has met all applicable requirements for the area under section 110 and part D.

For redesignation of a nonattainment area to attainment, the CAA requires EPA to determine that the area has attained the applicable NAAQS (CAA section 107(d)(3)(E)(i)). As stated in the April 2014 “Guidance for 1-Hour SO 2 Nonattainment Area SIP Submissions,” for SO 2 , there are two components needed to support an attainment determination: A review of representative air quality monitoring data, and a further analysis, generally requiring air quality modeling, to demonstrate that the entire area is attaining the applicable standard, based on current actual emissions or the fully implemented control strategy. Indiana has addressed both components.

Under EPA regulations at 40 CFR 50.17, the SO 2 standard is met at an ambient air quality monitoring site when the 3-year average of the annual 99th percentile of 1-hour daily maximum concentrations is less than or equal to 75 ppb, as determined in accordance with appendix T of 40 CFR part 50, at all relevant monitoring sites in the subject area. EPA has reviewed the ambient air monitoring data for the Indianapolis nonattainment area. The Indianapolis nonattainment area has two SO 2 monitoring sites located in Indianapolis—the Harding Street site and Washington Park site. This review addresses air quality data collected in the 2014-2017 period, which are the most recent quality assured data available. All data considered are complete, quality assured, certified, and recorded in EPA's Air Quality System database.

Table 1 shows the 2014-2016 and 2015-2017 design values for the Indianapolis nonattainment area. The 3-year average design values for the Harding Street and Washington Park monitoring sites for 2014-2016 are 58 ppb and 52 ppb, respectively. The 2015-2017 design values are 25 ppb and 20 ppb, respectively. All design values for 2014-2017 are below the SO 2 standard. Therefore, the Indianapolis SO 2 monitors clearly show attainment. Preliminary data for 2018 indicate that the area continues to attain the SO 2 standard.

Regarding the second component of the attainment determination, IDEM has performed extensive modeling of the Indianapolis nonattainment area to determine the effect of local and national emission control strategies on SO 2 and to demonstrate attainment of the SO 2 NAAQS.

A total of six sources were included in the SO 2 attainment demonstration and technical support document for the Indianapolis nonattainment area submitted to EPA for review and approval on October 2, 2015. These facilities are: (1) Belmont Advanced Wastewater Treatment Plant (formerly Indianapolis Sludge Incinerator), (2) Citizens Thermal (formerly Indianapolis Power & Light Company (IPL) Perry K), (3) IPL—Harding Street Generating Station, (4) Quemetco, (5) Rolls Royce Corporation (formerly Allison Gas Turbine Plant 5 and Plant 8), and (6) Vertellus Agriculture and Nutrition Specialties (formerly Reilly Industries and Reilly Tar and Chemical).

The American Meteorological Society/Environmental Protection Agency Regulatory Model (AERMOD version 14134) was the regulatory air quality model used for the 2010 SO 2 attainment demonstration modeling for the Indianapolis nonattainment area. Five years, 2008-2012, of surface meteorological data from the Indianapolis, IN National Weather Service (NWS) site was used in conjunction with five years of concurrent upper-air meteorological data from Lincoln, Illinois, which is approximately 200 miles west of Indianapolis.

Several Federal rulemakings established allowable limits for the six sources listed previously. These rulemakings include the Cross State Air Pollution Rule (CSAPR), Mercury and Air Toxics Standards (MATS), and National Emission Standards for Hazardous Air Pollutants for Major Sources (NESHAP): Industrial, Commercial, and Institutional Boilers and Process Heaters. These limits, which were adopted at 326 Indiana Administrative Code (IAC) 7-4-2.1, have been applied to the six sources.

The AERMOD modeling results for the Indianapolis nonattainment area showed a maximum 1-hour SO 2 concentration of 168.6 micrograms per cubic meter (μg/m3). When added to a background concentration value of 22.5 μg/m3, a total 1-hour SO 2 concentration of 191.1 μg/m3 is achieved. This is below the 1-hour SO 2 NAAQS of 75 ppb or 196.2 μg/m3 and, therefore, demonstrates attainment of the NAAQS for SO 2 .

In summary, the monitored data show attainment for 2014-2017, and IDEM has demonstrated, via modeling, that sources within the area are not expected to cause future violations in the area because of the permanent and enforceable limits that apply to those sources. Therefore, EPA agrees that the Indianapolis nonattainment area is currently attaining the SO 2 NAAQS.

To support the redesignation of an area from nonattainment to attainment, section 107(d)(3)(E)(iii) of the CAA requires EPA to determine that the air quality improvement in the area is due to permanent and enforceable reductions in emissions resulting from the implementation of the attainment demonstration and applicable Federal air pollution control regulations as well as any other permanent and enforceable emission reductions. As previously stated, the reduction in emissions from the six sources in the area has led to a decrease in monitored levels. The controls and operational changes that were made by the six facilities, as well as unit retirements, resulted in emission reductions for the nonattainment area between the 2011 nonattainment base year and the 2015 attainment year.

Table 2 compares SO 2 emissions for all sources ( i.e., EGU sources, non-EGU point sources, non-point sources (area), non-road sources, and on-road sources) for the 2011 nonattainment year and the 2015 attainment year for Marion County, Indiana where the Indianapolis nonattainment area is located. SO 2 emissions within Marion County declined by 36% between the nonattainment year (2011) and the attainment year (2015) resulting in attainment of the 2010 SO 2 NAAQS.

As indicated above, the six facilities identified in the attainment plan have reduced their emissions from the 2011 nonattainment year to the 2015 attainment year. Table 3, below, shows the reductions that took place from 2011 to 2015.

EPA agrees that the improvement in air quality in the nonattainment area is due to permanent and enforceable emission reductions, as described more fully in EPA's March 22, 2019 approval of Indiana's attainment demonstration [84 FR 10692]. In preparing its attainment plan, Indiana adopted revisions to the previously approved SO 2 at 326 IAC 7. These rule revisions were adopted by the Indiana Environmental Rules Board following established, appropriate public review procedures. In addition, the rule revisions provide unambiguous, permanent emission limits, expressed in lbs/hour of allowable SO 2 emissions, that, if exceeded by a source, would be clear grounds for an enforcement action.

Revised limits for the six facilities identified above (among others) are codified in 326 IAC 7, titled “Sulfur Dioxide Rules.” These are: “Compliance date” (326 IAC 7-1.1-3, which contains a compliance date of January 1, 2017), “Reporting requirements; methods to determine compliance” (7-2-1), “Marion County sulfur dioxide emission limitations” (7-4-2.1). The rules also include associated monitoring, testing, and recordkeeping and reporting requirements. For example, continuous emission monitoring will be conducted for assessing compliance with the 30-day average limits. Specifically, 326 IAC 7-1-9 is being replaced by 7-4-2.1 for Marion County. EPA finds these limits to be enforceable. Another summary of the limits is provided in EPA's March 22, 2019 approval of Indiana's attainment demonstration (84 FR 10692). The attainment plan also satisfies requirements for emission inventories, RACT/RACM, RFP, and contingency measures. Additionally, Indiana has previously addressed requirements regarding nonattainment area NSR rules. Therefore, EPA has determined that Indiana's SO 2 attainment plan meet the applicable requirements of CAA sections 110, 172, 191, and 192.

As a criterion for redesignation of an area from nonattainment to attainment of a NAAQS, the CAA requires EPA to determine that the state has met all applicable requirements under section 110 and part D of title I of the CAA ( see section 107(d)(3)(E)(v) of the CAA). Indiana's submission meets section 110 and part D requirements. EPA approved Indiana's infrastructure SIP for SO 2 on August 3, 2015 (80 FR 48733). In this infrastructure SIP approval, EPA determined that Indiana's SIP meets the requirements of CAA section 110(a)(1) and 110(a)(2) and contains the basic program elements, such as an active enforcement program and permitting program.

With the redesignation request of July 10, 2017, Indiana submitted information addressing the SIP requirements under section 172 and part D. Indiana submitted an attainment inventory of the SO 2 emissions from sources in the nonattainment area on July 10, 2017. Indiana chose 2011 for its base year emissions inventory, as comprehensive emissions data was available and updated that year, which satisfies the 172(c)(3) requirements. The six facilities identified in the previous section were the main sources in the nonattainment area. Indiana did not create mobile source SO 2 emission budgets for the Indianapolis Nonattainment Area, which included Marion County, because SO 2 emissions from mobile sources were found to be an insignificant contributor to PM 2.5 in the nonattainment area. As such, transportation conformity is not of concern for the 2010 SO 2 NAAQS. (78 FR 41698).

Table 4 compares SO 2 emissions for all sources for the 2015 attainment year and the 2030 maintenance year for Marion County, Indiana. SO 2 emissions within Marion County are projected to decline by 56% between 2015 and 2030, primarily due to fuel switching (coal to natural gas) at EGU point sources. The decrease in emissions shown between the attainment year (2015) and the maintenance year (2030) in Table 4 illustrates that continued maintenance of the 2010 1-hour SO 2 NAAQS is expected.

Section 172(c)(1) requires nonattainment area SIPs to provide for the implementation of all reasonably available control measures (RACM) as expeditiously as practicable and to provide for attainment of the NAAQS. EPA's longstanding interpretation of the nonattainment planning requirements of section 172 is that once an area is attaining the NAAQS, those requirements are not applicable for purposes of CAA section 107(d)(3)(E)(ii) and therefore need not be approved into the SIP before EPA can redesignate the area. In the 1992 General Preamble for Implementation of Title I, EPA set forth its interpretation of applicable requirements for purposes of evaluating redesignation requests when an area is attaining a standard. See 57 FR 13498, 13564 (April 16, 1992). EPA noted that the requirements for reasonable further progress (RFP) and other measures designed to provide for attainment do not apply in evaluating redesignation requests because those nonattainment planning requirements “have no meaning” for an area that has already attained the standard. EPA's understanding of section 172 also forms the basis of its Clean Data Policy, which was articulated with regard to SO 2 in the April 2014 “Guidance for 1-Hour SO 2 Nonattainment Area SIP Submissions,” and suspends a State's obligation to submit most of the attainment planning requirements that would otherwise apply, including an attainment demonstration and planning SIPs to provide for RFP, RACM, and contingency measures under section 172(c)(9). Courts have upheld EPA's interpretation of section 172(c)(1) for “reasonably available” control measures and control technology as meaning only those controls that advance attainment, which precludes the need to require additional measures where an area is already attaining. NRDC v. EPA, 571 F.3d 1245, 1252 (D.C. Cir. 2009); Sierra Club v. EPA, 294 F.3d 155, 162 (D.C. Cir. 2002); Sierra Club v. EPA, 314 F.3d 735, 744 (5th Cir. 2002); Sierra Club v. EPA, 375 F.3d 537 (7th Cir. 2004). 2 Therefore, because the Indianapolis nonattainment area has attained the SO 2 standard, no additional measures are needed to provide for attainment, and section 172(c)(1) requirements for an attainment demonstration and RACM are not part of the “applicable implementation plan” required to have been approved prior to redesignation per CAA section 107(d)(3)(E)(ii). EPA believes that Indiana has satisfied the reasonably available control measures/reasonably available control techniques (RACM/RACT) requirement for this area.

The other section 172 requirements that are designed to help an area achieve attainment are the section 172(c)(2) requirement that nonattainment plans contain provisions promoting RFP, the requirement to submit the section 172(c)(9) contingency measures, and the section 172(c)(6) requirement for the SIP to contain control measures necessary to provide for attainment of the NAAQS. These are also not required to be approved as part of the “applicable implementation plan” for purposes of satisfying CAA section 107(d)(3)(E)(ii).

Section 172(c)(4) requires the identification and quantification of allowable emissions for major new and modified stationary sources to be allowed in an area, and section 172(c)(5) requires source permits for the construction and operation of new and modified major stationary sources anywhere in the nonattainment area. EPA has determined that, since Prevention of Significant Deterioration (PSD) requirements will apply after redesignation, areas being redesignated need not comply with the requirement that a New Source Review (NSR) program be approved prior to redesignation, provided that the area demonstrates maintenance of the NAAQS without part D NSR. A more detailed rationale for this view is described in a memorandum from Mary Nichols, Assistant Administrator for Air and Radiation, dated October 14, 1994, entitled “Part D New Source Review Requirements for Areas Requesting Redesignation to Attainment.” Indiana has demonstrated that the Indianapolis nonattainment area will be able to maintain the 2010 SO 2 NAAQS without part D NSR in effect, and therefore Indiana does not need to have a fully approved part D NSR program prior to approval of the redesignation request. Indiana's PSD program will become effective in the nonattainment area upon redesignation to attainment.

Section 172(c)(7) requires the SIP to meet the applicable provisions of section 110(a)(2). As noted above, EPA believes that the Indiana SIP meets the requirements of section 110(a)(2) applicable for purposes of redesignation.

Section 176(c) of the CAA requires States to establish criteria and procedures to ensure that federally supported or funded projects conform to the air quality planning goals in the applicable SIP. The requirement to determine conformity applies to transportation plans, programs, and projects that are developed, funded, or approved under title 23 of the United States Code (U.S.C.) and the Federal Transit Act (transportation conformity) as well as to all other federally supported or funded projects (general conformity). State transportation conformity SIP revisions must be consistent with Federal conformity regulations relating to consultation, enforcement, and enforceability that EPA promulgated pursuant to its authority under the CAA. On June 4, 2010, Indiana submitted documentation establishing transportation conformity procedures in its SIP. EPA approved these procedures on August 17, 2010 (75 FR 50708). Moreover, EPA interprets the conformity SIP requirements as not applying for purposes of evaluating a redesignation request under section 107(d) because, like other requirements listed above, State conformity rules are still required after redesignation and Federal conformity rules apply where State rules have not been approved. See Wall v. EPA, 265 F.3d 426 (6th Cir. 2001) (upholding this interpretation); see also 60 FR 62748 (December 7, 1995) (redesignation of Tampa, Florida).

As discussed above, EPA is proposing to find that Indiana has satisfied all applicable requirements for purposes of redesignation of the Indianapolis nonattainment area under section 110 and part D of title I of the CAA.

As a criterion for redesignation of an area from nonattainment to attainment of a NAAQS, the CAA requires that the state has a fully approved SIP under section 110(k) of the CAA ( see section 107(d)(3)(E)(ii) of the CAA). SIPs must be fully approved only with respect to currently applicable requirements of the CAA. EPA has determined that Indiana has a fully approved SIP under section 110(k). As discussed above in section II.C., Indiana has submitted, and EPA has approved all applicable requirements under section 110 and part D of title I of the CAA. Indiana has implemented its SO 2 SIP regulations at 326 IAC 7-4-3, and Indiana maintains an active enforcement program to ensure ongoing compliance. Indiana's new source review/prevention of significant deterioration program will address emissions from new sources. Indiana's current SO 2 SIP rule for Marion County, which contains the Indianapolis SO 2 area, is codified at 326 IAC 7-4-3.

CAA section 175A sets forth the elements of a maintenance plan for areas seeking redesignation from nonattainment to attainment. Under section 175A, the plan must demonstrate continued attainment of the applicable NAAQS for at least ten years after the nonattainment area is redesignated to attainment. Eight years after the redesignation, the State must submit a revised maintenance plan demonstrating that attainment will continue to be maintained for the ten years following the initial ten year period. To address the possibility of future 2010 SO 2 NAAQS violations, the maintenance plan must contain contingency measures as EPA deems necessary to assure prompt correction of any future 2010 SO 2 NAAQS violations. Specifically, the maintenance plan should address five requirements: The attainment emissions inventory, maintenance demonstration, monitoring, verification of continued attainment, and a contingency plan.

Indiana's July 10, 2017 redesignation request contains its maintenance plan, which Indiana has committed to review eight years after redesignation. Indiana submitted an attainment emission inventory which addresses current emissions and projections of future emissions for point, area, and mobile sources. Indiana has demonstrated that the area is attaining and is expected to maintain the SO 2 NAAQS. Indiana has committed to continue monitoring at its monitoring sites in accordance with the requirements of 40 CFR part 58. These data will be used to verify continued attainment. Indiana has the authority to adopt, implement and enforce any subsequent emissions control measures deemed necessary to correct any future SO 2 violations. Regarding contingency measures to implement in the case of a future violation of the 2010 SO 2 standard, Indiana provided a list of five potential measures for the sources within the nonattainment area, including requiring: Alternative fuel, SO 2 emissions add-on control technologies for existing emission units, reduced operating hours, SO 2 emission offsets for new and modified major sources and SO 2 emission offsets for new and modified minor sources.

Indiana commits to study SO 2 emission trends and identify areas of concern if the annual average 99th percentile maximum daily 1-hour SO 2 concentration of 79 ppb or greater occurs in a single year, or if a two year average of 76 ppb or greater occurs in the maintenance area. Indiana will adopt and implement corrective actions as necessary to address such trends of increasing emissions or ambient impacts. The public will have the opportunity to participate in the contingency measure implementation process. EPA proposes to find that Indiana's maintenance plan adequately addresses the five basic components necessary to maintain the SO 2 standard in the Indianapolis nonattainment area.

As requested by Indiana on July 10, 2017, EPA is proposing to redesignate the Indianapolis nonattainment area from nonattainment to attainment of the 2010 SO 2 NAAQS. Indiana has demonstrated that the area is attaining the SO 2 standard, and that the improvement in air quality is due to permanent and enforceable measures. EPA is also proposing to approve the maintenance plan that Indiana submitted to ensure that the area will continue to maintain the SO 2 standard.

Under the CAA, redesignation of an area to attainment and the accompanying approval of the maintenance plan under CAA section 107(d)(3)(E) are actions that affect the status of geographical area and do not impose any additional regulatory requirements on sources beyond those required by state law. A redesignation to attainment does not in and of itself impose any new requirements, but rather results in the application of requirements contained in the CAA for areas that have been redesignated to attainment. Moreover, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

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

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

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

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

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

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

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

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

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

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

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

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

Entities potentially regulated by this proposed action include:

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that EPA is now aware could potentially be regulated by this action. Other types of entities not listed in the table could also be regulated. To determine whether your entity is regulated by this action, you should carefully examine the applicability criteria found in 40 CFR 122.26 and 122.32, and the discussion in the preamble. If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the FOR FURTHER INFORMATION CONTACT section.

The EPA is proposing a set of changes to the NPDES eRule that updates the data elements that apply to regulated MS4s. These changes are necessary because of a separate rulemaking that the EPA promulgated after publication of the NPDES eRule. That rulemaking, published on December 9, 2016 and referred to as the MS4 General Permit Remand Rule (MS4 Remand Rule), modified the NPDES permit requirements for small MS4s contained within the Phase II stormwater regulations. Promulgation of these Phase II regulatory changes made a number of the MS4-related data elements in the NPDES eRule no longer accurate. This proposed rule updates those specific data elements to make them consistent with current stormwater Phase II regulations, corrects related typographical errors, and clarifies some other data elements at the request of state NPDES permitting authorities. The proposed changes are limited to the correction of inaccuracies and the addition of requested clarifications, and do not increase the reporting burden on regulated MS4 permittees.

This rule proposes to modify the existing NPDES eRule; therefore, the authorities for this action are derivative of the authorities for that action. The EPA promulgated the NPDES eRule on October 22, 2015 (80 FR 64064) pursuant to the Clean Water Act (CWA), 33 U.S.C. 1251 et seq., which added a new part to title 40 (40 CFR part 127) and made changes to existing regulations. The EPA promulgated the NPDES eRule under authority of the CWA sections 101(f), 304(i), 308, 402, and 501.

These proposed updates to the NPDES eRule are necessary because the EPA promulgated subsequent modifications to the Phase II stormwater permitting regulations for small MS4s, known as the MS4 Remand Rule. The authority for that rule is the Federal Water Pollution Control Act, 33 U.S.C. 1251 et seq., including sections 402 and 501. The MS4 Remand Rule was published on December 9, 2016 (81 FR 89320) and was incorporated into the Code of Federal Regulations at 40 CFR 122.28(d), and as modifications to 40 CFR 122.33 thru 122.35.

These proposed regulatory updates do not increase the regulatory burden associated with complying with the NPDES eRule, but rather correct current inconsistencies between the language used in the current data elements and the newly modified Phase II stormwater regulations and make several clarifications suggested by state NPDES permitting authorities. EPA anticipates no change in the overall cost burden to affected entities to comply with the NPDES eRule above what was projected as a result of promulgating the rule.

Under the NPDES eRule (promulgated on October 22, 2015, see 80 FR 64064), NPDES permitting authorities and permittees must replace the paper-based system of reporting permit information and data with an electronic system. The rule also lists specific data elements that must be reported in EPA's national NPDES data system, the Integrated Compliance Information System (ICIS)-NPDES. See 40 CFR part 127, Appendix A. Permitting authorities and permittees must begin reporting electronically for permitted MS4s on December 21, 2020.

Following the issuance of the NPDES eRule, EPA promulgated changes to certain Phase II stormwater permitting requirements related to small MS4s. This rulemaking, referred to as the MS4 General Permit Remand Rule (MS4 Remand Rule), was published on December 9, 2016 (see 81 FR 89320), and became effective as of January 9, 2017. The Phase II rule changes address a decision by the U.S. Court of Appeals for the Ninth Circuit in Environmental Defense Center, et al. v. EPA, 344 F.3d 832 (9th Cir. 2003) (EDC decision). That court found that EPA regulations for obtaining coverage under a small MS4 general permit did not provide for adequate public notice, the opportunity to request a hearing, or permitting authority review to determine whether the best management practices (BMPs) selected by each MS4 in its stormwater management program (SWMP) meet the CWA, including the requirement to “reduce the discharge of pollutants to the maximum extent practicable.” The Phase II rule changes resolved these problems by revising the procedures to be used to issue and administer small MS4 general permits, and by making it clear that the terms and conditions of the permit are enforceable, not the contents of the permittee-developed SWMP.

Because the description of the MS4-related data elements in Appendix A of the NPDES eRule were based on the regulations in place prior to issuance of the MS4 Remand Rule, it is necessary to update the NPDES eRule to reflect these changes. If left unchanged, the eRule data elements would be inconsistent with the new requirements for small MS4 permits in the Phase II regulations. EPA is taking this action now to ensure that such inconsistencies are fixed, and to correct a small number of typographical errors and other mistakes made in relevant parts of the Appendix A data elements.

The EPA is also proposing to clarify the MS4-related data elements to address suggestions by authorized NPDES programs that participated in the EPA-State Stormwater Technical Workgroup. The EPA convened the EPA-State Stormwater Technical Workgroup (Workgroup) to discuss the MS4 data elements listed in Appendix A to 40 CFR part 127. This Workgroup met bi-weekly from November 2017, to July 2018, and included approximately 100 subject matter experts from the EPA Headquarters, seven EPA Regions, and 34 states. The EPA documented member recommendations in a memorandum entitled Implementation Technical Paper No. 9: Data Requirements for NPDES Electronic Reporting Rule Stormwater Information (EPA, October 2018), posted on the EPA's website at https://www.epa.gov/compliance/data-entry-guidance-and-technical-papers. This technical paper provides more detail on electronic formatting and submission of data elements required through authorized NPDES program inspections and oversight, MS4 program compliance monitoring reports, NPDES permit applications, and NPDES general permit reports [ e.g., Notices of Intent (NOIs)]. The EPA plans to use this technical paper to develop electronic reporting tools and to update NPDES data sharing protocols and schemas, the EPA's NPDES data system (ICIS-NPDES), and the forthcoming NPDES Noncompliance Report (NNCR).

The changes needed to eliminate the current inconsistencies between the NPDES eRule data elements and the post-MS4 Remand Rule regulations are limited, and because these inconsistencies are repeated frequently, they fall into several broad categories. The following describes the broad categories of inconsistencies and the types of proposed changes.

The MS4 Remand Rule modified the Phase II stormwater regulations by, among other things, clarifying that it is the permit that establishes the enforceable requirements for the MS4. By establishing procedures for the permitting authority to ensure that the permit contains all of the requirements to assess compliance, the MS4 Remand Rule also clarified that these requirements are not found in documents such as the MS4's Notice of Intent for coverage or its SWMP, unless the SWMP, or portions of it, has been formally incorporated as part of the permit following a review, approval, and public notice process. For instance, the MS4 Remand Rule preamble clarified the relationship between the permit and the SWMP as follows:

The MS4 data elements in Table 2 of the NPDES eRule's Appendix A data elements were based on the pre-MS4 Remand Rule version of the Phase II regulations. Therefore, some of the language used for the current data elements does not accurately reflect that the permit terms alone constitute the enforceable requirements of the permit. In order to ensure that reported information related to MS4s accurately reflects the regulations upon which they are based, the EPA proposes to clarify the descriptions of the data elements where necessary to ensure that the requirements that are reported and tracked through electronic reporting are the terms and conditions of the permit.

The following is a summary of the changes that the EPA proposes in order to correct the inconsistencies described above.

• Corrections to data elements that reference the permittee's intentions as opposed to the permit requirements. Language in the current Appendix A data elements that describes the permittee's intentions in implementing the “minimum control measure” components of its stormwater program is not consistent with the current Phase II regulations. For instance, the current Appendix A data element description for the public education and outreach minimum control measure is described as “The one or more unique codes/descriptions that identifies educational materials the permittee intends to distribute or equivalent outreach activities the permittee will implement to inform the target audience about the impacts of stormwater discharges and the steps the public can take to reduce stormwater pollutants” (emphasis added). Use of this data description made sense under the pre-MS4 Remand Rule regulations, where the MS4's compliance obligation was contained within the permittee's SWMP, the contents of which were also required to be summarized in the MS4's NOI, if the permitting authority elected to issue a general permit for eligible small MS4s.

The MS4 Remand Rule clarified, among other things, that the MS4's description of its compliance actions does not substitute for the terms and conditions in the permit. The revised Phase II regulations make it clear that the permittee's compliance is judged by whether it has met the requirements of the permit; the permittee's intention as reflected in its SWMP does not constitute the basis for permit compliance. Though, in the example above, this language accurately reflected existing regulatory requirements for the public education and outreach minimum control measure prior to the MS4 Remand Rule, its emphasis on the intention of the permittee, rather than the permit requirements, is inconsistent with the revised Phase II regulations.

EPA's proposed rule modifies the relevant language for each of the data elements that includes this type of language to reflect that the permit establishes the enforceable requirements, not the SWMP or NOI. Using the public education and outreach example again, this proposed rule revises the data element description to read as follows: “The one or more unique codes/descriptions that identifies the permit elements associated with the public education and outreach program requirements, including any educational materials the permittee is required to distribute or equivalent outreach activities the permittee must implement to inform the target audience about the impacts of stormwater discharges and the steps the public can take to reduce stormwater pollutants.” This modification clarifies that it is the specific “permit elements” related to the public education and outreach program that the regulations require the MS4 to report to the EPA. Another related, yet minor, change would modify the corresponding “Data Name” to reflect that it is not the details within the SWMP that define the permittee's compliance responsibilities. Therefore, instead of using “MS4 Public Education Program” as the data name, the name would refer to “Public Education and Outreach Permit Requirements.” These same changes would be made to the data elements for the other minimum control measures.

• Corrections to data elements that refer to the MS4's “measurable goals” as opposed to its permit requirements. Several of the data elements refer to the permittee's “measurable goals,” which is language that is no longer current after EPA modified the Phase II regulations. Previously, small MS4s were required to submit information describing the “specific actions taken by the permittee to implement each BMP and the frequency and the dates for such actions.” See 64 FR 68763 (December 8, 1999). The submitted measurable goals were then used as the basis for the permittee's enforceable requirements, and the permittee was required to evaluate and submit annual reports on the progress made with respect to meeting these measurable goals. References to the MS4's measurable goals were largely removed from the Phase II regulations to more clearly convey that the terms and conditions in the relevant permit are enforceable, not the permittee's proposed measurable goals.

EPA's proposed rule removes in the current data elements references to measurable goals and replaces them with language that refers to the “specific schedules or deadlines” for complying with the relevant requirements of the permit. For instance, one of the current Appendix A data elements associated with the construction site stormwater minimum control measure is described as “The one or more unique codes/descriptions that identify the measurable goals associated with the construction program, including, as appropriate, the months and years in which the permittee will undertake required actions, including interim milestones and the frequency of the action.” The proposed rule revises this language as follows: “The one or more unique codes/descriptions that identify specific schedules or deadlines for complying with the permit's construction requirements, including, as appropriate, the months and years in which the permittee must undertake each required action, including interim milestones and the frequency of the action.” Another related, yet minor, change modifies the corresponding “Data Name” to remove language that references the measurable goal and substitutes it with the permit's relevant “deadlines.”

• Updates to the data element(s) associated with permit requirements established in addition to the minimum control measure requirements. The proposed rule also updates the language used to describe MS4 terms and conditions that are included in the permit to address the modified Phase II regulatory language at 40 CFR 122.34(c) related to “other applicable NPDES requirements.” These changes include updates to the language used for the “Data Name” and “Data Description.” The proposed rule also corrects an error by adding a data element that was omitted from the current Table 2 related to the deadlines associated with “other applicable permit requirements.”

• Additional clarifications to accurately characterize the source of data on permit requirements. The proposed rule suggests a few additional changes to clarify that the source of data on an MS4's permit requirements is the permit itself, not the permit application or NOI. For instance, the current title for one of the Table 2 sections for MS4 data elements is “Municipal Separate Storm Sewer System (MS4) Information on NPDES Permit Application or Notice of Intent.” In order to clarify that the terms and conditions that the MS4 is responsible for meeting are found in the permit, EPA proposes to modify this title as follows: “Municipal Separate Storm Sewer System (MS4) Information in NPDES Permit.”

• Removing data element made unnecessary or obsolete by the modified Phase II regulations. One of the current data elements requires information from permittees that is no longer required under the revised Phase II regulations. The data element titled MS4 Permit Components Descriptions and Measurable Goals would be deleted from Table 2 of Appendix A in the section entitled “Compliance Monitoring Activity Information (Data Elements Specific to Municipal Storm Sewer System Program Reports).” The current data element requests information on “all of the permitted components and measurable goals that are included in the MS4 permit.” This data element is redundant of the data element that would now be titled “Municipal Separate Storm Sewer System (MS4) Information in NPDES Permit,” and for that reason may be removed.

• Changes to conform data elements to current Phase II reporting requirements. The following are changes made to data elements to reflect the current Phase II reporting requirements for small MS4s under 40 CFR 122.34(d)(3). These data elements are all located in the section entitled “Compliance Monitoring Activity Information (Data Elements Specific to Municipal Storm Sewer System Program Reports).”

1. Status of Compliance with Each Minimum Control Measure. The proposed rule modifies this data element to reflect the changes made to the description of information required to be reported under 40 CFR 122.34(d)(3)(i). To reflect the fact that the Phase II regulations were changed to require the permittee to include in its report “[t]he status of compliance with permit terms and conditions,” conforming changes are made to the Data Name so that the revised Data Name is “Status of Compliance with MS4 Permit Requirements.” Similar changes are made to the Data Description to read as follows: “The unique code . . . that identifies if the permittee has complied with the MS4 permit requirements.”

2. Results of Information Collected and Analyzed. The current data elements inadvertently omit information required to be reported under 40 CFR 122.34(d)(3)(ii). This provision requires small MS4 permittees to include in their annual reports “[r]esults of information collected and analyzed, including monitoring data, if any, during the reporting period.” The proposed rule corrects this omission by adding a new data element to capture this information.

3. Progress and Summary of Results with Each Minimum Control Measure. The proposed rule modifies this data element to reflect the changes made to the description of information required to be reported under 40 CFR 122.34(d)(3)(iii). To reflect the modified description of the information to be reported, namely “[a] summary of the storm water activities the permittee proposes to undertake to comply with the permit during the next reporting cycle,” conforming changes are made to the Data Name ( i.e., it would be changed to “Summary of Activities Undertaken to Comply with the MS4 Permit Requirements”) and to the Data Description ( i.e., it would be changed to “This is a text summary describing the stormwater activities undertaken by each permittee to comply with the MS4 permit requirements.”).

4. Changes to MS4 Permittee's Components and Measurable Goals. The proposed rule modifies this data element to reflect the changes made to the description of information required to be reported at 40 CFR 122.34(d)(3)(iv). To reflect the changes in the regulations that require the permittee to include in its report “[a]ny changes made during the reporting period to the permittee's storm water management program,” conforming changes will be made to the Data Name ( i.e., it would be changed to “Summary of Activities Undertaken to Comply with the MS4 Permit Requirements”) and to the Data Description ( i.e., it would be changed to “The one or more codes/descriptions that describe . . . any changes made to the MS4 permittee's Stormwater Management Program (SWMP) during the reporting period.”).

• Clarification related to data provided for small MS4 permittees under a Two-Step General Permit approach. For permitting authorities that use a “Two-Step General Permit” under 40 CFR 122.28(d)(2) to provide permit coverage for small MS4s, there is flexibility regarding whether the permittee or the NPDES authority will be responsible for submitting data initially. EPA envisions that most NPDES authorities will choose to require the permittee to supply the initial information that characterizes what actions the MS4 proposes to take to address the permit requirements as a first step. Then, during the second step of the permitting process, the permitting authority will modify this information as necessary to reflect the final permit requirements. To allow or authorize this approach, the proposed rule includes the following text for many of the data elements in the “MS4 NPDES Permit-Related Information” section: “This data element includes proposed activities that are submitted by small MS4s seeking coverage under a `Two-Step General Permit.' Following completion of the second permitting step, the authorized NPDES program will be responsible for sharing the final permit terms and conditions with the U.S. EPA national NPDES data system as required in Subpart B, 40 CFR 127.”

Additionally, the EPA proposes adding a note to the MS4 Permit-Related Information section of Table 2 that provides a basic explanation of how the Two-Step General Permit process is designed to work, and how the permit information for these types of permits is to be reported. The following text is proposed for the note: “Small MS4s seeking coverage under a ‘Two-Step General Permit’ issued pursuant to § 122.28(d)(2) will be required to submit to the authorized NPDES program information on stormwater control activities they propose to take to address specific requirements. The authorized NPDES program will review this information and then establish, through a second permitting step, additional permit terms and conditions, as necessary to satisfy the MS4 permit standard, for each MS4. The authorized NPDES programs should use their best professional judgement to adequately identify the mandatory set of requirements using actual language from the permit, summarized versions of one or more permit requirements, or a mix of actual and summarized permit requirements. Any summary of permit requirements should provide a clear understanding of the one or more permit requirements. The requirements listed in this section will be used to facilitate electronic reporting of the MS4 Program Report.”

• Updates to regulatory citations to reflect current Phase II regulations. The proposed rule would update a number of the existing MS4 regulatory citations in Table 2 of Appendix A in order to reflect changes made to the Phase II regulations, and, in a few instances, to correct erroneous citations that are currently included in the table. For instance, the current table references 40 CFR 122.28(b)(2)(ii) for the supporting authority for the data elements associated with each of the minimum control measures. Because the modified Phase II regulations now include a section addressing small MS4 general permits, this citation would be updated to refer to the correct section ( i.e., 40 CFR 122.28(d)). Elsewhere, the proposed rule adds references to 40 CFR 122.33(b) to more accurately reflect the current Phase II regulatory authority for requiring basic system information. The proposed rule also provides the updated reference to the correct annual reporting provision ( i.e., 40 CFR 122.34(d)(3)). Other examples include the proposed addition of updated citations for Phase I MS4s, such as an updated citation to 40 CFR 122.26(d)(2)(iv)(A)(6), (B)(5), and (D)(4) to support the use of the data element for “Deadlines Associated with Public Education and Outreach Permit Requirements” for Phase I MS4s.

• Corrections to current description of the frequency of required small MS4 reporting. The current Table 1 imprecisely notes that small MS4s are required to report only in years two and four of permit coverage. While this is correct for small MS4s that have already been permitted for at least one permit term, if the permittee is in its first permit term, it is required to report annually for the entire permit term. The proposed rule corrects this inaccuracy. See 40 CFR 122.34(d)(3).

• Clarification of the types of MS4 permit holders that can be chosen under the data element for MS4 Permit Class. The proposed rule includes a minor update to the examples of MS4 permit types under the MS4 Permit Class data element, which better reflect the types of general permits that are described under the revised Phase II permitting regulations. The following examples would replace the current examples: Large/Medium MS4 permit (Phase I), Small MS4 permit (Phase II)—Comprehensive General Permit, Small MS4 permit (Phase II)—Two-Step General Permit, Small MS4 permit (Phase II)—Individual Permit.

During meetings of the EPA-State Stormwater technical workgroup (see Section III), Regional and state subject matter experts suggested the need for additional clarification to the MS4 data elements. The clarifications that are included in the proposed rule are described as follows.

• Revised description of the types of entities potentially covered under an MS4 permit. The data description that accompanies the unique MS4 identifier data element does not reflect the fact that regulated small MS4s can also include so-called “non-traditional MS4s,” such as colleges or universities, military installations, transportation systems, and state and federal facilities. In order to more accurately describe the different types of MS4s that can be regulated, the proposed rule includes the following modified language: “The unique identifier for each entity covered under an MS4 permit ( e.g., city, county, incorporated town, unincorporated town, college or university, local school board, military installation, highways or other thoroughfares, federal facility, state facility, prison).”

A further clarification would be added to better describe how the unique identifier can be used to apply to multiple MS4 entities covered under one permit, as follows: “Use of this identifier allows for better tracking of how the MS4 permit elements apply to each entity covered under the MS4 permit ( e.g., if one MS4 NPDES permit covers two cities, the authorized NPDES program may elect to assign each city with a unique identifier). The authorized NPDES program will make the final determination on how to identify entities covered under an MS4 permit.” Lastly, a minor change would be made to the Data Name to better describe the types of entities that may be regulated; the Data Name would now read as “Unique MS4 Regulated Entity Identifier” instead of “Unique Identifier for Each Municipality Covered Under MS4 Permit.”

Additionally, to better match the existing regulations, the proposed rule replaces references throughout Table 2 to “municipality” with the word or phrase “entity” or “MS4-regulated entity.”

• Inclusion of a unique identifier for each permit requirement or set of permit requirements. The proposed rule would require that each unique permit requirement or set of permit requirements be designated with a “Unique MS4 Activity Identifier.” This addition is intended to improve the accuracy of compliance reporting by linking permit requirements to a unique identifier. EPA does not consider this additional identifier to constitute a change in reporting burden given that information on permit requirements is already required; this new element will merely ensure that each individual permit requirement (referred to in Appendix A as “the one or more unique codes/descriptions that identify” the permit requirement) can be recognized with its own unique number or other identifier.

• Consolidation of data elements related to tracking implementation activities performed by other government entities. The existing data elements require information to be submitted with the annual report on whether the MS4 permittee is relying on other government entities to satisfy any permit obligations, and to provide the status of their implementation activities. To assist the states in more accurately tracking these other government entities to the specific permit requirements for which they have assumed responsibility, the proposed rule moves the requirement to report on the MS4's reliance on other government entities to a different section of Table 2, namely the MS4 NPDES Permit-Related Information section. The Technical Workgroup indicated that this change would enable NPDES permitting authorities to obtain information on the MS4's reliance on other government entities in a way that will better enable them to ensure that reporting on the compliance status of these specific permit responsibilities will be accurate and more easily understood. By making this change, EPA proposes deleting two existing elements, which would already be addressed, namely the “MS4 Reliance on Other Government Entities Status” and “MS4 Reliance on Other Government Entities Permit Component Status” data elements.

• Clarification of permit information required for storm sewer system map. The proposed rule would clarify that, for previously permitted MS4 permittees, rather than requiring information on “the status of the permittee's storm sewer system map” associated with the Illicit Discharge Detection and Elimination permit requirement, a more direct way of conveying this information is to request the “date of the most recent storm sewer system map.” Additionally, the proposed rule would clarify that the requirement to show all “MS4 outfalls” on the storm sewer system map excludes private outfalls. This clarification is consistent with the regulatory definition of MS4, which is limited to stormwater conveyances “owned or operated by a . . . public body” at 40 CFR 122.26(b)(8)(i). Privately-owned conveyances and their associated outfalls do not fall within the definition of an MS4 because they are not “owned or operated by a . . . public body.”

• Relocation of MS4 industrial stormwater control data element. The proposed rule would move the Phase I MS4 industrial stormwater control data element from its current location in the “Compliance Monitoring Activity” section of Table 2 to the newly named MS4 NPDES Permit-Related Information section. This change is not substantive, but merely intended to better reflect the fact that this information is typically provided prior to permit coverage, much like the other information included in that same section.

Additionally, the proposed rule would add an accompanying data element for any permit deadlines associated with the industrial stormwater control requirements. EPA does not consider this a new reporting burden, but rather a clarification that where the permit establishes specific deadlines for actions related to industrial stormwater control, compliance with these dates must be tracked.

• Ability to submit further information regarding instances of noncompliance. The existing data element requiring information on whether the permittee has complied with the MS4 permit requirements limits the information submitted to a “Yes” or “No” response. Members of the Technical Workgroup recommended that MS4s be given the opportunity to provide further information for context if the answer is “No” ( e.g., that the MS4 was not in compliance with one or more permit requirements). To address this recommendation, the proposed rule suggests clarifying that MS4s as necessary will be asked to provide information related to noncompliance.

• Clarification of information required to be reported in the summary of activities to comply with the MS4 permit requirements. The proposed rule clarifies that among the information that must be conveyed by the MS4 in its annual report is a summary of activities undertaken (1) as part of the industrial stormwater control program (for Phase I MS4s and select Phase II MS4s that have industrial stormwater requirements), and (2) to comply with permit requirements during the next reporting period. This clarification does not constitute a new reporting burden since this information was already required to be reported; the proposed text just makes the requirement more clear.

• Clarification regarding how information on enforcement actions taken by Phase II MS4s is to be reported. The proposed rule would clarify that Phase II MS4s are not required to distinguish between different types of enforcement action, as Phase I MS4s are required to do. In contrast with Phase I MS4s, Phase II MS4s may simply report any enforcement action taken as a “Phase II MS4 Enforcement Action.” The permitting authority may elect to provide this option as a system default so that MS4 permittees may simply select “Phase II MS4 Enforcement Action” to fulfill this requirement for the reporting period.

• Clarification related to data elements that may not apply to non-traditional MS4s. The proposed rule would provide further clarification on the data elements that may not apply because non-traditional MS4s typically do not possess the requisite legal authority to enforce stormwater laws. The following sentence would be added to three data elements ( i.e., “MS4 Enforcement Action Type,” “MS4 Enforcement Action Total by Type,” and “MS4 Enforcement Agency”): “This data element may have different reported data for non-traditional MS4s ( e.g., transportation MS4s) as they may not have legal authority to enforce one or more MS4 permit requirements and may report on items like referrals to the state permitting authorities or use mechanisms such as encroachment permits.”

• Clarification regarding how to report the specific MS4 enforcement agency in the annual report. The proposed rule suggests alternate wording to better explain how MS4 permittees will specifically identify in the annual report the specific MS4 enforcement agency that was responsible for taking enforcement action during the reporting period. The proposed language explains that the permittee will select the MS4 enforcement agency from among the unique MS4 regulated entities identified during the permit application process for co-permittees applying for coverage under an individual permit, unless there is only one regulated entity.

Additional information about these statutes and Executive Orders can be found at http://www2.epa.gov/laws-regulations/laws-and-executive-orders.

This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.

This action is not expected to be an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.

This action does not impose any new information collection burden under the PRA. OMB has previously approved the information collection activities contained in the existing regulations and has assigned OMB control number 2020-0035. The proposed rule would impose no new information collection burdens beyond what has already been approved by OMB for the NPDES eRule published on October 22, 2015 (80 FR 64064). This proposed rule is limited to updating the language used to describe various data requirements for MS4 permittees to reflect recent changes to the underlying NPDES regulations and to correct various errors and omissions.

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden, or otherwise has a positive economic effect on the small entities subject to the rule. This proposed rule would impose no new regulatory burdens on regulated entities in the NPDES program. The action is limited to updating the language used to describe various data requirements for MS4 permittees to reflect recent changes to the underlying NPDES regulations, to correct various errors and omissions, to make targeted clarifications by request of state NPDES permitting authorities. We have therefore concluded that this action will have no net regulatory burden for all directly regulated small entities.

This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local or tribal governments or the private sector.

This action does not have federalism implications. It 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.

This proposed rule does not have tribal implications, as specified in Executive Order 13175. EPA considered the potential impacts on tribes and concluded that there would be no substantial direct compliance costs or impact on tribes. Because the purpose of the proposed rule is to eliminate inconsistencies between regulations and application forms, improve permit documentation, transparency and oversight, provide clarifications to existing regulations, and delete outdated provisions, it is not expected to have substantial direct effects on tribal governments, 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, as specified in Executive Order 13175. Executive Order 13175 does not apply to this action and EPA determined that tribal consultation is not necessary for this action. The EPA specifically solicits input on this proposed action from tribal officials.

The EPA notes that it consulted with tribal officials under the EPA Policy on Consultation and Coordination with Indian Tribes early in the process of developing the final NPDES eRule, which this proposal would modify, to permit them to have meaningful and timely input into its development. A summary of that consultation is provided in Section VIII.F of the final NPDES eRule preamble at 80 FR 64094.

EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it does not concern an environmental health risk or safety risk.

This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

This rulemaking does not involve technical standards.

EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it does not affect the level of protection provided to human health or the environment. This proposed rule offers the same environmental justice benefits that were described in the final NPDES eRule preamble in Section VIII.J. The final rule preamble states that “[a]s described in the context of non-monetary benefits, discussed in Section VI and described below, the final rule would significantly increase transparency and access to crucial information that is relevant to the protection of the health and environment of minority, low income, and tribal populations.” See 80 FR 64095.

For the reasons set forth in the preamble, EPA proposes to amend 40 CFR part 127, Appendix A as follows:

Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following website as soon as possible after they have been received: http://www.regulations.gov. Follow the search instructions on that website to view public comments.

In the November 1, 2018 proposed rule (83 FR 54982) titled, “Medicare and Medicaid Programs; Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, Program of All-inclusive Care for the Elderly (PACE), Medicaid Fee-For-Service, and Medicaid Managed Care Programs for Years 2020 and 2021,” we included preamble language and regulatory provisions regarding the proposed Risk Adjustment Data Validation audit methodology and the proposal not to apply a Fee-For-Service (FFS) Adjuster. We posted a FFS Adjuster Study on October 26, 2018.

In the March 6, 2019 Federal Register (84 FR 8069), we published a document titled “Medicare Program; Release of Data Underlying Risk Adjustment Data Validation Provisions” that announced the release of data underlying the proposed policies regarding the use of extrapolation in MA Risk Adjustment Data Validation (RADV) audits and the Fee-for-Service (FFS) Adjuster.

CMS is announcing the release of additional data underlying the October 26, 2018 FFS Adjuster Study. Updates to existing documentation related to the study data, as well as additional data without Personally Identifiable Information, were posted on the CPI Private Plans Team website on April 25, 2019. Additional data containing Protected Health Information are being made available by CMS to all parties who have entered into an applicable data use agreement and to those parties who can request this information if they agree to enter into an applicable data use agreement. CMS expects to release that data by June 14th. This will be the final release of data from the October 26, 2018 FFS Adjuster Study.

In addition to releasing this additional data from the previously published study, CMS intends to replicate that study, publish the results, and release associated data. Doing so will allow CMS to both test its initial results and release a more complete set of underlying data. Certain intermediate data elements not saved in the implementation of the initial study would be preserved in the replication and made available through publication.

In order to maximize the opportunity for the public to provide meaningful input to CMS, we believe it is important to allow additional time for the public to prepare comments on the RADV provisions of the proposed rule. In addition, we believe granting a 120-day extension to the public comment period in this instance would further our overall objective to obtain public input and to generate information that will be useful to our agency's decision makers. Therefore, this document announces the extension of the public comment period until August 28, 2019 for the RADV provisions included in the November 1, 2018 proposed rule (83 FR 55037 through 55041 and 55077).

NEH operates as part of the National Foundation on the Arts and the Humanities (the “Foundation”) under the National Foundation of the Arts and the Humanities Act of 1965, as amended (20 U.S.C. 951 et seq. ). The Foundation consists of the Institute of Museum and Library Services (“IMLS”), the Federal Council on the Arts and the Humanities (“FCAH”), the National Endowment for the Arts (“NEA”), and NEH. NEH currently follows Foundation regulations implementing the Privacy Act, located at part 1115 within Subchapter A of 45 CFR Chapter XI.

The regulations found within 45 CFR Chapter XI, Subchapter A apply to the entire Foundation. This proposed rule will add Privacy Act regulations to 45 CFR Chapter XI, Subchapter D (45 CFR part 1169), replacing the Foundation's Privacy Act regulations with regard to NEH. IMLS and NEA have already added IMLS and NEA-specific Privacy Act regulations to 45 CFR XI, Subchapters B and E (45 CFR parts 1159 & 1182), respectively, which replaced the Foundation's Privacy Act regulations with regard to IMLS and NEA. FCAH, which relies upon NEA and NEH for its administration, does not maintain any systems of records of its own, and hence has no need or obligation to publish Privacy Act regulations. See 5 U.S.C. 552a(f) (requiring only that an agency that “maintain[s] a system of records shall promulgate rules” implementing the Privacy Act).

The Foundation's Privacy Act regulations set forth in 45 CFR Chapter XI, Subchapter A contain outdated address and contact information, as well as outdated procedures by which an individual may request access to his or her records. Through this rulemaking, NEH seeks to put into place current contact information, as well as update and clarify the procedures NEH will follow when granting access to, or amending or correcting, a record contained within a system of records. NEH will also add a new exemption covering its system of records entitled “Office of Inspector General (“OIG”) Investigative Files,” which did not exist when the Foundation published its Privacy Act regulations.

Because NEH is the only agency that continues to use the Foundation regulations at 45 CFR Chapter XI, Subchapter A, rather than amend the Foundation regulations—which, along with future amendments, requires coordination with IMLS and NEA—NEH has chosen instead to issue its own Privacy Act regulations. In the event this proposed rule becomes final, NEH will seek NEA and IMLS's consent to publish a joint rulemaking removing the Foundation's Privacy Act regulation at 45 CFR part 1115, as that regulation will no longer apply to any of the Foundation's constituent agencies.

This proposed rulemaking largely tracks the format and content of the Foundation's Privacy Act regulations, and sets out few substantive changes. In addition to adding the exemption described above for the OIG Investigative Files, NEH also has modernized the procedures by which individuals may request access to records pertaining to them, and by which NEH will verify an individual's identity and provide access to requested records. It has also extended its appeals process to cover NEH decisions to deny individuals' requests for access to records, in addition to NEH decisions to deny individuals' requests to amend or correct records.

In keeping with the Foundation's Privacy Act regulations, NEH will continue to claim an exemption under 5 U.S.C. 552a(k)(5) with respect to the identity of persons supplying reference reports or evaluations for individual applicants for NEH fellowships or grants. In practice, the exercise of this exemption has required that NEH withhold both the actual identity of the reference, as well as all or some of the reference reports and evaluations, since the comments reflected in such documents in many cases reflect the identity of the reference. NEH obtains and keeps such reference reports confidential to ensure that references be given, and evaluations made, with complete candor.

This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.

This action is not expected to be an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.

This action does not impose an information collection burden under the PRA. This action contains no provisions constituting a collection of information under the PRA.

This action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities.

This action does not contain any unfunded mandate as described in the UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments.

This action does not have federalism implications. It 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.

This action does not have tribal implications as specified in Executive Order 13175. Thus, Executive Order 13175 does not apply to this action.

For the reasons stated in the preamble, the National Endowment for the Humanities proposes add part 1169 to 45 CFR Chapter XI Subchapter D as follows:

DoD is proposing to amend DFARS subpart 232.10, Performance-Based Payments; amend the clauses at DFARS 252.232-7012, Performance-Based Payments—Whole Contract Basis, and DFARS 252.232-7013, Performance-Based Payments—Deliverable Item Basis; and add a new provision at 252.232-70XX, Performance-Based Payments—Representation, to implement section 831 the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017, which amends 10 U.S.C. 2307 to address the use of performance-based payments.

A proposed rule was published in the Federal Register on August 23, 2018 (83 FR 42831), under DFARS Case 2017-D019, Performance-Based Payments and Progress Payments. That rule proposed to implement section 831 and also revise progress payments and performance-based payments policies and procedures for DoD contracts. That proposed rule was withdrawn by a notice published in the Federal Register on October 4, 2018 (83 FR 47867). This rule addresses only the amendments to the DFARS required by section 831.

Performance-based payments are a method of contract financing that may be available under fixed-price contracts, except for contracts awarded using Sealed Bidding procedures. Performance-based payments differ from the more traditional progress payments based on costs because these contract financing payments are made on the basis of the contractor's achievement of objective, quantifiably measurable events, results, or accomplishments that are defined and valued in the contract prior to performance. It is a preferred method of contracting as it may reduce oversight and compliance costs to the Government. It also has benefits for contractors as it should help cash flow, reduce the cost of oversight and compliance, and allows the management team to focus on technical and schedule progress.

Section 831 amends 10 U.S.C. 2307(b)(1) by requiring, whenever practicable, that payment under the authority of 10 U.S.C. 2307(a) shall be made using performance-based payments. Federal Acquisition Regulation (FAR) 32.1001(a) already states that performance-based payments are the preferred Government financing method when the contracting officer finds them practical, and the contractor agrees to their use.

DFARS case 2011-D045, published in the Federal Register on March 31, 2014 (77 FR 4638), mandated that cumulative performance-based payments shall not exceed the cumulative cost incurred on the contract or delivery item, whichever is applicable, at any point during contract performance. That requirement was supported by the statement at FAR 32.1004(b)(2)(i) that contract financing should only be provided to the extent actually needed for contract performance and the statement at FAR 32.1004(b)(3)(ii) that the contracting officer must ensure that performance-based payments “are not expected to result in an unreasonably low or negative level of contractor investment in the contract.”

Section 831 amended 10 U.S.C. 2307 by adding paragraph (b)(2), which provides that performance-based payments shall not be conditioned upon costs incurred in contract performance but only on the achievement of negotiated performance outcomes. Therefore, this rule proposes to remove the restrictions at DFARS 232.1001(a) and paragraph (b)(i) of the clauses at DFARS 252.232-7012 and 252.232-7013 that limit performance-based payments to amounts not greater than costs incurred up to the time of payment. However, the requirement for contractors to report costs incurred when requesting performance-based payments is retained, in order to have the data necessary for negotiation of performance-based payments on future contracts.

Section 831 also added paragraph (b)(3) to 10 U.S.C. 2307, which addresses the eligibility for performance-based payments of nontraditional defense contractors and other private sector companies. This has been added to the policy at DFARS 232.1001.

10 U.S.C. 2307(b)(4), as added by section 831, requires contractors to be in compliance with Generally Accepted Accounting Principles in order to receive performance-based payments, with no requirement for a Government-unique accounting systems or practices as a prerequisite to receive performance-based payments. This requirement has been incorporated at DFARS 232.1003-70 and the clauses at DFARS 252.232-7012 and 252.232-7013. This rule also proposes a new representation by each offeror, if performance-based payments are anticipated, as to whether the output of its accounting system is in compliance with Generally Accepted Accounting Principles, as evidenced by audited financial statements.

This rule proposes to amend the clauses at DFARS 252.232-7012 and 252.232-7013. These clauses do not apply to contracts at or below the simplified acquisition threshold or for the acquisition of commercial items. In accordance with 10 U.S.C. 2307(f) and 41 U.S.C. 4505, FAR 32.201 provides that payment for commercial items may be made under such terms and conditions as the agency head determines are appropriate or customary in the commercial marketplace and are in the best interest of the United States. Furthermore, FAR 32.202-1 states that Government financing of commercial purchases is expected to be different from that used for noncommercial purchases. While the contracting officer may adapt techniques and procedures from the noncommercial subparts for use in implementing commercial contract financing arrangements, the contracting officer must have a full understanding of effects of the differing contract environments and of what is needed to protect the interests of the Government in commercial contract financing.

This rule proposes to amend the DFARS to implement changes to performance-based payment policies for DoD contracts by amending the policy on performance-based payments at DFARS 232.1001 and amending the clauses at DFARS 252.232-7012, Performance-Based Payments—Whole Contract Basis, and 252.232-7013, Performance-Based Payments—Deliverable Item Basis.

This rule may benefit contractors who receive contract financing from the Government in the form of performance-based payments. Performance-based payments do not apply to—

• Payments under cost-reimbursement line-items;

• Contracts awarded under the authority of FAR part 12 or part 13;

• Contracts for architect-engineer services or construction, or for shipbuilding or ship repair, when the contract provides for progress payments based upon a percentage or stage of completion.

Performance-based payments are tied to the achievement of specific, measurable events or accomplishments that are defined and valued in advance by the parties to the contract. Total performance-based payments cannot exceed 90 percent of the contract price.

This rulemaking proposes to remove the DFARS restrictions that limit performance-based payments to amounts not greater than costs incurred up to the time of payment.

If performance-based payments to the contractor based on the negotiated value of completed milestone events are allowed to exceed the total costs incurred up to the time of payment, the cost to the contractor of short-term borrowing will decrease and the cost to the Government of borrowing will increase.

In addition, there is a minimal cost to offerors and the Government related to a new provision at DFARS 252.232-70XX, Performance-Based Payments—Representation, that requires each offeror responding to a solicitation that may result in a contract providing performance-based financing to represent whether the output of the offeror's accounting system is in compliance with Generally Accepted Accounting Principles, as evidenced by audited financial statements.

DoD has performed a regulatory cost analysis on this rule. The following is a summary of the estimated public cost savings and Government costs in millions calculated in perpetuity in 2016 dollars at a 7-percent discount rate:

To access the complete Regulatory Cost Analysis, go to the Federal eRulmaking Portal at www.regulations.gov, search for “DFARS Case 2019-D002,” click “Open Docket,” and view “Supporting Documents.”

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

This rule is expected to be an E.O. 13771, Reducing Regulation and Controlling Regulatory Costs, deregulatory action. The total annualized value of the cost savings is $1,521,836. Details on the estimated cost savings can be found in section IV. of this preamble.

DoD expects that this proposed rule may have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq. Therefore, an initial regulatory flexibility analysis has been prepared and is summarized as follows:

This rule proposes to implement section 831 the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2017, which amends 10 U.S.C. 2307 to address the use of performance-based payments.

The primary objective of this rule is to remove the restrictions at DFARS 232.1001(a) and the clauses at 252.232-7012(b)(i) and 252.232-7013(b)(i) that limit performance-based payments to amounts not greater than costs incurred up to the time of payment, as required 10 U.S.C. 2307.

This rule will apply to approximately 50 small entities per year that submit offers and are awarded contracts that provide performance-based contract payments from DoD, as well as an additional 5 offerors that submit offers in response to solicitations that may result in contracts that provide performance-based payments but do not receive an award.

This rule adds a reporting requirement that will require an entry in the annual representations and certifications with regard to whether the output of the offeror's accounting system is in compliance with Generally Accepted Accounting Principles, as evidenced by audited financial statements. DoD estimates that the skill necessary for this requirement is at the journeyman level and that each entry will require an average of 6 minutes.

The rule does not duplicate, overlap, or conflict with any other Federal rules.

This rule will not have a significant economic impact on small entities. The burden imposed by the new representation is minimal. The net impact is likely to benefit small entities, to the extent that the entity may receive an increase in cash flow if the negotiated value of performance-based payment events exceeds the actual costs incurred at the time of event completion. There are no significant alternatives consistent with the stated objectives of the statute.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities.

DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D043), in correspondence.

This rule affects the information collection requirements at DFARS subpart 232.10 (and associated clauses at DFARS 252.232-7012 and 252.232-7013, currently approved under OMB Control Number 0704-0359, DFARS Part 232, Contract Financing. The impact, however, is negligible, because only the last three lines of the table are deleted, which do not impose the predominance of the burden. This rule also adds a new information collection requirement that requires the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). Accordingly, DoD has submitted a request for approval of a new information collection requirement concerning the provision at 252.232-70XX, Performance-Based Payments—Representation to the Office of Management and Budget.

A. Public reporting burden for this collection of information is estimated to average 0.1 hours per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information.

The annual reporting burden estimated as follows:

Respondents: 144.

Responses per respondent: 1.

Total annual responses: 144.

Preparation hours per response: 0.1 hours.

Total response Burden Hours: 14.4.

B. Request for Comments Regarding Paperwork Burden.

Written comments and recommendations on the proposed information collection, including suggestions for reducing this burden, should be sent to Ms. Jasmeet Seehra at the Office of Management and Budget, Desk Officer for DoD, Room 10236, New Executive Office Building, Washington, DC 20503, or email Jasmeet_K._Seehra@omb.eop.gov, with a copy to the Defense Acquisition Regulations System, Attn: Ms. Amy G. Williams, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060. Comments can be received from 30 to 60 days after the date of this notice, but comments to OMB will be most useful if received by OMB within 30 days after the date of this notice.

Public comments are particularly invited on: Whether this collection of information is necessary for the proper performance of functions of the DFARS, and will have practical utility; whether our estimate of the public burden of this collection of information is accurate, and based on valid assumptions and methodology; ways to enhance the quality, utility, and clarity of the information to be collected; and ways in which we can minimize the burden of the collection of information on those who are to respond, through the use of appropriate technological collection techniques or other forms of information technology.

To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Defense Acquisition Regulations System, Attn: Ms. Amy G. Williams, OUSD(A&S)DPC/DARS, Room 3B941, 3060 Defense Pentagon, Washington, DC 20301-3060, or email osd.dfars@mail.mil. Include DFARS Case 2019-D002 in the subject line of the message.

Therefore, 48 CFR parts 204, 232, and 252 are proposed to be amended as follows:

The revision and addition read as follows:

The addition reads as follows:

The addition and revision reads as follows:

The addition and revision read as follows:

This rule proposes to modify the DFARS clause 252.239-7007, Cancellation or Termination of Orders, to: (1) Clarify limitations on the Government's obligation to reimburse a Contractor for nonrecoverable costs when the Government cancels an order for telecommunications services; and (2) incorporate the information currently included in DFARS clause 252.239-7008, Reuse Arrangements. Combining these clauses will result in 252.239-7008 being removed from the DFARS.

The clauses at DFARS 252.239-7007 and 252.239-7008 are both included in solicitations, contracts, and basic agreements for telecommunications services. The clause at 252.239-7007 provides contractors with terms and conditions that apply in the event the Government cancels any of the services ordered under the agreement or contract, while the clause at 252.239-7008 is provides contractors with terms and conditions for the reuse of equipment and facilities purchased under a telecommunications order that is cancelled or terminated by the Government. Since both clauses are included in the same contracts and both clauses establish terms and conditions for the cancellation or termination of telecommunications orders, the text of the two clauses can be combined, without changing the intent. This will help minimize the number of clauses contained in the contract and streamline content for the contractor.

This rule also amends DFARS clause 252.239-7007 to clarify that the Government will not reimburse the contractor for certain costs incurred prior to the issuance of an order under a communication services agreement or other contractual document. This clarification intends to prevent the contractor from incurring costs in anticipation of, but prior to, the establishment of a formal agreement/contract for services and the award of an order for such services. This rule also establishes within the clause a cap, based on the recurring and nonrecurring charges included in the contract, on the Government's maximum liability for the cancellation or termination of services. The purpose of this clarification is to create an upfront mutual understanding of the maximum amount of reimbursement due to the contractor in the event of cancellation or termination.

The modification of this DFARS text supports a recommendation from the DoD Regulatory Reform Task Force. On February 24, 2017, the President signed Executive Order (E.O.) 13777, “Enforcing the Regulatory Reform Agenda,” which established a Federal policy “to alleviate unnecessary regulatory burdens” on the American people. In accordance with E.O. 13777, DoD established a Regulatory Reform Task Force to review and validate DoD regulations, including the DFARS. A public notice of the establishment of the DFARS Subgroup to the DoD Regulatory Reform Task Force, for the purpose of reviewing DFARS provisions and clauses, was published in the Federal Register at 82 FR 35741 on August 1, 2017, and requested public input. One public comment was received on these clauses. The respondent recommended DFARS clause 252.239-7007 be removed from the DFARS, because the content of the clause is redundant to information provided in Federal Acquisition Regulation (FAR) part 15, Contracting by Negotiation. However, the purpose of the clause is to implement standardized policy across DoD that addresses critical issues associated with the acquisition of telecommunication services. FAR part 15 provides contracting officers with the processes and procedures related to the solicitation, evaluation, and award of competitive and noncompetitive negotiated acquisitions; it does not provide the guidance contained in the clause, which ensures that all DoD telecommunications services contractors are subject to the same and equal terms and conditions regarding the Government's cancellation or termination of services. As such, DFARS clause 252.239-7007 is necessary to support DoD's needs. Subsequently, the DoD Task Force reviewed the requirements of DFARS clauses 252.239-7007 and 252.239-7008 and determined that the clauses could be clarified and combined, which is the basis for this proposed rule.

This proposed rule does not create any new provisions or clauses. The rule combines two clauses on the same topic into a single clause and makes minor modifications to clarify current practices. This rule does not change the applicability of the affected clauses, which are included in solicitations and contracts for telecommunications services, including those valued at or below the simplified acquisition threshold or for commercial services.

Executive Order (E.O.) 12866, Regulatory Planning and Review; and E.O. 13563, Improving Regulation and Regulatory Review, direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Office of Management and Budget, Office of Information and Regulatory Affairs, has determined that this is not a significant regulatory action as defined under section 3(f) of E.O. 12866 and, therefore, was not subject to review under section 6(b). This rule is not a major rule as defined at 5 U.S.C. 804(2).

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

DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule is not creating any new requirements or changing any existing requirements for contractors. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

The Department of Defense is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to modify the text of DFARS clause 252.239-7007, Cancellation or Termination of Orders, to: Clarify DoD's liability in the event DoD cancels or terminates a telecommunications services order, and incorporate the text of DFARS clause 252.239-7008, Reuse Arrangements. Combining the requirements of these two clauses permits DFARS 252.239-7008 to be removed from the DFARS.

The objectives of this proposed rule are to: Streamline contract terms and conditions pertaining to telecommunications services; prevent costs from being incurred in anticipation of, but prior to, the establishment of a formal agreement or contract and award of an order for telecommunications services; and, to create an upfront mutual understanding of the maximum amount of reimbursement due to the contractor in the event of cancellation or termination. The modification of these DFARS clauses supports a recommendation from the DoD Regulatory Reform Task Force.

This rule is not expected to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because it is simply combining two existing clauses that address the same topic into a single comprehensive clause, and clarifies the current practices regarding DoD liability to reimburse telecommunication services contractors in certain circumstances.

Based on fiscal year (FY) 2018 data from the Federal Procurement Data System, the Government awarded approximately 8,670 contracts and orders for services under the Product and Supply Code (PSC) D3—Information Technology and Telecommunications. Of the 8,670 contracts and orders awarded, approximately 28 percent of the awards were made to 1,050 unique small businesses entities. The PSC D3 does not break down further into information technology services and telecommunications services; therefore, the number of contracts and orders awarded in FY 2018 exclusively for telecommunications services is estimated to be fewer than the number awarded in FY 2018 under PSC D3 in its entirety.

This proposed rule does not include any new reporting, recordkeeping, or other compliance requirements for small businesses. This rule does not duplicate, overlap, or conflict with any other Federal rules. There are no known significant alternative approaches to the proposed rule that would meet the proposed objectives.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities. DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D035) in correspondence.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

Therefore, 48 CFR parts 239 and 252 are proposed to be amended as follows:

I. Background

This rule proposes to modify the DFARS clause 252.239-7004, Orders for Facilities and Services, to incorporate the information currently included in DFARS clause 252.239-7005, Rates, Charges, and Services, and make minor changes to simplify the clause text. Combining these clauses will result in 252.239-7005 being removed from the DFARS.

The clauses at DFARS 252.239-7004 and 252.239-7005 are both included in all solicitations, contracts, and basic agreements for telecommunications services. The clause at 252.239-7004 specifies how contractors shall acknowledge the receipt orders under the contract or agreement, while the clause at 252.239-7005 provides contractors with terms and conditions regarding charges for facilities and services being provided in accordance with the contract or agreement. Since both clauses are included in all of the same contracts as DFARS clause 252.239-7004 and both clauses provide terms and conditions pertaining to telecommunications services, the text of the two clauses can be combined, without changing the intent of either one of the clauses. This will help minimize the number of clauses in the contract and streamline contract terms and conditions for contractors.

The modification of this DFARS text supports a recommendation from the DoD Regulatory Reform Task Force. On February 24, 2017, the President signed Executive Order (E.O.) 13777, “Enforcing the Regulatory Reform Agenda,” which established a Federal policy “to alleviate unnecessary regulatory burdens” on the American people. In accordance with E.O. 13777, DoD established a Regulatory Reform Task Force to review and validate DoD regulations, including the DFARS. A public notice of the establishment of the DFARS Subgroup to the DoD Regulatory Reform Task Force, for the purpose of reviewing DFARS provisions and clauses, was published in the Federal Register at 82 FR 35741 on August 1, 2017, and requested public input. No public comments were received on these clauses. Subsequently, the DoD Task Force reviewed the requirements of DFARS clause 252.239-7004 and 252.239-7005 and determined that the clauses could be combined.

This proposed rule does not create any new provisions or clauses. The rule combines two clauses on the same topic into a single clause and makes minor modifications to simplify clause text. This rule does not change the applicability of the affected clauses, which are included in solicitations and contracts for telecommunications services, including those valued at or below the SAT or for commercial services.

Executive Order (E.O.) 12866, Regulatory Planning and Review; and E.O. 13563, Improving Regulation and Regulatory Review, direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The Office of Management and Budget, Office of Information and Regulatory Affairs, has determined that this is not a significant regulatory action as defined under section 3(f) of E.O. 12866 and, therefore, was not subject to review under section 6(b). This rule is not a major rule as defined at 5 U.S.C. 804(2).

This rule is not subject to Executive Order (E.O.) 13771, because this rule is not a significant regulatory action under E.O. 12866.

DoD does not expect this proposed rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because the rule is not creating any new requirements or changing any existing requirements for contractors. However, an initial regulatory flexibility analysis has been performed and is summarized as follows:

The Department of Defense is proposing to amend the Defense Federal Acquisition Regulation Supplement (DFARS) to modify the text of DFARS clause 252.239-7004, Orders for Facilities and Services, to include the text of DFARS clause 252.239-7005, Rates, Charges, and Services. Combining the requirements of these two clauses permits DFARS 252.239-7005 to be removed from the DFARS.

The objective of this proposed rule is to streamline contract terms and conditions pertaining to telecommunications services. The modification of these DFARS clauses supports a recommendation from the DoD Regulatory Reform Task Force.

This rule is not expected to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because it is simply combining two existing clauses that address the same topic into a single comprehensive clause.

Based on fiscal year (FY) 2018 data from the Federal Procurement Data System, the Government awarded approximately 8,670 contracts and orders for services under the Product and Supply Code (PSC) D3—Information Technology and Telecommunications. Of the 8,670 contracts and orders awarded, approximately 28% of the awards were made to 1,050 unique small businesses entities. The PSC D3 does not break down further into information technology services and telecommunications services; therefore, the number of contracts and orders awarded in FY 2018 exclusively for telecommunications services is estimated to be fewer than the number awarded in FY 2018 under PSC D3 in its entirety.

This proposed rule does not include any new reporting, recordkeeping, or other compliance requirements for small businesses. This rule does not duplicate, overlap, or conflict with any other Federal rules. There are no known significant alternative approaches to the proposed rule that would meet the proposed objectives.

DoD invites comments from small business concerns and other interested parties on the expected impact of this rule on small entities. DoD will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (DFARS Case 2018-D035) in correspondence.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

Therefore, 48 CFR part 239 and 252 are proposed to be amended as follows:

On July 26, 2018, the Service received a petition for rulemaking from Pastor Robert Soto, the lead plaintiff in McAllen Grace Brethren Church v. Jewell, No. 7:07-cv-060 (S.D. Tex. June 3, 2016) (hereinafter “ McAllen” ), and the Becket Fund for Religious Liberty, asking the Service to revise its existing rules pertaining to the religious use of federally protected bird feathers and parts for Native Americans. The petitioners submitted the petition pursuant to paragraph 7 of the June 10, 2016, settlement agreement between the McAllen Plaintiffs and the United States, which states:

The petition provides proposed regulatory text, which more broadly asks the Service to do four things:

(1) “ Criminal possession ban: Petitioners propose that the Department [of the Interior] promulgate the Morton Policy as a regulation, with one modification: that the policy apply to all sincere religious believers who use federally protected feathers in their religious exercise.” The “Morton Policy” is a Department of Justice enforcement policy that generally advises against prosecuting members of Federally Recognized Tribes who possess, travel with, or acquire or transfer without compensation eagle feathers. A Department of Justice memorandum concerning its application of the Morton Policy to Federally Recognized Tribes and a related 1975 press release by Secretary of the Interior Rogers C.B. Morton are available as indicated above in ADDRESSES .

(2) “ Protect Sincere Religious Believers: Members of a state or federally recognized Indian tribe, a Native American church, or other Native American religious organization should enjoy a presumption of sincerity; others should have the opportunity to demonstrate their sincerity in other ways.”

(3) “ National Eagle Repository: The Department should reform the Repository by increasing its funding and staffing, working more closely with tribes and other stakeholders to improve efficiency, and adopting policies that will expand the overall supply of feathers. This will enable the Repository to better serve all sincere religious believers who use eagle feathers in their religious exercise.” Note that the draft regulatory language suggested by the petitioners specifically requests access to the Repository for all sincere religious believers. (See paragraph d. of the petitioned regulatory text, pp. 44-45 of the petition).

(4) “ Combat commercialization and increase enforcement: Petitioners propose that the Department [of the Interior] engage in government-to-government consultations with federally recognized tribes on specific measures to help Native Americans detect and report suspected illegal commercial activities involving protected feathers.” (See pp. 3-4 of the petition).

Note that some of these requests are for administrative action and are not directly addressed in the regulatory language the petitioners propose. The petitioners' proposed regulatory text can be found on pp. 44-45 of the petition, available at http://www.regulations.gov in Docket No. FWS-HQ-LE-2018-0078.

You may obtain the petition for rulemaking, and you must submit your comments and materials concerning this petition, by one of the methods described in ADDRESSES . The Service will not consider the petition's merits until after the comment period ends on the date set forth in DATES . If the Service decides that the petition has merit, we may begin a rulemaking proceeding. The Service will announce any action that we decide to take in the Federal Register .

We will not accept comments sent by email or fax or to an address not listed in ADDRESSES . If you submit a comment via http://www.regulations.gov, your entire comment—including any personal identifying information, such as your address, telephone number, or email address—will be posted on the website. When you submit a comment, the system receives it immediately. However, the comment will not be publicly viewable until we post it, which might not occur until several days after submission. If you mail or hand-carry a hardcopy comment directly to us that includes personal information, you may request at the top of your document that we withhold this information from public review. However, we cannot guarantee that we will be able to do so. To ensure that all comments that we receive are publicly available, we will post all hardcopy comments on http://www.regulations.gov.

Under the Administrative Procedure Act, any person may petition for the issuance, amendment, or repeal of a rule (5 U.S.C. 553(e)). The petition will be given prompt consideration, and the petitioner will be notified promptly of action taken. A petition for rulemaking may be published in the Federal Register if the official responsible for acting on the petition determines that public comment may aid in consideration of the petition.